Despite headwinds, CEOs remain focused on growth

Transformative technology and workforce resiliency remain top priorities, even as most CEOs prepare for a downturn.

The CEO job is highly demanding even in relatively stable business times. But then “stable” is not a word that anyone would use to describe the last few years.

Start with the unprecedented, life-altering challenges of the pandemic. Fast-forward a year to the warp speed return to growth, fueled by rapid technology innovation and a hypercompetitive battle for talent. And now make plans for another complex pivot amid increasing economic gloom and geopolitical pressures that have business leaders mapping out a third major U-turn in three years. It’s enough to give the C-suite a collective case of whiplash.

Despite this series of once-in-a-generation challenges, though, our latest CEO survey found U.S. chief executives in a surprisingly positive frame of mind, all things considered, even as they focus on helping their teams mine new levels of resiliency to navigate what most expect will be some tough business cycles ahead.

Here’s a closer look at some of the insights from our new report, the KPMG 2022 U.S. CEO Outlook.

The big picture

A few major themes on overall business confidence emerged from our survey this year, which included feedback from 400 CEOs at large U.S. companies.

For starters, 9 in 10 of the CEOs expect a recession in the next 12 months—and just one-third think the downturn will be mild or short. But when looking out over three years, 95 percent of respondents remained confident about their companies’ growth prospects over that longer term.

Indeed, that bad news/good news dynamic resonated throughout much of this year’s survey. For example:



Percentage of CEOs who said the looming recession will hamper growth, but at the same time, 83 percent expressed confidence in the resiliency of both their company and their industry.



Anticipated they would need to cut some staff in the next six months, but then 92 percent said they expected their headcount would actually grow over the three-year period.



Despite significant economic concerns from CEOs, more than half expect annual earnings growth of at least 2.5 percent over the three-year period, and a similar number (56 percent) said they were likely to pursue an acquisition to support growth.

Full speed ahead on digital

Despite the financial headwinds, the CEOs in our survey—by a wide margin—said that doubling down on technology to advance digital engagement across the business was their top priority. Three-quarters of the respondents said they needed to move more quickly on reallocating capital to support digital opportunities, and nearly 8 in 10 said they planned aggressive digital investments to advance their digital positioning compared to competitors.

Given the uncertain financial picture, inflation-proofing the business by managing costs more tightly was a consistent overall theme as well, although just 22 percent of the CEOs ranked this as their top priority. But for many CEOs, the prioritization of technology growth and cost management are increasingly intertwined. For example, many of the rapid digital innovations borne from the pandemic—whether through how employees work or how companies engage their customers—have become important growth drivers while also exposing other capital allocations as increasingly inefficient or even obsolete.

One allocation that is not likely to change is the commitment to cyber-securing the business, with 81 percent of the CEOs we talked to indicating that cyber threats and the related business risks continued to rise, but just 39 percent felt their companies were well prepared—a decrease in confidence from previous years.

1 Advancing digitization and connectivity across the business
2 Inflation proofing capital and input costs
 Employee value proposition to attract and retain the necessary talent

Purpose and people

ESG and talent were two other major areas of attention in our survey, with CEOs feeling pressure on both fronts due to the challenging macroeconomic forecast.

The status of ESG efforts was especially conflicted. On the one hand, 76 percent of the respondents said that issues such as climate change and income inequality are direct threats to their business, and another 70 percent said their ESG programs had improved business performance. But then 59 percent also acknowledged that they planned to pause or reconsider their efforts over the next six months amid economic uncertainty.

Meantime, the battle for talent continues, and especially as the unemployment rate remains low despite that economic uncertainty. Three-quarters of the CEOs in our survey were concerned about their ability to retain talent amid the conflicting pressures of the rising cost of living and demand for higher wages against the potential need for hiring freezes.

One way that CEOs are trying to keep talent engaged is through an increased investment in developing their workforce’s digital skills: 54 percent of the CEOs said they are putting more capital investment into technology training and capabilities for employees—a bump from the previous year in which investment was more focused on directly purchasing new digital tools.

Although 70 percent of U.S. CEOs said their ESG programs improved their financial performance, 59 percent said they plan to pause or reconsider their ESG efforts in the next 6 months.
Insights from KPMG’s 2022 CEO Outlook

Making a list

Despite the challenging economic landscape that most CEOs in our survey expect in the year ahead, it was interesting to note that financial concerns were not top-of-list for the CEOs from the large companies that we surveyed. In fact, when asked to detail the most pressing concerns for their companies, the top five that emerged were:

Pandemic fatigue among employees — More than 75 percent of CEOs are concerned about staff burnout from the roller-coaster of the last two years.

Geopolitical uncertainty
— Among CEOs, 81 percent said geopolitical uncertainty was increasing fears of a cyber attack.

Emerging or disruptive technology — Organizations are bucking recent technology investment trends by focusing on workforce development (54 percent) as opposed to new technology (46 percent)

Economic stressors such as inflation, interest rates, and recession expectations — A majority (91 percent) of CEOs believe there will be a recession in the next 12 months, with only 34 percent believing it will be mild and short.

Supply chain — Organizations are doubling down on technology, including real-time, end-to-end analytics, to identify issues and optimizations that can improve visibility across the value chain.

Contact us

Paul Knopp

Paul Knopp

Chair and CEO, KPMG US

+1 847-612-3437
Lisa Massman

Lisa Massman

Principal, Human Capital Advisory Leader, KPMG US

+1 213-955-1524