03/22/2017

Is your talent brand fit for the future?

Author: Agnès Hussherr, Global Human Capital Leader Agnes Hussherr

These days, news headlines about the workplace of the future are dominated by advancements in technology, automation and robotics.  There’s no doubt that it’s an exciting time of transformation, opportunity and change for all of us in Human Resources.  Interestingly, at the same time, an organisation’s brand has become more accountable to its people than ever before. 

And with 77% of CEOs seeing the availability of key skills as the biggest threat to their business, it’s easy to see why.  The skills they need most are uniquely human ones; problem solving, creativity, innovation, adaptability and leadership.  These skills are crucial to achieving the balance between technology and talent in the workforce of the future – a balance that will soon be a necessity across all industries.  That’s why 60% of CEOs are rethinking their HR function and a substantial 78% say they have already changed their people strategy to meet this need.

CEO Survey_HC cutIn light of these results, and with so much focus on automation and technology, there are some important questions that organisations need to ask themselves: do your people know and trust that they are your priority?  Are you telling the right story to ensure you’re attracting and keeping the talent you need and building a leadership pipeline?

An organisation’s talent brand has to reflect every aspect of its personality; culture and values – and what it stands for; its purpose.  And in doing so, it must also represent your people; your current workforce, the talent you want to attract and your alumni.  The results of our recent research: Winning the fight for female talent showed that from the outset, female talent want to see themselves reflected in a brand.  Women want to work for a brand that values diversity and has visible female role models that they can relate to.  In fact, the report finds that an inclusive employer brand with a transparent and proactive diversity programme, is now critical to attracting female talent.   

This demonstrates the importance of an authentic, ‘lived’ talent brand.  People must not only trust a brand before they will even consider working for them, they want to see themselves reflected in it.  The age old recruitment phrase ‘a good fit’ now carries much more weight and goes both ways, with top talent asking themselves if an organisation reflects their personality and what they stand for. 

Business leaders in this year’s CEO survey placed human capital second only to innovation as a priority, with digital and technology capabilities coming in third.  Indeed, balancing people and technology in the future workforce is going to be one of the biggest challenges facing businesses across all industries.  CEOs realise that to do this successfully, they’ll need skills that technology alone cannot provide.

So every organisation needs to ask itself: does my talent brand tell a story that will attract and retain people with the right skills to succeed – now and in the future?  Because technology is still only part of the story – a story which stars people.

As Global Human Capital Leader, Agnès drives the people strategy for the PwC Network including the workforce of the future, development, performance and talent initiatives. Based in Paris, Agnès also sits on the PwC France leadership team, as Human Capital & Culture Managing Partner.  As an Assurance partner in Banking & Capital Markets, she retains responsibility for several key clients. Read more

03/20/2017

Is ‘crisis-ready’ the new normal in a volatile world?

Author: Melanie Butler, PwC’s Global Crisis Centre LeaderMelanie-butler.jpg.pwcimage.200.252

I struggle to remember a time when the world seemed quite as unpredictable as it does today. The rise of populism, a seemingly resurgent Cold War, the ongoing refugee crisis and many other geopolitical and economic scenarios have challenged long-held assumptions and confounded politicians, pollsters, economists and media commentators alike. Brave is the pundit who states that they know what will happen next.

Today’s CEOs are painfully aware that their organisations may have to fend off calamity as a result of events that they could neither anticipate nor control. Indeed, it seems that managing crisis is becoming a new normal for businesses. When we surveyed CEOs on the topic of crisis recently, nearly two-thirds (65%) said they had experienced at least one crisis[1] in the past three years. And the future looks equally hazardous. More than 30% predict they will face more than one crisis in the next three years, compared with just 16% who think they will face fewer.

Crisis management appears to fall squarely within the remit of the CEO. An overwhelming 91% of CEOs we spoke to told us they were in charge when a crisis hits. I commend them for their strong leadership, yet they have practical concerns about crisis management. Our survey found that 65% of CEOs feel most vulnerable about their ability to gather information quickly and accurately in a crisis while 55% worry about communicating with external stakeholders and employees. To add to the pressure, over half (57%) admit that their business continuity plan is out of date.

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Of course, saving the company from disaster is not the job of the CEO alone. Effective crisis management is a team effort. It involves preparing the right strategy, governance structures, teams and plans so that, in the event of a crisis, the response can be implement, adapted and scaled appropriately. It also involves empowering the right people to make decisions so that the company keeps the trust of customers, employees and other stakeholders during a period of serious uncertainty. If decision-making is paralysed by the fear of making the wrong call, the CEO could end up isolated, undermined and exposed.

