Charting a course through complexity

As featured on BusinessMirror:  Charting a course through complexity

The business landscape, as illustrated by the 2023 KPMG CEO Outlook survey, is undergoing a profound transformation, shaped significantly by geopolitical challenges. This annual survey, drawing insights from more than 1,300 CEOs of the world's largest businesses, has become a barometer of corporate sentiment, reflecting the concerns and strategies of global leaders.

Out of 1,325 corporate executives across the globe, with 400 business leaders from the Asia Pacific (ASPAC) region, they have provided their perspective on the dominant trends in the business landscape and revealed their crucial next steps.

In the field of business risks, geopolitical uncertainties have surged to the forefront, surpassing previous concerns. This shift is remarkable, especially considering that these concerns didn't even make the top five in the 2022 survey. The volatile interplay of global politics, trade dynamics, and international relations has created an atmosphere of unpredictability, forcing CEOs to reevaluate their strategic approaches. Geopolitics and political uncertainties are now perceived as the most significant threats, prompting a reassessment of risk management strategies across industries.

This year’s challenging global landscape underscores the pressures CEOs feel to make decisions on a variety of critical issues — and they impact how CEOs plan to support and attract talent over the next three years.

The survey highlights a clear divide in how CEOs view the future of work. Even though hybrid work models have gained popularity, a significant 64 percent of global CEOs expect a complete return to the way things were before the pandemic, where everyone worked from the office. This remains consistent with their views in the 2022 CEO Outlook. Moreover, this raises concerns about how well this traditional setup aligns with the changing needs and expectations of the modern workforce.

The responses align with those from CEOs in the Asia Pacific region, including the Philippines. When asked, “In three years' time, how do you envision the working environment for corporate employees whose roles were traditionally based in-office?”, sixty two percent of the respondents expressed their expectations of going back to the traditional setup where employees are in the office.

This sentiment underscores the persistence of traditional office-centric thinking among CEOs. It comes against a backdrop of the debate surrounding hybrid working, which has had a largely positive impact on productivity over the past three years and has strong employee support, particularly among the younger generation of workers. As organizations continue to roll out their return-to-office plans, it is crucial that leaders take a long-term view that embraces the employee value proposition and encompasses the considerations and needs of employees to ensure that talent is nurtured and supported.

Additionally, ASPAC CEOs are inclined to reward employees who choose to return to the office voluntarily. Ninety percent of them state that they are likely to provide those making an effort to come into the office with favorable assignments, raises, or promotions. This percentage is higher than the 87 percent of Global CEOs surveyed worldwide.

With more employees demanding greater flexibility in their work environment—especially among younger workers and female employees—the 62 percent of ASPAC CEOs who expect a complete return to in-office work may confront workplace tensions that could challenge their perspective. Executives in the region must learn to manage employee expectations on flexible work setups, while maintaining openness to workplace solutions that do not always require staff to be present in-office.

KPMG in the Philippines Chairman and CEO, and Head of People, Performance and Culture Sharon G. Dayoan shares, “The Philippine business community is also grappling with the balance between traditional office setups and the evolving preferences of the workforce, especially considering the widespread adoption of remote and hybrid work models.”

“This concern with providing a flexible work set up to retain talent while also establishing measures to ensure work integrity, mirrors the discussions happening in Philippine boardrooms. Industry leaders are seeking appropriate approaches to ensure they remain competitive while meeting the needs of their employees,” Dayoan added.

In essence, while there is a pull towards the familiarity of traditional office norms, there's also an openness to adapt and recognize the changing nature of work. This suggests a delicate balance between maintaining established practices and embracing the need for flexibility and employee preferences in the evolving work landscape.

“In the workplace, a tension between tradition and adaptability persists, where a pull towards familiar office norms coexists with an openness to adapt to employee preferences. Amidst these uncertainties, KPMG CEO Outlook suggests that pragmatic strategies are the need of the hour, where business leaders must navigate diverse workforce needs with tailored solutions,” Dayoan concluded.

As the workplace transforms to account for greater inclusion, diversity and equity (IDE), ASPAC CEOs are cognizant of the role they must play to create a level playing field in their organizations. Yet companies in the region fare poorly compared with their global peers when it comes to achieving equity and diversity in their organizations—especially at higher levels of corporate leadership.

Considering that 90 percent of CEOs in ASPAC are likely to reward workers who strive to appear in-office, business leaders should be alert to the potential of encouraging gender disparities in the workplace—more so for female workers, especially mothers, who will require slightly more time off than their male peers.  Favor given to employees who appear in-office can also slow the progress on gender diversity in the C-suite. Executives in the region are encouraged to be vigilant to these risks, and to create a stronger push for inclusion, diversity and equity in their organizations.

Companies in the Asia Pacific region may have to reevaluate their positions on strengthening these IDE values, or be left behind by other firms. It remains to be seen if this will happen, given that only 54 percent of ASPAC CEOs believe that progress on diversity and inclusion has moved too slowly in the business world, compared to 66 percent of CEOs globally, illustrating that the push for change from the top is not as strong as it ought to be.

“Many local and global companies are recognizing the importance of fostering diverse and inclusive workplaces. Philippine businesses should continue exploring more proactive measures and transformative changes at the leadership level to push forward their own IDE narratives,” Dayoan added.

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