Survey respondents call out key social hope for future: ‘Embracing the economic opportunities that climate change and the energy transition present.’
We are in the era of talent. That is the clear message from Keeping us up at night: The big issues facing business leaders in 2022. Conducted in November 2021, KPMG’s annual survey of over 400 Australian CEOs, emerging business leaders, and Non-Executive Directors, defines the key challenges facing their organisations and Australia in 2022, and also, in the next 3 to 5 years.
Top three concerns for 2022
- Talent acquisition, retention, and re/upskilling to meet a more digitised future – 69 percent
Overwhelmingly talent acquisition, retention, and re/upskilling to meet a more digitised future was seen as the biggest challenge for the year ahead, with 69 percent nominating this issue.
- Dealing with cyber vulnerability – 50 percent
Today, the risk associated with digital transformation has moved into a different phase as many organisations have been forced to embrace new technologies and ways of working to navigate COVID 19. This has also placed cyber vulnerability in the spotlight.
- Challenges and benefits of employees working remotely – 48 percent
In third place for this year was the challenge (and benefits) of remote working (48 percent), while digital transformation – optimisation and extracting organisational value from it – came in fourth at 44 percent.
“Overwhelmingly, the top three concerns for Australian leaders next year are about responses to a post COVID world,” said Alison Kitchen Chairman KPMG Australia. “We see this reflecting what can be characterised as ‘the Great Renewal’ – a time when businesses will be focused on people and the environments in which they operate. The survey results strongly indicate that is about both seeking and developing talent as well as staying abreast of the risks and opportunities in a rapidly digitising workplace.”
Ms Kitchen said these themes were also reflected in the mid to longer term findings of the survey where there was a refocus on growth and innovation.
Top issues for the next 3 to 5 years
“Looking further ahead, the notable trend is in the longevity of the respective top four issues,” said Ms Kitchen. “While digital and talent remain the top two concerns among executives for the next three to five years, it’s interesting that cyber vulnerability fell to 35 percent and the remote working issue plummeted in priority list to just 10 percent in the medium term.”
Other top ten issues for the forward 3 to 5-year period included ESG, purpose, diversity, and agility. Interestingly, none of these were placed in the 2022 top ten list.
Ms Kitchen added: “It is clear that as Australia starts to emerge fully from the lockdowns of the last two years, having enough skilled talent to meet customer needs is the key challenge concerning all businesses – and they don’t see this changing in the next few years. The challenge of digital transformation, which was top in our previous survey two years ago, is still a key issue and will remain so in the next 3 to 5 years. The two issues are inter-connected, given that upskilling to meet a more digitised future was one of the planks of the concern over talent.”
When respondents moved from a focus on their own organisations to their broader views on society’s challenges as a whole, the skills gap was second highest nomination, with Australia facing a lack of data scientists and technology specialists.
“One of the most intriguing findings is that ‘identifying opportunities for growth’ came in at only 11th place for 2022,” Alison Kitchen said. “It did however rise to third place in 3 to 5 years from now. This suggests that companies – possibly concerned by the skills shortage – are more focused on meeting current demand in 2022, rather than sourcing opportunities they may not be in a position to fulfill in the future.”
Top ten issues % of all respondents
|Top 5 challenges in 2022||Top 5 challenges in 3-5 years|
|Talent acquisition, retention and re/upskilling to meet a more digitised future.||69%||47%|
|Dealing with cyber vulnerability.||50%||35%|
|The challenges and benefits of employees working remotely.||48%||10%|
|Digital transformation & optimisation and extracting organisational value from it.||44%||48%|
|Dealing with evolving regulatory processes, reporting changes and impacts.||34%||30%|
|Designing and implementing an ESG strategy that will deliver benefits in short and long term.||32%||33%|
|The need for greater agility and flexibility in your organisation to meet opportunities and challenges.||32%||29%|
|Balancing short term versus long term value creation in your organisation.||26%||25%|
|Building diversity into leadership and talent mapping.||25%||29%|
|Building greater purpose into organisational culture.||24%||24%|
While the survey did group respondents into current and emerging leaders, there was no noticeable difference in responses between the two cohorts. This suggests there will not be any radical change of emphasis ahead unless circumstances force such a response.
In addition, it appears business leaders believe that the present fears over cyber-security would be at least partly resolved over the next few years. At the same time, the current debate over flexible working and the degree to which staff will come back to the office will be answered one way or the other by 2026.
In other notable findings, designing and implementing an ESG strategy was in 6th place, both now and in 3 to 5 years. This would seem to suggest that it is now accepted as an important issue facing executives.
“ESG strategy will continue to be an ongoing key priority for all companies in future year,” Alison Kitchen said.
New social change dimension – hopes and challenges
For the 2022 edition of the survey, KPMG added another dimension. Rather than focusing solely on the key risks seen by business leaders, respondents were asked to tell KPMG what areas of social change they are hoping to see develop to have a positive effect on the economy and society. The clear top response was: ‘Embracing the economic opportunities that climate change and the energy transition presents.’
Dr Brendan Rynne, KPMG Chief Economist, said: “The great existential threat of our lifetime – global warming and climate change – is seen by business leaders as an opportunity to contribute to improving the outlook, via transformation and reversal. Not only is working on climate change and energy transition seen as a social benefit but it is also recognised as a key area for potential economic opportunities.”
Dr Rynne said that researching and developing new technologies, bringing electricity costs down as renewable energy becomes more cost effective, and implementing adaptive behaviours are viewed as catalysts for change. He noted that these are also likely to provide economic stimulus for those supplying and consuming the ‘new world’ services.
“While preparing for a future skills gap was the second biggest societal issue (after climate), it was notable that “shifting levels of regional/global tension” was regarded as the third biggest challenge facing Australia,” he said, “Given that international co-operation will be crucial in meeting decarbonisation targets, that was a sobering finding.”