To be good at crisis management, companies need to be prepared - and prepared to work at it. Yet often they struggle to devote sufficient time and resources to creating plans based on ‘what if’ scenarios. There are signs this could be changing, however. Nearly a third (30%) of the CEOs we spoke to have proactively started crisis planning, with another quarter planning to do so over the next year.

There is no such thing as a ‘typical’ crisis. They are all different. But companies that are well prepared can often see their top-line improve after a crisis.  Thirty-nine per cent of CEOs said that a well-managed crisis response actually contributes to revenue growth, no doubt reflecting the customers’ confidence that the company acted responsibly and in-line with its corporate values. Those companies that are well-prepared to face unforeseen events tend to share some common characteristics. They are proactive about identifying, monitoring and mitigating both existing and emerging risks. They make sure that they have the right in-house capabilities to manage a crisis and they plug any gaps before disaster happens. They have a crisis toolkit of processes, resources and technologies and they organise crisis drills to ensure that key personnel are battle-tested. They are clear about who is responsible for what in a crisis and they empower the appropriate individuals to take decisions. Finally, they have a leadership team that is continuously striving to improve the organisation’s crisis capabilities, particularly in the wake of an actual crisis. Wise CEOs know that a good time to prepare for the next crisis is just after the last one has taken place. 

Melanie Butler leads PwC’s Global Crisis Centre “GCC”, which acts as a trusted guide to clients as they prepare for, respond to and recover from the crises they face.  She has worked with and alongside governments and organisations to help them confront crises with confidence and to resolve the critical problems they encounter - and leverages the expertise of our crisis teams across the network so that organisations can reassure their own clients, communities and stakeholders that they’re able to manage crisis situations effectively. Read more

[1] For the purposes of this research we define a ‘crisis’ as when one or more triggers or stress events significantly impacts or threatens the continuity of ‘business as usual’.

 

 

03/16/2017

Turning confidence into performance: The private company findings from the 20th CEO Survey

Author: Stephanie Hyde, Global Entrepreneurial and Private Business Leader Stephanie Hyde

It’s the 20th time PwC has run its annual survey of the world’s leading CEOs, and as usual, there are some important and thought-provoking results. Taking a deep dive into the private company CEO views emerging from the Survey highlights a number of areas that private businesses need to focus on if they are to deliver on their ambitions for growth amidst a turbulent and uncertain market environment. The pace of technological change continues to quicken, it’s increasingly difficult to find people with the ‘right skills’, and the gaining and keeping of public trust for corporations is becoming a more important concern. Exploring the data in more detail, and seeing how different markets and sectors are thinking, provides a good baseline on which you can evaluate where you are in your business compared to where you want to be.

What are private company CEOs thinking, as we look ahead to 2017, and beyond? What stands out most is their self-confidence. CEOs in general are relatively gloomy about the immediate prospects for the global economy, but they’re all positive about their own prospects, and none more so than private companies. We see that 86% of these CEOs expect revenue growth over the next 12 months, up 5% from 2016 – a significant jump. In fact, it's the first time in five years that private company CEO confidence has been higher than that of public company CEOs. Likewise 92% of private CEOs expect growth in the next three years. So how well-founded is this optimism, and what challenges might they face in turning confidence into performance?

PwC_Rep_USA_SF_JFB_0171It’s not easy to find definite answers to the first of those questions. The data suggests that private businesses are more cautious than public ones when it comes to strategies for growth, or perhaps lack the skills or resources to fully exploit the possible options. Fewer private companies plan to accelerate growth through outsourcing, acquisitions or new collaborations with SMEs or entrepreneurs, though the number planning new M&A activity is on par. By contrast, when it comes to the challenges they face, the picture is much clearer. Finding and retaining people with the right skills remains a bigger issue for private companies, and especially for family firms and other companies that can’t offer shares or options to attract the best. But the real message for this sector is technology – both the risk it represents and the opportunities it opens up.

