BRUSSELS - Belgian CEOs are generally optimistic about the growth of their own companies and the growth in their own country, but they have less faith in worldwide economic growth. The four biggest challenges for our business leaders are operational risks, cyber security, technological disruption and geopolitical changes. This was revealed by the CEO Outlook that service provider KPMG carried out among 1300 business leaders worldwide - and which also included our country for the first time.
Belgian CEOs are self-assured about the prospects for growth of their own companies: 96% expect that their firm will grow in the coming three years. This means that our CEOs are slightly more positive minded than the worldwide average (90%) and the average in the Benelux (80%). Nevertheless, they are modest when it comes to the growth figures: only 16% believe that the turnover of their company will rise by more than 2% (Benelux: 32%, globally: 44%), and 8% see the number of employees increasing by more than 5% (Benelux: 39%, globally: 37%).
In macro-economic terms, Belgian CEOs have more confidence in the growth of the national economy (84% confidence) than in the world economy (60% confidence). In global terms, 67% of the CEOs have confidence in worldwide growth and 74% in growth of their national economy. Within the Benelux, we see a similar picture: 63% confidence in growth of the world economy compared to 73% confidence in the national economy.
When surveyed about how they see their companies growing, 32% of our captains of industry assume that this will occur through organic growth such as research & development, capital investments and recruiting (Benelux: 42%, worldwide: 28%). Other growth opportunities consist of mergers and acquisitions (24%, Benelux: 14%, worldwide: 16%), strategic alliances with new partners (20%, Benelux: 23%, worldwide: 33%) and joint ventures (16%, Benelux: 12%, worldwide: 13%).
Koen Maerevoet, CEO of KPMG Belgium: “Generally, we can say that our business leaders have considerable confidence in the growth prospects of their own companies, and those of the national economy. There is a certain modesty in their ambitions, and they are primarily looking for innovation, investments and talent to realize this growth.”
The biggest challenge for Belgian CEOs is how to handle operational risks – the risks associated with processes and systems used within a company, such as the quality of the production chain, efficient deployment of people and resources, project management, etc. Of the surveyed CEOs, 64% see this as one of the biggest challenge: nearly twice as many as in the Benelux (34%) and globally (33%).
In addition to the operational risks, Belgian CEOs regard cyber security (48%) and technological disruption (40%) as the second and third biggest challenges. Certainly in the area of cyber security, we see that our CEOs consider this as one of the larger obstacles compared to their counterparts in the Benelux (34%) and the worldwide average (35%). Still, 60% indicate being "well" to "very well" prepared for a cyberattack, which is significantly higher than in the Benelux (44%) and worldwide (51%), and 80% even assume that the strategic impact of a cyberattack can be limited (Benelux: 47%, worldwide: 56%).
The use of data is also on the agenda of Belgian CEOs. This week - on 25 May - the new European privacy legislation, the GDPR, goes into effect: 76% of our business leaders consider the protection of personal data of customers as one of the most important responsibilities they are confronted with (Benelux: 54%, worldwide: 59%).
Koen Maerevoet: “This shows that the increased importance of privacy in the public debate has had an impact on our CEOs. What's more, our business leaders consider the handling of personal data of customers as strategically important enough to take a personal initiative on it. After all, companies run the risk of high penalties and significant damage to their reputation if they do not comply with the new legislation.”
A fourth challenge is the impact of geopolitical decisions on business operations. Maerevoet: “We have seen an increase in protectionist measures worldwide in the past few years. There is uncertainty caused by Brexit: our companies still do not know what form the economic cooperation will take once the United Kingdom leaves the EU. Concluding trade and investment agreements are no longer taken for granted, as witnessed by the CETA debate in our own country. We are also now being confronted with a possible trade war between the United States and its most important trade partners.”
Worldwide, we see that 55% of business leaders regard this ‘return to territorialism’ as the biggest threat to the growth of their own companies. In Belgium, we see that only 36% of our CEOs consider this as a big risk. “This may indicate that they estimate this problem to be less urgent, or that they are less informed on the possible impact of protectionism on their own business operations. Geopolitics are not new, but their impact on companies has increased enormously over the past years. CEOs are well advised to closely follow these international political and diplomatic decisions. They don't need to become politicians themselves, but they must keep the line open at the highest policy level and act in the best interest of their company and their employees.
To ensure sustainable growth, companies must be able respond to changing consumer behavior. Millennials - born between 1980 and 2000 - have enormous purchasing power, but this digital generation is far more focused on a personal consumer experience. Sustainability and corporate social responsibility are higher on the agenda of this generation. 48% of Belgian CEOs indicated that they understand millennials require a different approach that is more direct, more personal and more digital, which is in line with the worldwide average of 45%. Dutch firms are the most advanced in this (56%), while Japanese CEOs show the least response to the generation shift (35%).
About the 2018 CEO Outlook
For the fourth time, KPMG surveyed over 1,300 CEOs worldwide about the prospects and challenges they see ahead. All companies concerned generate sales revenue of at least 500 million dollars on a yearly basis, with one-third of them exceeding 10 billion dollars. This is the first time that Belgian CEOs also participated in the survey.