Top CEO priorities: Digital, talent, ESG and business purpose

Covid-19 has well and truly changed business priorities, as CEOs connect with their business purpose and realise the value of digitalisation, among other major shifts.

KPMG surveyed more than 300 CEOs across the world – including 50 in Australia – through July and August, building on a previous survey conducted at the start of the year among over 1,000 global CEOs. The goal was to trace the change in CEO sentiment through the crisis, and the results are notable.

Most remarkable has been the impetus to digital transformation efforts – a trend born out of necessity. Mandated ‘work from home’ policies in countries across the world meant that businesses turned to digital channels to keep their operations up and running. KPMG reports that well over 80% of Australian CEOs saw their digital adoption speed up during the crisis, across impact areas.

“It is stark that digital transformation has accelerated during the crisis. More than three-quarters of CEOs here and internationally said the crisis had brought forward the provision of digital customer experience by years or months and it has also sped up digitisation of operations, and the creation of digital models and revenue streams,” explained Gary Wingrove, CEO at KPMG Australia.

According to the firm’s analysis, digital investments are also making businesses feel more comfortable. Nearly three-fourths of all CEOs surveyed are confident that their business will grow over the next three years, “because they have greater control over the levers that will determine this – one of the most critical being digital acceleration,” according to the report.

That being said, businesses aren’t ignorant of how the world has changed under the Covid-19 paradigm. Evidence of this is the risk focus among businesses, which has transformed considerably. Back in January, the biggest risks according to Australian CEOs were environmental risks, cyber risks and a global return to territorialism as signaled by trade wars and tightening immigration laws.

Today, the risk profile is much more immediate, with talent, supply chain and operational risks ranking at the top of the list. Talent risks barely made the top ten back in January, but are currently the most pressing issue for most businesses. The need for cost cutting has forced many to shrink their teams, putting businesses at risk of losing important people.

Similarly at the bottom end of the list early this year were supply chain risks, which have catapulted to the top priorities now. Lockdown caused myriad disruptions to the movement of raw material and finished goods alike, and the sluggish reopening since has doubled down on these issues. As mentioned, businesses have had to reorganise their operations under the ‘new normal,’ which means that operational risks are also high on the minds of CEOs.

The focus on immediate business survival has thrown more fundamental risks such as climate change and inequity out of the spotlight. At the same time, KPMG notes that CEOs have not forgotten the threat of climate change altogether, nor have they lost sight of other environmental, social or corporate governance (ESG) considerations.

“The seriousness with which Australian CEOs take the issue of climate change is reflected in the fact that 84 percent say that managing climate-related risks will play a part in whether they keep their jobs or not over the next 5 years. To move forward, they are looking to double-down on the structural shifts that have emerged during the crisis, such as less business travel: 60 percent say they want to lock-in climate change gains made as a result of the pandemic. More than half (58 percent) said that their response to the pandemic has caused their focus to shift to the social component of their ESG program,” explained Wingrove.

So digital investments, new risks and shifting priorities are key trends in the C-suite. Another central development observed by KPMG is that CEOs in Australia are increasingly in touch with their companies’ purpose since the pandemic started, more so than business leaders across the globe.

As many as 90% now use their business purpose as a guiding light for decisive and effective action, while well over 80% keep the purpose in mind when considering stakeholder demands. More than a functional tool, business purpose is an emotional driver for leaders – 82% reported a “stronger emotional connection to their purpose since the pandemic started.”

At the same time, a similar share of leaders have had to introspect and reinvent their purpose to align with new realities emerging from the pandemic, and new demands from consumers and stakeholders alike.