The survey results suggest that private company CEOs are markedly less concerned about cyber threats than their public company peers. This is a concern, given that there is growing evidence that hackers are now targeting smaller and private businesses, because they are likely to have less secure systems – and less money to spend on updating them. I think this particular finding really stands out for me as a red flag for the sector. Private companies have to take this issue more seriously, and do so with real urgency. And the flipside of the digital question is almost as worrying, though for different reasons. Nearly three-quarters of private companies expect their markets to be transformed by technology over the next five years, but it’s far less clear how many of those CEOs are acting on this expectation and actively seeking to transform their own business so it can to survive and thrive in that new environment. Our own experience of working with the sector suggests that private companies in general are lagging public ones in this area. With so many new pay-per-use and cloud-based apps now available, there really is nothing standing in the way of even very small companies taking full advantage of  the possibilities of digital. Indeed, they can often do so more nimbly and cost-effectively than many of their larger competitors, who are often encumbered with legacy IT infrastructure.

Taking a step back, I think that many of the findings in this year’s CEO Survey echo those we found in the 2016 Family Business Survey. That study looked at the issue of the ‘missing middle’ in family firms – in other words, the need to bridge the gap between running the businesses day to day, and thinking in generations. Private companies in general need to develop robust strategies for the medium term, covering issues like talent management, innovation, and the use of new technology. This is where a strong board can be invaluable. I’ve seen that many successful private companies have been able to take advantage of quicker decision-making to be more agile in the market. Experienced and objective non-execs can provide not only valuable know-how, but rigorous oversight, ensuring the necessary strategic plans are not only developed, but appropriately challenged, efficiently implemented, and regularly monitored. That, in the end, is what will help turn confidence today into performance tomorrow.

Stephanie sits on the PwC Global Leadership Team as Entrepreneurial and Private Business Leader and is also a member of the PwC UK Executive Board, as Head of Regions. The Global Entrepreneurial and Private Business segment works with over 100,000 businesses, and contributes over 20% of PwC’s global revenues. Starting with the firm in 1995, Stephanie became a partner in 2006 and joined the Executive Board in 2011. She has worked in a diverse range of industries from energy and defence to pharmaceuticals and manufacturing. Read more

03/13/2017

Inside the mind of the investor: how CEOs can improve engagement

Author: Richard Sexton, Vice Chairman, Global Assurance at PwC RS pic

I’m pleased to announce that this year’s Global Investor Survey has now been released. Following the success of last year’s survey, we again set out to gauge sentiment among investment professionals and compare it with the views of chief executive officers (CEOs). We asked both groups for their views on growth prospects, threats facing companies today and the challenges and opportunities presented by technological innovation to see where companies and the investment community could find common ground.

Unsurprisingly, their responses showed a variety of perspectives – but what areas stood out most?

Key areas of concern and opportunity

I think the two main areas that I found interesting this year were the generally upbeat view of investment professionals about global economic growth prospects, and the increasing influence of technology as a disruptor and enabler.

Although both groups cited geopolitical uncertainty as one of the top five threats to company growth prospects (investors naming it the top threat and CEOs naming it the fourth), investors also remained relatively positive about global growth prospects. Nearly half of the 554 investors surveyed (45%) expect global economic growth prospects to improve over the next 12 months, over double the number of last year and more optimistic than CEOs.

Another area investors have strong views is the effect technology has had on competition in the industries they follow. There are very few who think it’s had no effect at all, and whilst recognising the speed of technological change is slowing, almost one in five (19%) still think technology will completely reshape competition within 5 years.

An area where CEO and investor views roughly aligned though was around automation, and the possibility of it reducing headcount. 85% of investors expect automation to reduce company headcount, compared with 80% of CEOs who are expecting their company headcount to decline. So companies may wish to think about how they can invest in developing their employees’ skills now to prepare them for changes to their traditional roles as technologies such as AI, robotics and automation become more prevalent.

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Areas of improvement for companies

This year’s research identified a number of areas in which companies can improve their communications with investment professionals and other stakeholders, including their approaches to supporting innovation, the need for a strong corporate purpose and values, and steps being taken to prevent cyber-attacks and data breaches.

At the end of every section of this year’s survey we’ve included a number of questions for companies to ask themselves. We hope these questions, along with the findings of this year’s survey, will help improve the quality of engagement, and hopefully understanding, between companies and the investment community.

I would like to take this opportunity to thank all the individuals who took the time to answer our surveys and speak to our researchers in person. Without hearing their opinions we would be unable to share these insights.

If you would like more information on this year’s survey, please contact Hilary Eastman here.

