Our CEO survey assesses attitudes under three broad headings, namely a) economic and business sentiment b) the risks and opportunities businesses face and c) the specific actions CEOs are taking to manage these issues.
In the first instance, over two thirds (67 percent) of Irish CEOs are highly positive about their short-term growth prospects and although aware of the challenges posed by issues such as Brexit, are reasonably optimistic about the future. 84 percent of Irish CEOs are confident about Irish economic growth in the year ahead and almost three in four (73 percent) expect positive global economic growth.
According to KPMG Managing Partner Shaun Murphy; “The degree of optimism is understandable - many businesses are doing well and most of the economies Ireland trades with are in reasonable shape.” However, he sounds a note of caution as the potential impact of some developments has yet to be felt; “Brexit and perhaps to a lesser extent the threat of protectionism and US tax policies are all potential game changers for Irish CEOs and the businesses they lead.”
Sixty percent of Irish CEOs surveyed strongly agree that political uncertainty is having a greater impact on their business than they have seen for many years “Brexit is undoubtedly the biggest question facing Irish chief executives, even those who don’t think they are that exposed,” says Danny McCoy, Chief Executive of business representative organisation, IBEC. “I don’t think people fully recognise the level of interconnectivity.” Many companies who export to Britain are still in “a wait and see phase”. However, McCoy also believes that a major shock to trade with Britain “creates opportunities elsewhere for Irish businesses.”
Brian Daly, Head of Brexit at KPMG in Ireland, believes that perhaps the biggest cause for concern now is the risk that the UK will have to leave the EU with no deal, or a bad deal, in place. This risk may be heightened in light of the June 2017 election result, which could delay the start of substantial negotiations with the EU whilst the two-year clock on the March 2019 deadline is running and can only be extended with the unanimous consent of the EU 27. “It is in my view important to fully understand the impact this could have on your business and to have a contingency plan in place for such an outcome. Ideally the analysis will not only identify challenges but also opportunities for the business”.
Globally, innovation remains a key ambition for business leaders, and Irish CEO sentiment reflects that trend. For example, more than 80 percent of Irish CEOs say they are currently pursuing an innovation-led business transformation to drive growth. Meanwhile Irish CEOs see technology as having the single biggest impact on their business in the next three years.
While Ireland’s workforce has a lot going for it, attracting the right new talent to drive technology-related innovation is a concern for Irish CEOs. Nearly 40 percent of Irish CEOs believe that attracting new talent is the biggest technology-related challenge that their organisation will face in the next three years. “There’s a tightness in talent, particularly if you are looking say for a highly skilled engineer,” says Anna Scally, Head of Technology & Media and Fintech Lead with KPMG. “However it’s a worldwide issue - not just an Irish one.” Sectors such as FinTech have significant potential and strategic tax policies such as R&D incentives have undoubtedly helped foster innovation. However Scally believes that “There’s room for improvement in Ireland’s bid to attract the right people as personal tax is undoubtedly an issue when competing for high level talent.”
Irish CEOs are facing challenges they typically didn’t grow up with and having to take leadership positions in areas where they have little personal experience. Four in five of CEOs surveyed are concerned about their capabilities around mission critical business issues they have not previously encountered. A decade ago, themes such as cyber security, data and analytics, artificial intelligence and cognitive computing were niche themes in the realm of corporate futurism. Now they are on the board agenda.
Irish CEOs, in keeping with their global peers, are reassessing their skills and attributes to help them lead better. More than 9 out of ten have taken a course or a qualification in the past 12 months in order to help disrupt or challenge their role. 70 percent agree that they are now “more open to new influences and new collaborations than at any time in their career.” According to Shaun Murphy, this is entirely consistent with staying abreast of change and disruption; “The CEOs that we work with may occasionally be apprehensive about change - but most have an appetite for tackling issues and seeing change as an opportunity to be explored rather than an issue to be feared.”
With continued pressure on the bottom line, Irish CEOs are keenly focussed on managing their businesses’ core strengths while transforming the way they create value.