SA CEOs not intimidated by looming recession – KPMG outlook report

Out of 50 CEOs interviewed in South Africa, not one of them saw full-time remote working arrangements as a viable option for their company in the near future. In fact, 76% of them foresee workers returning to office full-time over the next three years.

This is according to the latest KPMG CEO Outlook Survey report for 2022, where 50 CEOs were interviewed locally, and 1,325 were interviewed globally. The KPMG Outlook Survey is an annual report, which is globally driven, and draws on the perspectives of these CEOs across 11 markets to provide insight into their three-year outlook on the business and economic landscapes.

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While a full-time return to office may seem like bad news for scores of South Africans who were hoping that remote work options would ease the strain of fuel price hikes in the face of the coming recession, the survey revealed that these very same captains of SA’s business enterprise ship feel that as a country, SA is well prepared to navigate its businesses through turbulent times and so the strains of the recession may not hit the consumer as hard as they expect.

“It’s heartening that 71% of global CEOs are confident about the global economy’s growth prospects over the next three years, even though more than 80% first expect a global recession to likely hit over the next 12 months,” says Busisiwe Mavuso, Chief Executive Officer of Business Leadership South Africa.

“Overall, they portray confidence in the resilience of the global economy and believe the recession will be short-lived.”

The majority of the 1,325 CEOs in this year’s survey showed that they were rather focused on three key areas in recent times. These were technology, talent and ESG.

Investing in technology

CEO of KPMG Ignatius Sehoole explained that CEOs across the board were prioritising corporate digital transformation. “CEOs in South Africa continue to prioritise digital investment, with 84% local executives compared to 71% globally. In fact, 58% CEOs in South Africa compared to 56% CEOs globally are placing more capital investment in buying new technology,” he said.

Sehoole said that AI was becoming more prominent and embraced in industries it was previously overlooked by.

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“It is interesting to see what AI is doing in the mining industry. It is revolutionising it,” he said.

He explained that even KPMG itself was implementing more technology and the advancements of AI.

“Since embracing AI, I can honestly say we have not reduced our number of staff. So the notion that AI is going to result in job losses doesn’t hold much water for now. It actually just improves operations and employee morale as they are freed up to do more interesting tasks,” he said.

Attracting the necessary talent

Talent has become one of the top three single most pressing concerns for organisations. How CEOs support and attract talent is changing because of the challenging economic situation and CEOs’ growth goals. Sehoole explained that perceptions between older generations and their relation to the workplace was a lot different from that of younger generations and their relation to the workplace.

“Employee expectations, when it comes to hybrid work, are evolving, so it’s important for CEOs in South Africa or globally to develop better working structures that suit their people what is still an emerging area,” the report advised.

Despite this, many organisations in South Africa are launching return-to-office plans to usher in a ‘return to normal’, and 76% local CEOs envision in-office as the go-to-office environment in three years’ time, compared to 65% globally.

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Interestingly, a business’s ESG approach was increasingly being seen as a differentiator as many CEOs mentioned they were seeing significant demand for greater ESG transparency and reporting with a considerable demand for it coming from employees and new hires.

“There has been this resurgence of a purpose driven organisation. And more and more, it is being driven by the employees. I see now when I interact with students from varsity who want to come into KPMG, they are deliberately asking, ‘What is your purpose? Why are you here? What makes you tick?’. It seems that they are very much about social justice, they are responsible about the environment and they are starting to ask questions that matter,” Sehoole explained.   

Greater need for environmental, social and governance (ESG) metric alignment

The study found that ESG has become integral to long-term financial success. CEOs in South Africa increasingly agree that ESG programmes improve financial performance, which includes being able to secure talent, strengthen employee value proposition, attract loyal customers and raise capital.

But Sehoole said that from conversations, it seems as if no one has an aligned view on the correct standpoint on ESG.

“When examining the challenges in delivering ESG strategies, we have seen that local CEOs list ‘identifying and measuring agreed metrics’ as the biggest challenge,” he said.

“Nevertheless, the importance of ESG initiatives on businesses, especially with regards to improving financial performance, driving growth, and meeting stakeholder expectations cannot be stressed enough. While we know there is a lack of an accepted global framework for measuring and disclosing ESG performance, the KPMG survey revealed that 65% of stakeholders are demanding greater ESG transparency and reporting, and 60% of CEOs noted that 10% of their revenue would be allocated to invest in programs to enable organizations to be more sustainable,” he said.