Richard Sexton is Vice Chairman; Global Assurance, an appointment he took up on 1 July 2013. In this role, he focuses on further building the PwC network’s global assurance practice with particular emphasis of quality and regulatory matters, trust in the profession, and broader financial markets. Read Richard's full biography.

03/10/2017

Globalisation and business – the challenge of reclaiming trust in society

Author: Colm Kelly, Global Tax and Legal Services leader Colm_kelly

Well managed market economies have served as the basis for social progress - but what do increasing concerns about trust tell us about the future of business in society?

The opening of new markets, the availability of diversified sources of products to consumers, and capital for investment and the sharing of knowledge and talent have all helped businesses expand and accelerate social progress around the world.

Millions have been lifted out of poverty: the share of the global population living in extreme poverty has fallen from 40% just 30 years ago to below 10% today. 

Yet, the assumption that business is good for the system as a whole is now being challenged. 

PwC’s recent CEO survey reveals the large gap between how CEOs and the public view the impact of globalisation: only 38% of the public believed globalisation has had a largely positive impact on improving the movement of capital, people, goods and information, compared to 60% of CEOs.  Both CEOs and the public are voicing concerns about the increasing loss of trust in business. People’s legitimate worries over their prospects are fueling populist movements and political dynamics. This trust breakdown poses a potent risk to political, economic and social systems the world over. PwC_Globalisation 

What’s eating away at public confidence in business occurs on two levels: personal and societal. Personal, in that people lose trust in companies as a result of breaches of data privacy and ethics (84%) or IT outages and disruptions (71%). Societal, because the public have higher expectations of a business, and its social role and responsibility – irrespective of whether they are its customer.

The impact on CEOs has also been significant. In 2003 70% of the CEOs surveyed thought corporate misdeeds posed little or no threat to growth. Today 59% of CEOs worry about the lack of trust in business as a threat to growth. 85% believe it’s important to run their business in a way that accounts for wider stakeholder expectations. 

The 2017 Edelman Trust Barometer report supports these findings, illustrating that ongoing globalisation and technological change are further weakening people’s trust in global institutions. People believe governments, business, media and NGOs have failed to protect them from the negative impacts of the globalisation trends. The report concludes that the trust collapse has now evolved into a systemic threat. 

We cannot turn back globalisation. Neither can countries operate in isolation. Too many factors including technology, international business, climate change, immigration and a host of others have implications beyond the borders of any one country.  So how do we retain and re-balance the positive progress of a globalised world with delivering for people in their local communities? ​How can we measure success beyond GDP and make sure that economies can better serve a dual goal - to deliver both financial and societal outcomes for citizens?

We know that we need to realign business, economic and societal outcomes but how should we evolve society’s current systems to build the kind of future we really want? 

The debate has started, but it will require a louder voice from business – working with policy makers and the public -- to contribute to the conversation to help address these critical challenges.

Colm Kelly is the Global Tax and Legal Services leader for the PwC network. Prior to his current role, Colm was Vice Chairman, Operations for the PwC network. Colm was previously a member of the PwC Global Tax Leadership Team with responsibility for Global Tax Strategy and Markets. He was also a member of the European Tax Leadership team for several years. Read more

03/08/2017

Five strategies for finding — and keeping — female talent

Authors: Bob Moritz and Sharmila Karve

Today is International Women’s Day, a day to celebrate the many social, economic, cultural and political achievements of women. But how do we keep the momentum going beyond today, and bring about real change in the way women work, are hired and progress in their careers?

A new report explores just that question. Winning the Fight for Talent examines gender-inclusive recruitment around the world. From rapid technological advances to demographic shifts, megatrends around the world are driving a greater urgency into reassessing existing recruitment practices. Organizations need to be more innovative, they need to be stronger magnets for the right leaders, and they need to build brands and cultures that are inclusive and engage with consumers and stakeholders.

With so many demands on performance, the key to success is embedded in talent — and when you aren’t considering half the population, you are missing an immense pool of creative minds. This is the reason why 78% of large organizations are actively searching for more women, especially in senior roles. While this bodes well for global gender parity, there is much progress still to be made.

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We’ve uncovered five strategies that leaders can use to position themselves to find — and keep — female talent:

1. Focus on career progression. Women today expect more from their careers than any previous generation. Among the women we surveyed, female millennials (born 1980–1995) and women just starting out in their careers said career advancement was the most attractive trait in an employer. The least attractive was lack of opportunities. Most experienced female professionals who had recently changed employers cited that as the top reason they left their jobs. Companies that establish formal career progression plans will have better luck at attracting employees and keeping them motivated and committed.

