Irish business leaders are cutting costs, yet 79% do not plan to reduce headcount and 89% don’t plan to reduce compensation in the fight to retain talent.
85% of Irish CEOs are confident about their company’s prospects for revenue growth in the year ahead despite economic concerns, according to the latest PwC Irish CEO survey.
At the same time, more than half (52%) of Irish CEOs believe that economic growth in Ireland will decline over the next 12 months (73% of global CEOs say the global economy will decline); 33% of Irish CEOs believe Ireland’s economy will improve in the year ahead (18% of global CEOs believe the global economy will improve).
“For business leaders, striking the right balance between mitigating immediate threats and reinventing their businesses for the future will be a key ingredient for sustainable business growth”
The survey polled 87 Irish CEOs who were part of 4,410 global CEOs surveyed in 105 countries in late 2022.
Challenges to profitability
The study reveals that Irish CEOs are seeing multiple direct challenges to profitability within their own industries over the next 10 years. More than half (53%) see changes in regulation impacting profitability followed by labour/skills shortages (51%), technology disruptors (advanced tech, AI, metaverse, blockchain etc) and changing customer demand/preferences (49%).
Over a third (34%) of Irish business leaders believe that employee resignation/retirement rates will increase in the year ahead (Global: 36%).
Over one in five (21%) Irish CEOs think that their organisation will not be economically viable in a decade if they continue on the current path and do not transform; almost twice as many global CEOs (39%) are of the same view.
Irish CEOs recognise that if their organisations are to remain viable in the long-term, they must invest in their people and technological transformation agendas to empower their workforces. The survey reveals that more Irish CEOs are planning investments in these critical areas compared to global counterparts in the year ahead: automating processes and systems (Ireland; 82%; Global: 76%); Upskilling the workforce in priority areas (Ireland: 80%; Global: 72%) and deploying advanced technology such as cloud, AI, robotics and blockchain etc (Ireland: 71%; Global: 69%).
The war in Ukraine and concerns about geopolitical conflict have caused many Irish CEOs to rethink aspects of their future business models. Many are taking action to mitigate against this exposure including increasing investments in cybersecurity/data privacy (49%), diversifying product/service offerings (46%), adjusting supply chains (41%) and re-evaluating market presence or expanding into new markets (35%).
Keeping an even keel
In response to the current economic climate, Irish CEOs are looking to cut costs and spur revenue growth. 78% have already cut operating costs or are considering to do so in the year ahead; 75% have already raised prices of products/services or are considering to do so in the year ahead.
At the same time more Irish CEOs are less inclined to cut headcount or compensation than global peers. 79% of Irish CEOs say they do not plan to reduce the size of their workforce in the next 12 months (Global: 60%). The vast majority – 89% – do not plan to reduce staff remuneration in order to retain talent and mitigate workforce attrition rates (Global: 80%). 71% will not implement hire freezes (Global: 56%).
“Despite the many uncertainties and risks impacting our economy, the survey suggests that Irish CEOs are confident about their own businesses,” said Feargal O’Rourke, managing partner, PwC Ireland.
“Irish CEOs are also more confident about Ireland’s economy than global CEOs are about the global economy which may well be due to the relative strength of the Irish economy at the moment. Re-evaluating their operating models, continued investment in critical areas and putting their people front and centre are key to ensuring resilience.
“And while there are headwinds, Ireland’s economy remains in a good position. With strong fiscal returns, continued foreign direct investment flows, a thriving export sector, high employment levels and indications that inflation may be easing, there are solid reasons why Irish CEOs have a more positive outlook than many of their global peers.
“For business leaders, striking the right balance between mitigating immediate threats and reinventing their businesses for the future will be a key ingredient for sustainable business growth,” O’Rourke said.