13th September 2017
More cautious outlook but growth firmly on the agenda - PwC 2017 Irish CEO Pulse Survey
The majority of Irish CEOs are confident about the economy and their businesses, but less so than last year, as revealed in PwC's 2017 CEO Pulse survey, having over 200 participating Irish CEOs, published today.
Key findings of the survey include;
- 58% of CEOs have a favourable economic outlook for the year ahead, compared to 71% last year.
- Growth is on the agenda with three-quarters planning to grow revenues (down slightly from 84% last year); 64% plan to grow profits (2016: 74%) and half plan to increase headcount (2016: 62%).
- Of those who are exporting, 28% anticipate to increase these exports by 20% or more in the year ahead.
Uncertainty is having an impact.
Geopolitical risks highlighted include Brexit (89%) and the potential impact of new US policies (81%). Ensuring Ireland has a clear national strategy to deal with Brexit (68%) should be the top priority of Government right now, according to CEOs.
Other areas that may impact future business growth, according to the CEOs, include: high personal tax burdens (93%); rising wage costs (88%) and cyber threats (86%). 84% are concerned about the lack of affordable housing/office space, up from 67% last year; 81% are concerned about the availability of key skills and remains at an all-time high in our 12 year survey. Launching the survey, Frances Fitzgerald, Tánaiste and Minister for Business, Enterprise and Innovation, said: "This survey serves as a useful indicator on future trends in Irish business and adds to the extensive research that my own Department is conducting also. It is positive to note that, despite the uncertainties, the majority of Irish CEOs are continuing to plan for growth in their businesses. There is no doubt, however, that Brexit is a key concern for policy makers and business leaders. This Government is doing everything possible to respond strongly to the impacts of Brexit by working with international and local stakeholders to provide supports to business and safeguard Irish jobs in every part of the country. ”
Speaking at the survey launch, Feargal O'Rourke, Managing Partner, PwC Ireland, said: "The confidence level is down slightly on last year, but this is hardly surprising given concerns relating to Brexit and other geopolitical factors. But uncertainty also brings opportunity, and many Irish CEOs do see opportunities arising. Not surprisingly there is a strong focus on export markets. Overall, in weighing up the opportunities and uncertainties, CEOs are slightly more cautious in their outlook with a consequent impact on the pace of investment decisions. Nevertheless they remain focused on the growth potential of their businesses."
FDI - success in Ireland a record high
Ireland continues to be provide an excellent environment for Multinationals to establish Global Business operations to sell to Europe and further afield. This is confirmed by 96% of survey respondents, who confirmed that their investment here is a success and is a record high in the survey; 91% said that they will maintain or increase this investment. Critical factors cited to preserve this investment in Ireland, according to the survey, include: retaining a competitive corporate tax rate (58%); maintaining and increasing our cost competitiveness (47%); ability to attract a highly skilled workforce (42%); a positive outcome for Ireland on the Brexit negotiations (33%) and reducing the personal tax burden (29%). Over a quarter (27%) also viewed the impact of any potential tax reforms by the US Administration as important.
Joe Tynan, Head of Tax, PwC Ireland, commented: "Ireland continues to be the number one location in Europe for FDI. Companies choose Ireland for a number of factors including its successful track record and the consistent and low corporate tax rate of 12.5%. Companies require the best talent to compete. Ireland, in comparison to other countries, is considered more welcoming to employees from across the EU. This allows companies to establish here and to serve all of the EU - in their own language.
The changing international tax landscape is a positive for Ireland. It is requiring companies to earn their profits where they have substantial operations. This is reducing the attractiveness of Caribbean tax havens and also reducing the attractiveness of countries who agree tax liabilities based on a ruling. It is enhancing the attractiveness of Ireland which offers a low corporate rate and the ability to set up substantial operations here."
Talent: Irish organisations lag global counterparts in a number of key areas
- The survey suggests that Irish organisations (62%) lag their global counterparts (78%) where changing people strategies to reflect future skills needs are concerned. Under half (43%) are rethinking their HR strategy compared to 60% globally;
- Less than a quarter (24%) are focusing on the pipeline of leaders for tomorrow, down from 42% last year.
- Irish business leaders reported the top change to their talent strategies to be workplace culture and behaviours (64%), up from 53% last year;
- Nearly three-quarters (73%) of Irish respondents confirm that they promote talent and inclusiveness, but just over one in ten (11%) are planning to change their strategies around diversity and inclusion.
Gerard McDonough, Director, People & Organisation, PwC, commented: "Concerns around the lack of key skills in Ireland have been very high for the last five years and have outpaced global concerns. But the survey suggests that the most valued skills are shifting towards the 'soft' human capabilities such as adaptability, creativity, innovation and emotional intelligence. At the same time, less than a third (31%) is considering the impact of automation/robotics on the future skills needs compared to 39% globally. Getting talent management strategies right in an increasingly digitised world, where humans and machines work alongside each other, may be the biggest challenge leaders will ever face."
The challenge of establishing and maintaining trust in the digital era
Business trust continues to be central to the CEO agenda and nearly half (48%) of Irish CEOs believe that the lack of trust in business is a threat to growth. This is getting more challenging in the digital era and nearly two-thirds of Irish CEOs (61%) confirm that in an increasingly digitised world it's harder for business to establish and maintain trust. Global CEOs admit to finding it even more challenging (69%).
Other key findings on business trust and technology include:
- Just over one in two (52%) Irish CEOs believe that how they manage and protect people's data will differentiate them (64% globally);
- Data analytics is seen as the emerging technology that will have the greatest opportunity for their organisation followed by the Internet of Things and Artificial Intelligence.
- 76% believe that technology will significantly change competition in their industry in the next five years.
- The survey suggests that Irish CEOs are less digitally savvy than their global peers, for example, 38% of Irish respondents reported to be active on social media compared to 43% globally.
Ciaran Kelly, Advisory Leader, PwC Ireland, said: "The survey highlights that while Irish CEOs accept that trust is critical, they are, worryingly, less concerned than global peers about how a number of key potential disruptors such as data breaches, IT outages and artificial intelligence will impact on stakeholder trust levels in the next five years.
"The survey further suggests that Irish organisations are not addressing these key disruptors to the same extent as their global peers, for example, the survey suggests that 40% of Irish CEOs are not seriously addressing cyber security breaches affecting business information or critical systems. CEOs need to recognise that trust can be easily destroyed in a digital era and they cannot deny the unstoppable progress of digital that continues to infiltrate our personal and business lives."
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Notes to editor:
About the survey.
The survey was carried out in Spring/Summer 2017 amongst Irish CEOs having over 200 participants across all industry sectors.
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