2. Revisit people policies. All companies could benefit from taking a hard look at their policies and assessing which ones meet the needs of female employees. These could include leadership opportunities, professional development, global mobility, flexibility and career progression. Proactive organizations will make sure programmes are updated and new ones put into place. There are many of them: 28% of employers have already adopted a formal returner programme, and a further 25% are currently exploring this opportunity.

Among professional women on career breaks, 76% want to return to work — yet three-fifths of highly skilled and qualified women who return to work end up in lower-skilled (and, as a result, lower-paid) jobs. Career returner programmes are one way of eliminating this bias against a candidate’s career gap, as is an employer’s ability to recognize the skills, experience and potential of women who have taken time away from work.

3. Mindset matters. A lot. Globally, 30% of women said that employers do too little to treat women equally in the workplace. In a survey of professional women, more than one in five women reported personal experience of gender discrimination when applying or interviewing for a job. There are three popular diversity recruitment practices that can help organizations: 1) Ensure that interviewers, including interview panels, are diverse, 2) Train recruitment professionals to focus on more inclusive strategies, and 3) Review role descriptions to ensure use of inclusive language.

Additionally, the global study suggested that there is a significant disconnect between the views of women and employers on the barriers to hiring more women. Of the top five barriers identified by employers, four explicitly point to external factors, such as the lack of a sufficient candidate pool and the industry sector being viewed as unattractive by women. In contrast, of the top five barriers identified by women, four explicitly point to internal systemic challenges, such as the impact of gender stereotypes on the recruitment process and concerns over the cost and consequences of maternity leave. Organizations around the world should keep an eye on internal (e.g. diverse decision-making groups) and external (clear articulation of values) to bridge this gap.

4. Diversity should be baked in and shared. The good news is that 76% of employers have incorporated diversity and inclusion in their employer brands. Among companies with more than 10,000 employees, 88% report having done so. But talking about diversity is no longer enough. Demonstrable progress — such as an inclusive workplace culture and high levels of collaboration, feedback and care — is increasingly important to women when deciding where to work. Over half of the women (56%) who took part in our global study said they looked to see if an organization had made progress in that department when deciding whether to work there. And 61% of them reported looking at the diversity of an employer’s leadership team as well.

5. Last but not least, lead by example. Of all the women we surveyed, 67% said they considered positive role models when deciding to accept a position with an employer, rising to 76% for women at the start of their careers. Leaders have a vital role to play, by creating the right tone at the top, inspiring other women and helping them to reach their full potential. A diversified leadership team is important, as is an inclusive workplace culture that brings everyone to the table. This means that conversations about inclusion should be carried out by men as well as women, and all senior employees should be strongly encouraged to mentor and build trusting relationships with people who don’t look like them. This is a key goal of the United Nation’s HeForShe movement, which aims to mobilize one billion men and boys in support of global gender equality.

This story originally appeared on the WEF Global Agenda blog.

Find out more about PwC’s role as a HeForShe Corporate Impact Championhere. And in this video, PwC Global Chairman Bob Moritz shares what being a HeForShe Impact Champion means to him.

Follow @sharmilaakarve and @bob_moritz to keep in touch and share your thoughts.

 

Bob Moritz

From 2009, Bob led PwC US as its chairman and senior partner. During his tenure, the US firm focused on increasing quality service and enhancing its brand and reputation by developing and retaining key talent and expanding its capabilities across all areas of the business. Bob speaks widely on, and is a champion for, diversity and inclusion in the workforce as well as being an advocate for workplace flexibility. Read more

 

 

Sharmila-karve.jpg.pwcimage.200.252Sharmila  Karve is D&I Global Leader at PwC. Based in Mumbai, India, Sharmila joined the firm in 1985 as an Articled Student and qualified in 1988 and was promoted to Assistant Manager immediately thereafter. She was married during the course of her Articleship period which was quite unusual. She worked with the firm until May 1991 when she left to raise her daughter. Read more

03/01/2017

Software greasing the wheels for Technology, Media and Telecom transformation

Author: Brad Silver, Global TICE Leader Brad silver

Technology, Media, and Telecommunications: just thinking of these industries brings to mind legendary innovators, scrappy startups, emerging technology, and creativity in the pursuit of the solutions of the future.

