KPMG 2020 CEO Outlook: COVID-19 Special Edition

The KPMG 2020 CEO Outlook COVID-19 Special Edition finds the world’s chief executives using this unparalleled moment in history to lead with increased purpose and impact, both societal and economic. They are protecting their people, building trusted relationships with customers and communities, and defining a new future of growth and success for their organizations.

The 2020 CEO Outlook offers a unique lens on evolving attitudes as the pandemic has unfolded. KPMG initially surveyed 1,300 CEOs in January and February, before many key markets were beginning to feel the full impact of lockdowns. Then, in July and early August, we conducted a follow-up ‘pulse’ survey of 315 CEOs to understand how thinking has evolved.

The pulse survey finds CEOs focused on finding opportunity in adversity.

At the beginning of the year, we found that most CEOs saw the primary objective of their organization shift from purely profit to also consider their purpose in society. Less than a quarter (23 percent) saw the organization’s overall objective in narrow ‘managing for shareholder value’ terms, with 54 percent taking a broader, purpose-driven approach focused on multiple stakeholders. And around one in five (22 percent) going as far as to say that their primary objective is to improve society.

Today, purpose helps CEOs understand what needs to be done to meet the needs of stakeholders such as employees and communities, 79 percent say they feel a stronger emotional connection to their corporate purpose since the crisis began. At the same time, however, the massive disruptive impact of the pandemic has caused many CEOs to question whether their current purpose really meets the needs of stakeholders: 79 percent say they have had to re-evaluate their purpose as a result of COVID-19.

This increasingly personal and emotional connection to purpose during the pandemic reflects the fact that CEOs face the same health and family challenges as their people and communities when it comes to COVID-19. In fact, well over a third of chief executives (39 percent) have had their health, or the health of one of their family, affected by COVID-19, and 55 percent changed their strategic response to the pandemic as a result.

At the beginning of the year, we also found that CEOs were increasingly prepared to personally lead the way in tackling society’s major challenges. Around two-thirds (65 percent) said that ‘as confidence and trust in governments decline, the public are looking to businesses to fill the void on societal challenges’. At the same time, 76 percent said they had a personal responsibility to be a ‘leader for change on societal issues’. This resolve faced a significant test this year with the tragic death of George Floyd at the end of May and the resulting protests around the world. Most CEOs have been quick to take action that will make a difference: today, 81 percent have either introduced new anti-black racism measures or plan to do so.

COVID-19 is clearly not the only threat we face that has profound economic and humanitarian consequences: climate change also offers a significant threat over the coming decades. CEOs recognize this, and are not being deflected from their Environmental, Social and Governance (ESG) goals as they look to rebuild their organizations in a way that supports a new and sustainable economy. The seriousness with which CEOs take the issue of climate change is reflected in the fact that 65 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: 71 percent say they want to lock-in climate change gains made as a result of the pandemic.

CEOs are also not taking their eye off the future of work. COVID-19 has effectively forced many organizations to experiment radically with how work is done. For many organizations, for example, virtual working kicked in literally overnight. With the pandemic transforming the world of work, 77 percent say they will continue to build on their current use of digital collaboration and communication tools, and 73 percent believe that remote working has actually widened their available talent pool.

As they look to accelerate digital innovation, CEOs are also acutely aware of the people who have to deliver – their employees. Many employees are grappling with significant anxiety – or even fear – about today’s situation and what the future holds, and have also had to embrace very different ways of working. While ‘talent risk’ was the threat that CEOs ranked behind 11 other risks at the beginning of the year, it has now risen to be the number one threat to long-term growth, with CEOs recognizing the need to keep their people feeling safe but also connected, engaged and productive.

In terms of the future operating model, supply chains have also been hard hit: 67 percent say they have had to rethink their global supply chain approach given the disruptive impact of the pandemic. However, CEOs are using this opportunity to ask how their supply chain can become a competitive advantage in the new reality that emerges. When we asked CEOs to say what was driving this supply chain rethink, the top-ranked reason was to ‘become more agile in response to changing customer needs’. In contrast, ‘pressure from governments to bring production closer to home’ was second-from-bottom.

Confidence in global economic growth has plummeted since the beginning of the year due to the pandemic. Thirty-two percent of CEOs are less confident in global economic growth than they were at the start of the year. CEOs, however, are more optimistic about their own country’s growth prospects (45 percent confident), and more confident in the resilience of their own business over the coming 3 years. A key growth lever is digital acceleration. With commerce increasingly taking place online because of factors such as social distancing, companies are having to rethink what customers want and how to deliver: 75 percent say the pandemic has accelerated the creation of a seamless digital customer experience and 64 percent say it has also accelerated the creation of new digital business models and revenue streams. The challenge now is to focus efforts and investment on the areas that generate most value and to maintain cyber security resilience.