PricewaterhouseCoopers PwC: CEO Confidence is Baaack! Two-Tier Growth Ahead

January 26, 2011
PricewaterhouseCoopers PwC: CEO Confidence is Baaack! Two-Tier Growth Ahead
John Fowler, Big4.com
26 January 2011
Each year, PricewaterhouseCoopers PwC releases its annual CEO survey at the World Economic Forum, which captures the current tone and outlook for the top CEOs in the world. For the last two years, this survey has been drenched with pessimism, as the global economic crisis took its toll on businesses worldwide and increased pressure on CEOs. The 14th annual survey was released yesterday in conjunction with Davos 2011 in  Switzerland – 25 Jan 2011, and the firm finds that CEO confidence in future growth is nearly back to pre-crisis levels. Of 1,201 CEOs, 48% were “very confident" of growth in next 12 months (up from 31% in 2010), and approaching the 50% reached in 2008 before the economic crisis.
 
88% of CEOs have some level of confidence for prospects in the next 12 months, up from 81% last year. Longer term, 94% are confident of growth three years from now, up from 92% in 2010. There was renewed confidence everywhere with emerging market CEOs being most bullish, and CEOs in Western Europe being least confident (with exception of Germany).
 
CEOs considered China the most important country for future growth. And China, the US and India were seen as the most important future sources for products and raw materials. 90% expect their operations to grow in Asia in the next 12 months, followed by Latin America, 84%; Africa, 75%; the Middle East, 72%; and Eastern Europe, 70%. And the best opportunities for growth will come from new products and services and from increasing share in existing markets. M&A,  JVs and alliances trailed as growth strategies.
 
So it looks like CEOs are thankfully past the sky-is-falling stage and see renewed opportunity. There is another important finding in this survey in that the recovery is happening on two-tiers – China, India and Brazil are growing at rates much higher than developed nations – and that is rapidly shifting economic balance of power which is causing CEOs to rethink how and where to invest in facilities, people and innovation. And the smartest companies which understand this diverging growth patterns will be the winners.
 
And there’s good news too on the jobs front – 51% plan to add jobs in the next 12 months, up from 39% in 2010. CEOs in Central Europe, Asia Pacific and Africa were particularly bullish about hiring. Only 16% CEOs expected to cut jobs in 2011, down from 25% last year. CEOs believe limited supply of candidates with the right skills, 66%, recruiting and integrating younger employees into the workforce, 54%, losing top people to competitors, 52%, and providing attractive career paths, 50% are key issues on the HR front.
 
Another important fact – 84% had changed their company’s strategy in the past two years, and 33% say the change was fundamental. And 64% planned to cut costs in the next 12 months, down from about 70% in 2010, indicating a large shift in mentality.
 
Last year, we blogged about the 13th Annual CEO survey on January 27, 2010, and that survey was huge comeback of optimism from the depths of pessimism seen in January 2009. And this survey now solidifies the optimism seen 12 months ago after a rocky 2010, and with the recovery more sustained in every part of the globe, CEOs are feeling that much more sunnier today. But the critical finding is that growth is available in plenty in emerging markets along with significant operating challenges; and that traditional markets cannot deliver high levels of revenue enhancement.
 
In any case, global opportunity and optimism is a strong case for employment and hiring; and there are a ton of folks out there who are hoping that this good confidence at the C-suite translates into much more opportunities for all.

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