But we’re not alone anymore…

Software is fueling the development of technology and services-based business models for all industries, and hastening the breakdown of industry walls. Convergence within the Technology, Media, and Telecommunications (TMT) industry is being met with the rapid escalation of technology acquisitions by non-TMT companies. Investments by non-tech companies

As our own Barry Jaruzelski said recently in the Wall Street Journal, software is “becoming the oxygen” for all established companies – regardless of whether their roots are in brick and mortar retail, century-old consumer product brands, manufacturing, or mobile apps.   

So, how can TMT companies succeed amid convergence, increasing competition, and the threat of commoditization? We have identified four guiding principles that can provide a blueprint for successful transformation from a products company to a “software and services” company.

  • Optimise your current position: Think about where your company currently lives in the value chain, and assess whether to expand, transforming your connection with the customer and path to market, or connect, structuring the company to be open and connected with “megahubs” – ecosystem platform drivers.
  • Mobilise and monetise models: IT and business operating models must unite to create a single digital operating model. This also requires adapting service models for business through monetisation of core data, value-added services, cost savings through scale, as well as moving fixed assets to consumption-based models.
  • Focus on customer outcomes: Rather than thinking narrowly about products, or even service offerings – focus instead on how to link core capabilities with the outcomes that customers are looking for.
  • Build a technology “lingua franca” (and an understanding of risk): Establishing a common language around digitisation, and a shared culture of innovation, will help facilitate the seamless collaboration necessary for moving at the speed of technology. Importantly, as companies embrace emerging technologies, they should account for the associated risks and costs. While future success won’t be possible without becoming open, connected, and networked, it is crucial that CEOs assess the cyber and data-privacy threats that can emerge from such a structure, and that the right service partners and protections are in place.

While we can’t see the future, we can prepare for it. Our latest article on this topic, “Software greases the wheels” provides additional insights on how to take decisive action now to prepare for the continued evolution of our industry – and the breakdown of industry walls.

Brad leads PwC’s Global Technology, InfoComm, and Entertainment & Media practice, a role in which he oversees PwC’s Technology, Media & Telecommunications (TMT) clients across the PwC network. In this capacity, PwC provides services to over 90% of Fortune Global 500 TMT companies.

 

02/27/2017

Consumers lead the way on digital trust in Central and Eastern Europe – will companies follow?

Author: Olga Grygier-Siddons, Chief Executive, PwC Central & Eastern Europe Olga-Siddons

Businesses in Central and Eastern Europe have been given an enormous credit of digital trust by local consumers. The challenge now is to safeguard it.

A recent PwC survey found that about 70% of internet users in Poland are willing to share data with online platforms, as long as their information is sufficiently protected. That illustrates neatly how the story of online trust in our region has largely been one of untapped potential: Our consumers have been faster than our companies to embrace the new reality where everyone is online, all the time. People are expressing online trust and looking for new ways of interacting with businesses, but it’s not clear whether businesses are truly listening yet.

Improving technology in the region – already often better than in Western Europe, as infrastructure “leapfrogs” ahead – means more and more transactions are taking place online. A world in which people are constantly connected to the Internet means a world of expanded consumer choice, so companies need to stand out from the competition by offering relationships and experiences, not just products.

In Poland, for example, 77% of people connect to the Internet using more than one device, in more than one location, every day; 44% of consumers want to receive personalised offers from businesses, delivered to their mobile devices. And in all of the categories of online services we analysed, more than 30% of respondents said convenience is more important than price. Still, they recognise the trade-off: in order to get personalised offers, they need to offer up data about themselves. They want to make sure that the benefit is worth the cost; that the data will be handled appropriately, and that personalisation won’t lead to excessive interference in their personal lives.

Olga Grygier-SiddonsTrust and transparency are the key to meeting those concerns – and that requires businesses to change their mind-set. One cautionary tale comes from a supermarket chain in the region, which faced a consumer backlash after journalists reported on how much data it was collecting on members of its loyalty programme. Instead of hiding the amount of data they’re collecting and why they’re collecting it, companies need to be up-front with their customers, showing proactively how sharing data will help build a better relationship and provide better service.

Unfortunately, thus far CEOs in the region have shown a lower level of concern than their global peers about threats to cyber-security: in PwC’s annual CEO Survey, only 46% said they were “somewhat concerned” or “extremely concerned” about this threat, the lowest percentage on a list of 10 threats, and well below the global average of 61%. But the EU’s new General Data Protection Regulation is bound to concentrate minds, as it revolutionises the way companies handle consumer data.

