Undaunted by 2021, CEOs remain hopeful for 2022
You'll be hard-pressed to find anyone more aware of the shocks and bumps of the economy than the chief executive officer -- often the highest-ranking, highest-paid and highest visible executive of a corporation. As the company's skipper, the CEO is responsible for steering the company to greater productivity and profitability through the winds of an ever-changing economy. For the 175 CEOs surveyed in the latest Fortune/Deloitte CEO Survey released early this week, their outlook for 2022 is "cautiously optimistic" but also "hopeful" despite the lingering ills of inflation, the Great Resignation and the COVID-19 pandemic which changed the course in mid-2021 to choppier economic seas.
According to Deloitte's press release earlier this week, CEOs have expressed cautious optimism that their organizations have adjusted and adapted to the challenges faced in 2021, including the lingering pandemic. "A new normal appears to be setting in whereby business leaders simply expect new challenges to arise continuously and are confident they can manage through them to achieve positive business results while making a real difference in society," said Deloitte CEO Joe Ucuzoglu.
Among the highlights from the survey:
- About two-thirds of CEOs expect their company's growth to be either "very strong" or "strong" in 2022.
- 36% of CEOs have expressed greater concerns over inflation and the potential for unstable financial markets as reasons that could disrupt their business strategy for this year.
- 78% of CEOs attribute increased business costs and margin impacts to supply chain disruptions in 2021, while 45% said the supply chain had caused revenue losses and customer service issues.
- Slightly less than half of the CEOs surveyed see the lack of hiring talented staff as the biggest challenge they face.
- 60% expect pandemic business effects to diminish this year: 20% say this summer, 40% say by the end of the year. Yet nearly one-third don't see the end in sight, at least not for the foreseeable future.
The Fortune/Deloitte CEO Survey was fielded between January 4 and 12. The 175 chief executives surveyed include Fortune 500 CEOs and Global 500 CEOs across 15 industries. According to Deloitte's press release, the executives were asked to share their thoughts, perspectives, priorities, and expectations for 2022.
When it comes to assessing the overall global economy for 2022, CEOs are mildly optimistic compared to the outlook of their own industry performance. For the global economy, for example, slightly less than half say they're "neutral" in their outlook, while 40% claim they're "optimistic" and 12% say they're "pessimistic." Compare that to industry performance where nearly 80% say they're either "optimistic" or "very optimistic" about their industry performance, and more than 90% say the same about their company performance -- with a third of CEOs saying they are "very optimistic" about their company performance, according to the report.
As for so-called external issues, the COVID-19 pandemic remains among the top three concerns across all industry leaders in the US. But since the last survey this past fall, it fell 14 percentage points to 56%. The labor and skills shortage remains a more pressing issue, which is still at the top of the list at 71% of the surveyed CEOs. That's relatively unchanged from last fall. Supply chain disruption came in third at 46%, the report stated. For CEOs based outside the US, the pandemic remains the top issue at 58%, followed by supply chain issues at 54% and labor and skill shortage issues at 50%.
Inflation remains a major issue for CEOs after it spiked in the US to 7% in late 2021, the highest it has been since 1982. For 2022, the CEOs surveyed predict it will retreat, but with varying estimates. More than one-third of US-based CEOs expect inflation in 2022 to be around 4% to 5%; one-quarter see it hovering between 3% and 4%, while one-fifth predict around 5% to 6%. The report said that CEOs outside of the US estimate it to be between 2% and 6%.
One other question posed in the survey concerned how CEOs lean on their leadership teams. In order of importance, the CEOs were asked to rank who they rely on most during these economically uncertain times. Two-thirds of CEOs in the US said their chief financial officer is most important, with 55% ranking business unit/regional leaders as most important, while chief operations officer and chief talent/HR officer are close behind. Interestingly, CEOs outside of the US rank business unit/regional leaders above the CFO. Foreign CEOs also place the chief talent/HR officer, board directors, chief strategy officer and the chief legal counsel higher in importance, while the chief operations officer and the chief information/technology officer are lower in importance, according to Deloitte's release.
The next Fortune/Deloitte CEO Survey is expected to be released this summer.