CEOs have a lot to fear and even more to focus on in the current economic climate. As a recent PWC CEO survey shows, confidence at the top of businesses is growing but only slowly and with a heavy pinch of caution. Their recent data (based on interviewing over 1,300 CEOs across 68 countries) finds that just over one third are very confident about growth prospects in the next 12 months (up from a low of 21% in 2009). Meanwhile, only 28% think economic growth will slow in the next 12 months, compared to almost one-in-two back in 2012.
Our client work confirms that CEOs are trying to do three main things to make their organisations more resilient, each of which needs a sharper and more strategic people focus to be effective:
- Focusing on a few, well-chosen pockets of opportunity to stimulate growth: this will require a better use of big data (to assess the opportunities themselves) and a greater use of internal collaboration (to leverage those opportunities chosen). For example, the integration of employee, customer and financial data-sets and the generation of social business analytics is becoming more pivotal here.
- Focusing on the customer to stimulate new sources of revenue growth. This requires building a culture with an “outside-in lens”: getting employees to put themselves in the customer’s shoes, innovating to create service and product improvements and even involving customers themselves in planning the future (through customer panels, innovation platforms etc.)
- Improving operational effectiveness to balance efficiency with agility. To achieve this, CEOs will need to increase the extent to which they both delegate power within the organisation and collaborate with other organisations in the outside world.
And when you look at the current winners in certain sectors, you can see how these factors are playing out in a positive way. Take Sainsbury’s as an example from close to home:
- they have chosen not to expand internationally in the same way as many other retailers but focus on gaining market share in the domestic market
- they have used smart integration of data to identify the in-store employee behaviours that will best generate more intense customer loyalty
- CEO, Justin King, and his team have done this in the chosen market by focusing their own colleagues relentlessly on the customer and getting both managers and the front-line in generating improvements at an operational level (rather than enforcing them from above).
There is also a lot of evidence that CEOs are anticipating significant organisational change over the next 12 months. Between two-thirds and eight-in-ten leaders believe they will be creating such change with regard to customer loyalty approaches, talent management strategies, investment in technology, organisational structure and improving their innovation capacity. From our work at Engage, we believe this has two big implications, one for the HR function and one for the communications function:
- CEOs will need to deploy new or more effective approaches to developing their own leadership pipelines: there will need to be more co-creation with senior managers outside of the Board being involved in strategic decision-making. Succession planning and leadership development will need more proactive attention. And high potential leaders will need to gain more exposure through rotations across functions and geographies. The HR function will have a much more pivotal role in making this happen.
- CEOs will need to communicate better with their stakeholders across the board: from bringing customers inside the organisation more to engaging employees in the strategy of the firm; and from being more inclusive with local communities to engaging with social media users, CEOs will need better support from their communications functions.
If CEOs are ever to get back to the high levels of confidence about future revenue growth seen back in the pre-crisis days, these organisational factors will need addressing as a priority and both the HR and communications functions will be pivotal in delivering the change needed within companies to get there.