For CEE companies in EU member states, the new rules undoubtedly mean new compliance costs, but the savvy ones can find ways to use the change as an opportunity to solidify consumer trust.

When the GDPR takes effect on 25 May 2018, it will be a tipping point in consumer awareness of how companies use their data; among its requirements are procedures for customers to examine, correct and delete data held by companies, and it imposes penalties of up to 4% of turnover for failure to comply. As the date approaches, consumers will be flooded with new versions of the terms of service for websites they have interacted with – including many that they’ve forgotten about.

Smart companies can stand out from their competitors by doing more than just the minimum: explaining the changes in plain language and pointing out the benefits consumers receive from the relationship. Ultimately, the best way for businesses to get consumers to trust them is to show that they have enough confidence in themselves to be open and transparent about their digital relationships with consumers.

Like their counterparts around the world, businesses in Central and Eastern Europe lost years of hard-earned trust overnight when the global financial crisis hit in 2008. The online world has given them an opportunity to earn it back, but it will require commitment to new ways of relating to their customers. This matters, because due to their troubled history, societies in this region have suffered for too long from a lack of trust in all areas (not just online).

If companies can grasp the role and significance of digital trust, they may find ways to leverage it to increase face-to-face trust, with benefits that flow far beyond the world of commerce.

Olga Grygier-Siddons is the Chief Executive Officer of PricewaterhouseCoopers Central and Eastern Europe (CEE) which comprises 29 Member Firms of the Global PwC Network. Olga is a member of the PwC Global Strategy Council which comprises the Territory Senior Partners from the largest 21 territories in the PwC Network.

02/22/2017

Confident or concerned? Inside the mind of today’s industry CEO

Author: Robert Swaak, Vice Chairman, Clients and Markets  Robert Swaak

In my experience, there’s one important question that continually preys on the minds of CEOs, regardless of their organisation or sector: Are things about to get better or worse?

It is always hard to predict the future since a single event in a single industry or country can be enough to trigger wider upheaval. Just consider the environment we’re operating in today. Nevertheless, I believe that our 20th CEO survey, launched on the slopes of Davos a few weeks ago, offers some telling insights. Today 59% of CEOs think that governments will become more protectionist, up from 46% in 2009. Furthermore, less than a third (29%) anticipate that global economic growth will improve in the short term.

Understandably, the confidence levels of CEOs tend to vary by sector. So while the past few years have been tough for miners due to the slowdown in China, 50% of mining CEOs feel optimistic about the economy in the short term. That’s because uncertainty has boosted investor demand for gold while the election of President Donald Trump should lead to increased expenditure on large-scale infrastructure projects in the US.

A third (37%) of automotive CEOs are also positive, encouraged by high North American sales in recent years, important technological advances such as electric and driverless cars, and the future potential to sell more vehicles in Europe, Asia, the Middle East and Africa.

On the other hand, around a quarter of CEOs working in consumer goods, transport and logistics and insurance take a more pessimistic view of the world economy. Trade restrictions will make life harder for the two former groups, while insurers continue to wrestle with intense price competition, low investment yields and a heavy regulatory burden.                             

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CEOs must have grown used to uncertainty since they have become more optimistic about their own organisation’s growth prospects over time. In 1997, the year of our first survey, just a third of participants felt very confident about their company’s three-year revenue outlook. This year, by contrast, 51% of CEOs are very positive about the next three years while 38% feel the same about their company’s prospects of 12-month revenue growth.

It strikes me that CEOs’ optimism is linked to their investment in innovation and digital capabilities and their willingness to seek out the right partners for these projects. Globally, nearly half (48%) of CEOs are turning to strategic alliances or joint ventures to drive growth and profitability. Meanwhile, more than a quarter (28%) of CEOs are looking at collaborating with entrepreneurs or start-ups instead of, or as well as, forming an alliance. A keenness to work with disruptors is particularly evident in sectors that are at the forefront of the digital transformation, such as technology, media and telecommunications and financial services.

Over the long term, the twin forces of technology and globalisation will continue to change the world, putting CEOs under pressure to ensure that the benefits of progress are more equitably distributed. Furthermore, in an age of people power, suspicion of apparently ‘faceless’ multinationals is likely to become even more widespread.

