CEOs’ Most Important Business Challenges In 2022
For employers only
Thinking about what challenges you should prioritize as an employer? Read Timothy J. McClimon's article to find out what should you be on the lookout for in 2022.
The Conference Board recently released the results of its 2022 survey of CEOs called Reset and Reimagine: Surviving and Thriving in a Uniquely Challenging Business Environment, and it is chock full of interesting perspectives about what CEOs think are important business challenges in the coming year. Topping the list were Covid-19 disruptions, rising inflation and labor shortages.
While it shouldn’t come as a surprise that Covid-19 continues to concern business leaders, other worries such as rising inflation, labor shortages, supply chain disruptions and changing consumer behaviors were external factors that CEOs think will have the greatest impact on their businesses this year globally — although US-based CEOs were more concerned about labor shortages (ranking this issue number one) and cybersecurity (ranking it number five) than some of their counterparts around the world.
Low on their list of concerns were corporate debt levels, vaccine availability, the future of cities, cryptocurrencies and shareholder activism. Climate change ranked relatively low on the list of concerns (number 16 globally), but some believe that is because climate change is now viewed as more of a long-term risk rather than an immediate concern and mitigating climate risk is becoming part of the day-to-day operations of many businesses rather than something that CEOs see as a disrupting external issue.
When asked about the internal issues that their companies will focus on the coming year, areas of high focus included attracting and retaining talent, accelerating digital transformation, improving cash flow, developing the next generation of leaders and modifying their business models.
According to the study, the interest that CEOs have in developing new leaders is driven by the knowledge that technical skills alone are not sufficient to optimize performance in the current business environment and the new hybrid work model requires new leadership skills such as agility, resilience, empathy, digital fluency, inclusive leadership and interpersonal communications.
Making the low end of the list of internal areas of focus for 2022 were revisiting a company’s mission and/or purpose, paying down debt, preparing for rising interest rates, decentralizing decision making and significantly changing capital allocation priorities.
The Conference Board study also concluded that there is an increased focus on environmental and social issues, equity, inclusion, employee well-being, workforce management and community impact – all significant aspects of many companies’ ESG strategies.
When asked which groups are most important when the board and C-suite leaders make decisions, CEOs in every part of the world rated customers first, employees second and shareholders third, reflecting a significant move toward what many are calling “stakeholder capitalism,” a management theory that businesses should serve the long-term interests of multiple constituents, not just shareholders. In fact, for CEOs globally, evolving stakeholder expectations of the role of businesses in society ranks far above shareholder activism as a factor for companies in 2022.
Finally, while more than 40 percent of CEOs globally said their companies are well prepared for a major crisis related to a pandemic, financial instability or an economic downturn, less that 40 percent believed they are well prepared to meet challenges posed by a major crisis related to inflation, cybersecurity, supply chain disruptions or climate change, which should raise questions from stakeholders about the resilience of some enterprises as we enter 2022.