80% of business leaders upbeat over growth prospects
Canadian business leaders are maintaining their confidence in the growth prospects of their companies and the Canadian economy, despite grappling with several challenges.
KPMG International's 2023 CEO Outlook found that while 80% of CEOs remain optimistic about their company's growth over the next three years, concerns about inflation, high living costs, technological disruptions, a tight labor market, and geopolitical uncertainties have tempered their outlook compared to the previous year.
“Despite some softening in the economy, Canadian CEOs remain confident about the Canadian economy and their company's growth outlook over the next three years,” said Elio Luongo, CEO and senior partner at KPMG Canada.
“CEOs are tackling demanding, evolving, and complex challenges yet remain resilient and confident in their outlook,” Luongo continued. “They are reassessing their strategic priorities and redoubling their efforts on talent management and technology while weighing the macroeconomic and geopolitical impacts on their organizations and people.”
2023 CEO Outlook: Key findings
The report found that 71% of Canadian CEOs believe that rising interest rates and tightening monetary policies could potentially prolong a recession, mirroring the concerns of 77% of global CEOs. Meanwhile, 75% of Canadian CEOs express worries about the impact of cost-of-living pressures on their organizations over the next three years, in line with the global sentiment of 76%.
The biggest concern for Canadian CEOs is the potential disruption caused by technology in their industries. While regulatory issues have fallen from the top spot, they continue to be a major concern as business leaders navigate a rapidly changing landscape surrounding tax, trade, supply chain, net-zero carbon emissions, and ESG requirements.
Geopolitical risks have also become a top concern, moving from its previous fifth position to the second on Canadian CEOs' list of concerns, with their global counterparts ranking it as the top risk to growth–a shift from its absence in the top five in the 2022 survey.
Canadian CEOs are focused on keeping their top talent
To address these challenges, Canadian CEOs have made attracting and retaining top talent their top operational priority, followed by advancing the digitization of operations and improving their customer experience. This differs slightly from global CEOs, who prioritize digitization, talent, and customer experience improvement, along with organic growth.
The report also highlighted a shift in focus among Canadian CEOs, from technology to their workforce, with 57% prioritizing increased capital for technology and 43% investing in developing their employees' skills and capabilities. This marks a departure from the previous year when Canadian CEOs allocated 80% of their investments to technology and only 20% to workforce development.
“Talent and technology go together, hand in hand. When used effectively, technology can be powerful, but it needs to be tied to specific business goals to drive growth, operational efficiencies, and better customer experiences,” said Stephanie Terrill, partner and business unit leader, management consulting at KPMG Canada.
“In a tight labor market, CEOs recognize they need to hold on to the right talent and give their employees the opportunity to upskill or retrain to deploy the technologies,” Terrill added. “Whether it's fending off cyberattacks, implementing and monitoring decarbonization programs, or addressing operational or regulatory obstacles, the ability to have data and insights at your command to help you make the right decisions is invaluable.”
AI and return-to-office
Globally, CEOs are investing in generative artificial intelligence (AI) as their top priority, with 75% of Canadian CEOs listing it as their top medium-term investment priority, and with 55% expecting a return on investment within three to five years.
While 64% of global CEOs expect a return to pre-pandemic working methods, only 55% of Canadian CEOs predict a full return to in-office work within the next three years, down from 75% the previous year.
To incentivize in-office work, 77% of Canadian CEOs express their willingness to reward employees with favorable assignments, raises, or promotions, compared to 88% globally.
