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24th Annual CEO Survey

UK CEOs plan a ‘no regrets’ recovery

After a year of disruption wrought by COVID-19, UK CEOs are looking to base their recovery on ‘no regrets’ moves: those decisions most within their control that will deliver positive change and a foundation for sustainable growth. This includes prioritising organic revenue growth and sensible cost efficiency. But it also includes a broader set of ‘no regrets’ moves around decisions that cannot be put off – where inaction would lead to regret – such as increasing investment in digital transformation, cyber security, sustainability and their people.

Even at a time when many CEOs remain concerned about economic uncertainty, they are investing in these areas with a clear intention of turning a year of significant disruption into a catalyst for positive change.

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A ‘no regrets’ recovery

For a lot of UK CEOs, economic uncertainty remains a concern (86%), but they also see a route to recovery for businesses and the economy.

Just over half (51%) of the UK CEOs surveyed expect to see moderate growth in the global economy this year, while around a quarter (26%) expect strong growth.

That suggests a clear belief among CEOs that the economy is recovering, albeit from a base of a very tough year. While nearly a quarter (22%) of UK CEOs do not expect the economy to pick up this year, very few expect it to get significantly worse (2%).

Kevin Ellis, Chairman and Senior Partner, at PwC UK, says: “CEOs are largely confident the crisis has turned a corner. This improvement is fuelling activity and momentum, as chief execs plan ahead, invest and acquire in areas that will help them adapt for a more resilient future.”

However, UK CEOs are more confident than their global peers when it comes to the prospects for their own organisation’s revenue growth and profitability this year. And that confidence increases even more for a three-year outlook.

CEOs concerned about uncertain economic growth

86% of UK CEOs are concerned about uncertain economic growth (compared to 83% globally)

CEOs very confident of profitability this year

40% of UK CEOs are very confident of profitability this year (compared to 34% globally)

This suggests CEOs have confidence in the decisions they are planning, even if they are less certain about the wider economy.

The decisions most CEOs are prioritising relate to organic growth and sensible cost efficiency, as they look to control costs.

This supports our overarching view that CEOs are prioritising ‘no regrets’ decisions to stabilise and protect their business. But there are clear signs these ‘no regrets’ moves are also about far more than ‘hunkering down’.

They are also about investing in priorities which cannot be ignored.

Kevin Ellis, Chairman and Senior Partner, PwC UK

CEOs are largely confident the crisis has turned a corner.
How are UK CEOs driving growth? 70% - Organic growth
70% - Operational efficiencies; 59% - New product/service
39% - Pursue new M&A; 34% - Enter a new market

No regrets on digital transformation

Following the disruption of the past year, a major priority for UK CEOs is digital transformation. More than three quarters (77%) of UK CEOs plan to increase their investment in digital transformation.

During the pandemic, most organisations found technology and digital channels were critical to survival. Those organisations that had already prioritised digital transformation fared better and are now the example others are seeking to emulate.

Kenny Wilson, CEO of Dr Martens, says: “Even before the pandemic, we were committed to reaching consumers by digital first. That was a conscious strategy that started playing out in 2018, and I’m glad it did because when we hit the pandemic we were able to be flexible and adjust the company. You could see the market was heading that way but the pandemic sped everything up.”

That benefit of greater operational agility and flexibility is now something few businesses will want to be without, having learned tough lessons through the pandemic.

Katherine Garrett-Cox CBE, CEO of GIB Asset Management, says that to achieve long-term growth, organisations must be willing and able “to pivot away from things they thought were always going to work."

"The more successful organisations will be those that are fleet of foot and ready to move fast in a different direction," she says.

Interestingly, CEOs this year expressed far less concern about the rate of technological change than in past years (down to 55% from 75% last year). It seems likely the rate of change has been more of an ally than a threat in recent times and will continue in that vein.

Related to digital transformation, around two-thirds of respondents are increasing their investment in cyber security and data privacy.

UK CEOs are increasing their investment in digital transformation in response to the pandemic

Significantly - 77% of UK CEOs

Katherine Garrett-Cox CBE, CEO of GIB Asset Management

The more successful organisations will be those that are fleet of foot and ready to move fast in a different direction.
Read Katherine's interview

The scramble to get employees working remotely and move services online was undoubtedly done in haste, and CEOs are more concerned than ever about cyber security threats and vulnerabilities (up to 91%, from 80% last year). These may be an unintended consequence of their response to disruption, as well as attackers targeting that disruption.

