Around 46% of chief executive officers are considering downsizing their employee base over the next six months while 39% of CEOs have already implemented a hiring freeze in the short-term, according to a survey by KPMG.
With a recession looming, there's a significant short-term emphasis on hiring freezes and headcount reductions, says the KPMG 2022 CEO Outlook survey.
But when CEOs take a longer-term view, 79% expect their organisation's headcount to increase over the next three years, and CEOs are still investing in their existing workforce, with half currently focused on boosting productivity.
While confidence is up over the next three years, CEOs anticipate challenges in the shorter term. Nearly nine out of 10 (86%) CEOs believe a recession will happen over the next 12 months, but three out of five (58%) feel it will be mild and short and 76% have plans in place to deal with it.
In spite of short-term recession fears, the increased confidence CEOs have for the longer term indicates they feel well prepared to navigate their businesses through turbulent times. When asked about their confidence in the resiliency of the global economy over the next six months — a period likely to be fraught with uncertainty and constant change — 73% still had a positive outlook, up 13 percentage points from February 2022, the survey says.
While CEOs may be resilient, they're also realistic about the challenges ahead. 73% CEOs believe a recession will upend anticipated growth over the next three years, and 75% also believe a recession will make post-pandemic recovery harder. 71% CEOs predict a recession will impact company earnings by up to 10% over the next 12 months.
Compared to 2019 and 2020, CEOs are better prepared to weather short-term challenges with resiliency measures in place, while still anticipating long-term growth, the survey says. The top three steps include: boosting productivity (50%), managing costs (43%) and reconsidering digital transformation strategies (40%).
CEOs indicate that geopolitical uncertainties will continue to impact their strategies and supply chains over the next three years. In fact, 81% of CEOs have adjusted or plan to adjust their risk management procedures considering geopolitical risk, and 21% of CEOs will be increasing measures to adapt to geopolitical issues to achieve their growth objectives.
"The pandemic and the events in Europe have shown us how interconnected we are as a world. To me, geopolitical issues are the number one risk. I think we all need to build optimized and resilient supply chains," says TV Narendran, chief executive officer and managing director, Tata Steel.
The KPMG survey draws on the perspectives of 1,325 global CEOs across 11 markets to provide insight into their three-year outlook on the business and economic landscapes.
The survey included leaders from 11 markets such as Australia, Canada, China, France, Germany, India, Italy, Japan, Spain, the UK and the US and 11 key industry sectors including asset management, automotive, banking, consumer and retail, energy, infrastructure, insurance, life sciences, manufacturing, technology and telecommunications.