Getting fit for their futures?Follow @PwC_LLP
Author: Nick C Jones, Director of PwC’s Public Sector Research Centre
CEOs are telling us that technological advances, demographic changes and shifting global economic power are three of the fundamental forces reshaping businesses. But another striking finding from the 17th Annual Global CEO Survey is that the top-two threats for CEOs are very much in the remit of government: fiscal deficits and over-regulation.
Fiscal deficits, in particular, are still in the spotlight. In last year’s Survey, 71% of CEOs were concerned about government responses to fiscal deficits and debt levels, including those in countries not undertaking major austerity measures (up from 61% in 2011). This year, these concerns have stayed at a similarly high level.
This isn't good news for either investment or jobs, given that uncertainty delays decisions on both. And it may be reflected in the further finding that a majority of CEOs surveyed (53%) still identify financial sector stability and access to finance as their highest priority for government action.
The burning question arising is: how can government and public sector organisations address business concerns and put the fiscal issue finally to bed? This has been the biggest cloud on CEOs’ horizons for the past four years, with many remaining very nervous about the success (or otherwise) of government efforts to balance growth and reform.
But it’s not only fiscal deficits that are a threat to business. Over-regulation and an increasing tax burden are seen as major threats too. And there are continuing issues of mistrust across the public-private divide, with about a third (31%) of CEOs surveyed saying that they perceive the level of trust government and regulators have in their sector has deteriorated over the last five years.
There are many potential implications for government. But we believe that public bodies can help themselves and businesses if they can respond in three key ways:
∙ Get fit for the future through digital transformation. 81% of CEOs surveyed see technological advances as a top-three global trend which will transform business. And its transformative impact ranks even higher with CEOs running organisations with state backing, at 86%. Public bodies need therefore to embrace digital technology as a tool, not only to reduce costs, but to drive innovation, transform how they engage with citizens, foster the interaction of citizens with each other and explore how outcomes can be better secured.
∙ Deliver growth through collaboration. The public sector can provide leadership in building a platform for growth and competitiveness. In particular, it has a role to facilitate collaboration across the public, private, not-for-profit and university sectors with a focus on investing in infrastructure, innovation and skills.
∙ Restore trust through engagement. In order to improve relationships between business and government, and drive good growth, a shift is needed in mind-sets and behaviours. The key shift is from that of coexistence across the public-private divide to a real spirit of partnership on both sides in order to deliver better outcomes for business and society.
As the world tries to put the financial crisis in the rear view mirror, we're optimistic that together business and governments can still make a real difference to the future of our society. But public sector organisations must get ready for tomorrow’s challenges by becoming more innovative, agile, connected and transparent. A demand-driven skills system, value-adding infrastructure and a self-sustaining innovation ecosystem are needed, with good growth at the heart of the purpose and mission of our public bodies.
Look out for our forthcoming report, ‘Government and the Global CEO: Getting fit for our futures?’, due for release on 5 March 2014.
Nick Jones is the Global Director of PwC’s Public Sector Research Centre and has authored, and contributed to, reports on a wide range of public services issues. Nick is also a member of the Editorial Team for PwC's Annual Global CEO Survey, commenting on the relationship between business and government.