Despite recovery signs emerging in some Western economies, a fear of a global recession was nominated as the top “hot button issue” by 555 CEOs representing 30 countries questioned by nonprofit peer group The Conference Board. Their second-biggest concern was “developing next generation leaders”, followed by “cybercrime” and “failing to attract and retain top talent”.
The poll was conducted in September and October, just before the election of Donald Trump. At the time, growth in U.S. gross domestic product was accelerating, while unemployment was falling and wages were rising. The global political order, however, had been shaken by Britain’s vote to leave the European Union, the rise of populist leaders, regulatory uncertainty and slowing economic growth in China.
“Emerging markets are still growing faster than mature markets, but that growth rate has slowed down considerably and that’s worrying,” Chuck Mitchell, The Conference Board’s executive director, knowledge content and quality, told Chief Executive.
Throw in uncertainty created by a changing U.S. administration, problems with the EU and concerns about global trade, and that slowing emerging-market growth has become even more of a threat. “That’s where recession risk comes in,” Mitchell said.
Recession risk was presented as an option to survey respondents for the first time this year. Not surprisingly, given China’s slowdown, it was cited as the top concern of Asian CEOs, while U.S. leaders ranked it fourth, behind finding talent and developing leaders.
Mitchell said questions over talent have consistently featured as a leading concern for CEOs globally since the survey was first conducted in 1999.
How CEOs are negotiating a skills crunch
A skills shortage is being gradually compounded by a demographic shift in labor markets that’s shirking the size of talent pools, both in developed and developing countries. To compete, survey respondents said they were trying to create more inclusive work cultures to bring the most out of employees and make them feel more valued. They also were creating skills-development programs to improve capabilities to maximize digital transformation.
Interestingly, though, the survey suggested CEOs should beware of taking too seriously claims that millennials are a fundamentally different generation. “There are a lot of myths around the stereotypes of millennials, but a lot of the research we did indicated it’s more about life stage, and the differences probably aren’t as profound as most people think they are,” Mitchell said.
Still, he acknowledged that rapid advances in technology are reshaping the challenges that upcoming leaders face. “A lot of that has to do with skills match, but there also has to be that ability to lead in a digital age,” he said. “You have to make decisions more quickly, but they’re based on more information than we’ve ever had—and not all of it’s accurate.”
For all the concerns about digital disruption, though, less than 20% of respondents agreed they had an enterprise-wide digital transformation strategy in place. And only a third strongly agreed that a failure to embrace digital transformation would damage their ability to remain competitive in the next two years. However, the proportion almost doubled to two-thirds when the time frame was moved out to 10 years.
“Kicking the digital can down the road has risks, especially with concerns expressed by our respondents over the possibility of a global recession,” the report warned.
Fear of terrorism rises in U.S. and Europe
There was a total of 28 bogeymen on The Conference Board’s radar of hot button issues for CEOs, including wage inflation, currency volatility, violence and social unrest, income inequality, climate change, conflict related to Russia and volatility in energy markets, to name a few.
Among the survey’s more interesting findings was that cybercrime has climbed the ranks of worries far beyond America and Europe. “It’s really occurring across all regions now and some of it plays into the notion of state actors getting involved,” Mitchell said. “Everybody’s feeling vulnerable.”
Among U.S. CEOs, fears of a terrorist attack jumped to the 9th biggest challenge’ from 17th a year earlier. That’s concerning because such disruptions are usually more stressful for politicians: share markets and retail spending have typically only suffered a short-term hit in the wake of recent attacks in Paris, Berlin and Brussels.
U.S. CEOs also were found to be far more concerned about healthcare benefits for employees, which ranked as their fifth-biggest concern. Asian CEOs, meanwhile, had an outsized fear of economic uncertainty in China, which ranked as their second-biggest concern; wage inflation came in at number six. For Europe’s CEOs, financial stability in the region was a top concern, as was the impact of Brexit.