So as CEOs adapt to an environment that is radically different from the one their predecessors knew, they must confront new challenges. How can their organisation harness the power of purpose to compete in a diverging world?  What’s the best way to manage both man and machine? How can organisations gain from connectivity without losing trust? What’s the CEO’s role in making globalisation work for all?

These are the kinds of questions we’ll be answering in a series of industry deep-dives from our 20th CEO Survey starting with the financial services, energy and government and public services sectors. Stay tuned for more industry views over the coming weeks.

Robert Swaak is Vice Chairman, Clients and Markets. In this role he oversees PwC's global markets through regions and industries. Read more

02/17/2017

The end of trust? Balancing privacy with profits in the digital world

Author: Julie Fitzgerald, Global Priority Services & Critical Markets leader (based in Switzerland)

Julie-fitzgerald

Over the past 20 years, technology has penetrated our business and personal lives at a speed and on a scale that few would have predicted. Yet while technology creates enormous opportunities, it also exposes us to significant risks. We can now source goods and services from across the world with a couple of mouse clicks, but that convenience comes at a price. Many of us, myself included, worry that we’re unintentionally compromising our privacy and the security of our personal data by shopping online.  

As our markets leader in Switzerland, I had the good fortune to be in Davos last month where we launched our 20th CEO survey to the global media. I can’t remember a time when trust has been more prominent than it is today. Although it wasn’t a focus area in the earlier years of our CEO research, it’s been steadily climbing up the agenda. And most, the financial crisis and the political focus on the tax affairs of multinationals have eroded both customers’ and other stakeholders’ trust in businesses. Our survey shows how heavily this erosion is weighing on CEOs. More than half (58%) were worried that a lack of trust in business would harm their business, a significant jump from 37% in 2013.

In some respects, technology has made us more trusting than before. This is best demonstrated by the sharing economy, where digital platforms connect strangers who are willing to share cars and homes. Overall, however, technology is acting as a drain on trust, especially where people believe they are dealing with ‘faceless corporations’ instead of someone like themselves. A never-ending stream of cyber attacks, system disruptions and phishing scams creates the impression – accurately, in many respects – that the internet is not a safe place. We increasingly have to differentiate ‘real news’ from ‘fake news’ and we fear that governments and companies are abusing our personal information. No wonder more than two-thirds (69%) of CEOs are firmly convinced that it’s getting harder for businesses to gain – and retain – people’s trust.

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Customer data is a great asset to companies, which use it to influence purchasing behaviour. It will be an even greater asset still once the Internet of Things has expanded to include host of devices ranging from smart watches and heart monitors to refrigerators and cars. Understandably then, customer data is probably the most pressing trust issue for CEOs, with 91% saying that breaches of data privacy and ethics will have a negative impact on stakeholder trust in the next five years. Our research suggests they are right to hold this view since 84% of people we spoke to at the same time as we surveyed the CEOs confirmed that breaches do indeed undermine their trust in companies.

Of course, companies will want to use data generated by the Internet of Things to serve their customers better, but they must also avoid intruding on their customers’ privacy or allowing their customers’ data to fall into the wrong hands (and indeed new EU regulations in the form of the General Data Protection Regulation will come into force next year to help further protect individual’s personal data).

Another major challenge to businesses is cyber espionage, the modern-day equivalent of industrial espionage. This is the practice of using computers to gain access to confidential information held by another organisation. Furthermore, more than half (53%) of CEOs are afraid that trust will be undermined by global cyber warfare – where government-backed hackers target another nation’s crucial energy or security infrastructure, commercial assets or mass transport system.

CEOs recognise that trust is an opportunity as well as a risk. Significantly, 64% of those surveyed believe that how their firm manages data will be a differentiating factor in future. The businesses that flourish will balance getting and using data with the social consequences of those actions. They will actively engage with stakeholders and invest heavily in their IT security, risk and governance strategies. Ultimately, in an environment where the line of acceptability regarding data usage will be constantly moving, the ability to earn trust will be one of the greatest determinants of business success. Read more about what’s on the mind of the CEO in our 20th CEO Survey.

Julie Fitzgerald is the leader of priority services and critical markets. In this role she will develop and implement plans for network-aligned businesses in priority services and critical markets. Prior to taking up this role, Julie has served as the Growth and Markets leader and as a member of the Management Board of the Swiss firm since 2013, a role that she will continue to have. In this role, she is responsible for clients and markets and driving growth areas such as digital, cyber and analytics. Read more