Marco Amitrano, Head of Clients and Markets at PwC UK, says: “Following the challenges of the past year, CEOs are doing all they can to stabilise their businesses. Prioritising organic growth and sensible cost efficiency are ‘no regrets’ moves. But in a period of disruption, where the role of technology has been more critical than ever, so is digital transformation. And acting to protect your business from cyber attack, when it relies more than ever on technology, is perhaps the epitome of a ‘no regret’ move.”

CEOs’ focus on cost savings and efficiency suggests the transformations being undertaken are being funded, where possible, from their existing cost-base, in the interests of preserving cash, or not incurring fresh debt while the economic outlook remains cloudy.

One area that appears to buck this trend is with the number of CEOs planning to drive revenue through mergers and acquisitions, up marginally on last year (39% compared to 32%). The main motivators for those acquisitions are expanding their existing product and service offering (31%) and consolidation within their industry (30%).

Marco Amitrano, Head of Clients and Markets, PwC UK

Protecting your business from cyber attack, when it relies more than ever on technology, is the epitome of a ‘no regret’ move.
What are UK CEOs' top concerns? 94% - Pandemics and health crisis
91% - Cyber threats, 83% - Uncertain economic growth
77% - Policy uncertainty, 73% - Availability of key skills

No regrets on people

The pandemic has clearly focused CEOs’ minds on a great many things, but high on the list of priorities is the wellbeing of their people, and the importance of maintaining a tightly knit workforce, bonded by culture and a shared sense of responsibility.

In many cases it has been the adaptability, resolve and creative problem-solving skills of their people that enabled organisations to continue operating successfully through the pandemic. In turn that will have highlighted some of the areas where extra attention was required, including workforce wellbeing which was tested by the extreme, emotional and physical challenges of the pandemic.

CEOs are more concerned than ever about the wellbeing of their teams; a concern no doubt exacerbated by less interaction due to lockdowns, on top of the stress of worrying about the pandemic and working in often unfamiliar or challenging ways.

Similarly, those who have continued working throughout the pandemic in customer or patient-facing roles, or roles where remote working was not an option, have had to deal with working in socially-distanced ways, while worrying about their own physical and mental health.

Nigel Wilson, CEO of Legal and General, says all organisations need to make the wellbeing of their people a higher priority. “There is enlightened self interest in having a highly motivated, healthy, happy workforce. We’re watching our scores on sickness and absence, how people are feeling and how healthy they are. Those are important metrics of a successful firm. We need to look after our people.”

Poppy Jaman, CEO of the City Mental Health Alliance

It is tragic that it’s taken a pandemic to elevate mental health, but hopefully it proves a catalyst for change.
Read Poppy's interview

Poppy Jaman OBE, CEO of the City Mental Health Alliance, says: “It is tragic that it’s taken a pandemic to really elevate mental health, but hopefully it proves a catalyst for long term change.”

Two thirds (66%) of CEOs are increasing their investment focusing on leadership and talent development, while many recognise a focus on diversity and inclusion, wellbeing, workforce engagement and culture can help provide a competitive edge.

Brenda Trenowden, Partner, People & Organisation, at PwC, says: “The pandemic has shown important change can happen quickly when the need and motivation are great enough. It challenged ideas about where people must work. It inspired organisations to address inequalities it highlighted so starkly, and it placed a greater emphasis on the relationship between businesses, their people and society. All these factors should compel organisations to address inclusion and diversity as a priority. Those who do will have greater insights into their diverse customer bases and communities and will be better placed for recovery and success.”

Across the board, UK CEOs are ahead of their global cohort in recognising the importance of such factors.

UK CEOs concerned about the declining wellbeing of their people

61% of UK CEOs

Sarah Churchman, Chief Inclusion, Community & Wellbeing Officer at PwC UK, says: "CEOs recognise their people are critical to their success, especially in countries such as the UK, where the services sector is so dominant and prized skills are in such demand. Organisations who care for the health and happiness of their workforce aren’t only doing right by their people, they are doing right by their business. Investment in your people is an investment in your reputation, your productivity and the resilience of your organisation.”

