Northern Ireland CEOs remain confident in the prospects for growth in their businesses and have placed advancing digitalisation and connectivity, along with generative AI, as a top priority, according to KPMG’s annual CEO Outlook survey of business leaders. Leaders are also placing importance on a robust ESG strategy remains essential to retain and attract customers and staff.
• The majority of Northern Ireland CEOs (80%) expect their businesses to grow in the next three years, while two thirds (67%) expect they will increase headcount over that period.
• In order to reach their growth objectives, Northern Ireland CEOs are prioritizing the advancement of digitization and connectivity across their organisations and focusing on inflation proofing capital and input costs.
• 47 percent of Northern Ireland CEOs agree that generative AI is also top investment priority for their business, that will most significantly enable future success albeit with notable challenges including ethical concerns and having the technical capability and skills to implement it.
• Northern Ireland CEOs see a robust ESG strategy as essential to driving the retention and acquisition of both customers and employees in the future but continued investment is needed as only 43 percent of Northern Ireland CEOs believe they have the capability and capacity required to meet new reporting standards.
• 63 percent of Northern Ireland CEOs believe there will be further progress on the ‘return to office’ for pre-covid office-based roles and a majority (75 percent) foresee a link between this and their reward strategy.
Despite headwinds, Northern Ireland CEOs remain optimistic on the economy.
Northern Ireland CEOs are more bullish about growth for their businesses in the next three years than their global peers, KPMG’s annual CEO Outlook survey has found. According to the global survey of over 1300 business leaders, 80 percent of Northern CEOs have confidence their companies will grow in that time compared to 77% of CEOs worldwide.
As a result, over two thirds (67%) of Northern Ireland CEOs expect to increase headcount within that time. Local CEOs have also expressed confidence for the wider Northern Ireland economy with around two thirds (67%) predicting growth. When it comes to the global economy, 60% of Northern Ireland CEOs expect growth.
While there is optimism for the near term, CEOs acknowledge challenges from interest rate hikes and tightening monetary policy by central banks. Just over two-thirds (70 percent) of Northern Ireland business leaders believe it may prolong a potential recession compared with almost three quarters (77 percent) of their counterparts worldwide.
Commenting on the survey findings, KPMG Partner in Charge of Northern Ireland Johnny Hanna, says; “CEOs in Northern Ireland are generally positive about the prospects for their businesses and for the local economy. Confidence remains strong, with companies making the most of the unique opportunities Northern Ireland offers, such as dual market access under the Windsor Framework. However, it’s worth noting there are challenges remain in the form of inflationary pressures, higher interest rates, and, most pertinently in the local environment, the knock-on impact that a lack of a functioning government at Stormont.”
When it comes to deal activity, just under one in four of Northern Ireland CEOs (47 percent) cite a “high appetite” for M&A, meaning they will undertake acquisitions which will have a significant impact on their organisations. This is only just below the global figure where 51 percent expect robust M&A activity.
CEOs face unprecedented complexity and are adapting growth strategies
While optimism for future business performance is strong, an increasing range of interconnected challenges competing for attention and resources are putting CEOs under some pressure. Geopolitics, emerging and disruptive technology and operational risks are the three biggest risk concerns of business leaders worldwide. In Northern Ireland, the top risk issues are emerging and disruptive technology, regulatory concerns, interest rates and environmental/climate.
CEOs are changing their approach to complexity and nearly two thirds (63 percent) of Northern Ireland business leaders have already adapted their growth strategies as a result of these interrelated challenges, as have 64 percent of their peers worldwide.
Johnny Hanna says: “The ever-changing nature of the challenges facing leaders in today’s complex environment – whether inflation, developing technology threats, or the growing influence of regulatory concerns – mean leaders need to be constantly reactive. It’s apparent that today’s CEOs are quick to flex their strategy when needed and recognise and act upon expertise gaps with speed.”
The growing importance of AI – hopes and fears.
In Northern Ireland, advancing digitalisation and connectivity remains the top priority for Northern Ireland CEOs followed by inflation proofing capital and input costs and inorganic growth. Perhaps surprising given the flagged risk from emerging and disruptive technologies, only 7% of respondents said they were focused on implementing and understanding emerging technologies.
Emerging and disruptive technology is cited by CEOs in Northern Ireland as the number one threat to organisational growth, with 90 percent of CEOs believing it will negatively impact their organisations’ prosperity over the next three years. This is higher than the global average of 72 percent.
As a result, generative AI is an investment priority for around half (47%) of Northern Ireland CEOs.
However, CEOs are concerned that their organisations lack the technical capability and skills required to implement this new technology (82%). They also cite ethical challenges and the current lack of regulation as the biggest challenge with implementing generative AI. Notably, there was significantly less concern about job redundancies and almost two-thirds of Northern Ireland CEOs believe the degree of regulation regarding generative AI should mirror that of climate commitments.
Johnny Hanna says; “Northern Ireland CEOs remain focused on advancing digitalisation and connectivity, while also realising that AI has a central role to play in their strategic planning for the future and needs to be placed high on the priority list. The ability to adapt and integrate AI technologies swiftly has the potential to transform business processes and cut costs.”
Lack of readiness on ESG mandatory reporting.
Despite a raft of new issues to contend with, CEOs still see their ESG strategy as being essential to having a strong reputation for attracting both customers and employees. This is felt more strongly in Northern Ireland than globally, with 33 percent stating their ESGs strategy’s biggest impact is in attracting the next generation of talent, compared with only 14 percent globally.
However, only 43 percent of Northern Ireland CEOs say they currently have the capability and capacity required to meet new ESG reporting standards – significantly lower than the global average of 74 percent.
Johnny Hanna says; “With ESG such an important issue for today’s leaders, particularly for attracting talent and investment, it is notable that organisations are struggling to meet latest reporting standards. Non-financial reporting is becoming a governance obligation and new directives such as the CSRD (Corporate Sustainability Reporting Directive) will require leadership focus to help compliance.”
CEOs continue to invest in people while recognising there is further to go on the return to the office
When it comes to talent, there’s further evidence that Northern Ireland’s CEOs are keen to invest in their wider team. 67 percent of Northern Ireland CEOs are placing more capital investment in developing their workforce over investment in new technology compared to 46 percent globally.
They continue to evolve their thinking on what the future of work may look like with many CEOs in Northern Ireland (63 percent) believing there is still progress to be made on the ‘return to office’ agenda.
Meanwhile, 75 percent of Northern Ireland CEOs think it is likely that employees who come into the office could benefit through enhanced reward and recognition compared with 87 percent worldwide.
Johnny Hanna says; “There is little doubt that Northern Ireland’s CEOs are keen to invest in and develop their workforce, seeing them as one of the most important assets in the future success of their businesses. When it comes to how those employees carry out their work, there is a continual process of evolution with leaders recognising the office is crucial for collaboration and innovation while hybrid working help to retain and attract talent.”