Back in business: global CEOs eye expansion rather than cuts
This WORKTECH Wednesday Briefing, new surveys from KPMG and Gensler suggest that companies are feeling more confident about the future and less inclined to slash office space
Could the pandemic’s negative impact on business confidence finally be receding? CEOs of the world’s largest businesses are increasingly more optimistic about the future of their companies according to KPMG’s 2021 CEO Outlook Survey.
At the height of the pandemic, CEOs were all set to vastly reduce their office footprints. However, this desire for less office space has now drastically fallen as a sense of normality is gradually returning. There is now instead a desire to introduce flexible working cultures.
The survey asked 500 CEOs from some of the world’s most influential companies (annual revenues over US $500m) about their strategies and outlooks for the next three years. They included CEOs from 11 key markets (Australia, Canada, China, France, Germany, India, Italy, Japan, Spain, the UK and the US) who were surveyed between January and March 2021.
The survey found that 60 per cent were confident about global economic growth. Stronger growth prospects have led to companies wanting to invest in expansion and business transformation, with 69 per cent identifying inorganic methods such as mergers and acquisitions as the main strategy for growth.
‘Stronger growth prospects have led to companies wanting to invest in expansion…’
If this is the case, then companies will require more office space and more adaptable workplace environments to facilitate the growth and transformation of their business. In fact, only 21 per cent of CEOs said they still planned to downsize. This is a huge change from the 69 per cent of global leaders who were planning to downsize in August 2020.
CEOs are also focused on providing their employees with flexibility. 51 per cent of CEOs surveyed are looking into shared office spaces and 37 per cent are implementing a hybrid work model for their staff. This hybrid model will most likely mean employees will work remotely for two or three days a week.
The pressure on companies to tackle climate change and leave a positive impact on society is also mounting and CEOs are starting to recognise this. Over a quarter of business leaders are now concerned that failing to meet climate change expectations will result in the public markets not investing in their business; 58 per cent said they face increased demands from stakeholders for more reporting on ESG issues.
However, the KPMG survey suggests how companies remain reliant on government funding to achieve net zero carbon goals – 77 per cent of CEOs said that government stimulus will be required.
Stakeholder awareness of climate change problems is not the only risk to growth that senior executives identified. CEOs also suggested threats to the supply chain and cyber security were growing issues that needed to be addressed. 56 per cent of CEOs recognise that their business supply chain has been under increased stress during the pandemic and cyber security risk has emerged as the number one risk to companies (up from fifth in 2020).
‘For the first time since the crisis began, CEOs globally seem to be stabilising …’
Although the pandemic is not yet over and many doubt there will be a speedy return to normality, for the first time since the crisis began, CEOs globally seem to be stabilising their operations. This growing business confidence is likely to bolster the office market – and further proof of a retreat from companies slashing their real-estate footprint can be found in a new US workplace survey from Gensler Research Institute. This confirms that ‘the workplace remains the preferred location for the majority of work activities and leaders at top-performing companies are more likely to be planning to increase their real estate footprint post-pandemic.’
The Gensler report surveyed more than 2,000 business leaders and knowledge workers across 10 industries in May and June 2021. It defined top-performing companies as organisations that have recently been ranked on a ‘Most Admired’, ‘Best Places to Work’ or ‘Most Innovative Companies’ list. It reports that 44 per cent of top-performing companies expect to increase real estate needs after the pandemic, against just 11 per cent of unranked companies.
You can find out more about what companies are planning in real estate as they bring employees back to the workplace, by viewing WORKTECH Academy’s ‘Office Return Radar’.
Asia Pacific in touch with trends
There is an upcoming opportunity for the WORKTECH community in the APAC region to check in with the latest global workplace trends. WORKTECH21 APAC is a free-to-attend virtual event that will be held on Wednesday 22 September. More than 450 delegates have already signed up in the Asia-Pacific region. Expert speakers include representatives from EY, Airbnb and ANZ Bank, and presentations will explore how agile working is the future and how once-marginal workplace ideas have gone mainstream. More details here.