Many CEOs also acknowledge they have a role to play in ensuring the UK in general has a more productive workforce: 62% of UK CEOs believe helping to deliver a skilled, educated and adaptable workforce for the UK should be a business priority. And concerns about the availability of key skills remain high among UK CEOs (73%).

A focus for many business leaders in the months ahead, and an important milestone in delivering on these commitments to wellbeing and the support of their people, will be the return to the office for those organisations who have had people working remotely over the past year.

Dr Martens’ Kenny Wilson says: “The office is a centre of culture, creativity and belonging and people really want to come back. It’s going to be really important post-pandemic as part of a mixed model of work. We’ve learned we can be more flexible around that mix, but we’ve also learned that we really lose something when we don’t have people coming together and collaborating.”

Nigel Wilson, CEO of Legal & General

There is enlightened self interest in having a highly motivated, healthy, happy workforce. We need to look after our people.
Read Nigel's interview
How are UK CEOs improving competitiveness? 45% - Workplace culture and behaviours
36% - Health & wellbeing of workforce; 33% - Workforce engagement and communication
33% - Productivity through automation & tech, 30% - Diversity and inclusion

No regrets on purpose and sustainability

As all organisations take stock of the ways in which they have changed during the pandemic, there is a clear focus on considering what other changes they can make to address a broad range of issues.

Mark Reynolds, CEO of Mace, says the disruption has enabled him to “press the reset button” and create a new workplace culture and behaviours. The result is an ambitious purpose-driven strategy, which aims to drive sustainable growth for the construction firm.

The pandemic has shown when the need is great enough we can tackle challenges we once thought insurmountable.

It is perhaps in this spirit that CEOs are showing a greater commitment to tackling climate change – an issue which has soared in terms of CEO concerns in recent years (from 44% two years ago to 70% this year).

Emma Cox, Sustainability and climate change leader, PwC UK

There's a real opportunity for the UK to take a lead on climate change. CEOs must work with the government to turn good intentions into a bold agenda for action.
Read Emma's perspective

Emma Cox, PwC UK's leader on sustainability and climate change, says CEOs recognise the need for greater collaboration between the private and public sectors. "There's a real opportunity for the UK to take a lead on climate change ahead of hosting the UN’s COP26 climate conference this year. CEOs must work with the government to turn their good intentions into a bold agenda for action."

There are already positive signs of change, with more than half of UK CEOs increasing their investment in sustainability and other ESG (environmental, societal and governance) initiatives. However, over half believe they should still be doing more to measure (51%) and report (53%) the environmental impact of their business.

“Maintaining a focus on ESG is critical in part because of the current economic environment, but also in light of the environmental crisis we face,” says GIB’s Katherine Garrett-Cox. “We have great evidence that you have better performance in companies that score higher on ESG metrics.”

Wendy Clark, CEO of Dentsu International

Consumers want to know where you’re sourcing your ingredients, what your labour practices are, what your ethical practices are, and your report card on human rights.
Read Wendy's interview

CEOs are also tackling issues such as diversity and inclusion and social mobility, with a great focus on improving workforce equality and regional expansion to access untapped talent pools.

All this comes after a year in which the pandemic put corporate reputations under the spotlight.

Media and consumers became quick to react when organisations were seen to be doing right by their people and their communities. Conversely, organisations that transgressed were quickly pulled up.

CEOs planning to increase investment in advertising and brand building

44% of UK CEOs

That spotlight will remain, and CEOs must consider all aspects of defending their invaluable reputation.

Wendy Clark, CEO of Dentsu International, says: “Consumers have no interest nor belief in your two-sentence holding statement, that’s dead. They want to know where you’re sourcing your ingredients, what your labour practices are, what your ethical practices are, and your report card on human rights.”

The overarching trend from our 24th Annual CEO Survey is a clear sense among business leaders that for all the disruption of the past year, and the heavy toll it has taken on people, businesses and the economy, there remains the potential to rethink and reset and turn a negative situation into a catalyst for positive change, through a series of ‘no regrets’ decisions.

UK CEOs say they should be doing more to report on

35% - impacto on wider communities, 30% - purpose and values
CEO concerns about climate change: 70% in 2021
64% in 2019, 44% in 2018

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Marco Amitrano

Marco Amitrano

Head of Clients and Markets, PwC United Kingdom

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