CEO Confidence in the Canadian Economy Falls 15 per cent: KPMG Global CEO Outlook 2019
Growing concerns about climate risk, territorialism and effects of disruptive technologies. Confidence in the Canadian economy fell 15 per cent over last year finds KPMG’s latest Global CEO Outlook 2019. The annual report surveys some 1,300 CEOs from around the world on the biggest risks facing their businesses and the strategies they are employing to address them and continue to drive growth.
The decline in Canadian confidence is in sharp contrast to that of their global counterparts who reported a nine per cent increase in confidence over last year.
|Confidence in domestic growth||Change|
“Canadian CEOs are actually still fairly bullish on our economy with eight out of 10 believing we’ll continue to see growth,” says Benjie Thomas, Canadian Managing Partner, Advisory Services for KPMG in Canada. “But events over the past year have eroded their confidence somewhat. They are worried that environmental risk, growing international trade frictions and emerging disruptive technologies pose real threats to continued growth. What is telling about these concerns is they all tend to be global issues rather than national ones – and they are the same top three risks identified by CEOs right across the globe.”
Thomas notes that the environment and territorialism didn’t make the top three threats last year. He believes the growing disagreements in Canada and globally on how to manage climate change weighs heavily on the minds of our CEOs given Canada’s dependence on the resource sector. He adds that worries about growing trade spats with and between Canada’s two largest trade partners are also eating away at confidence.
Canadian organizations facing an innovation disconnection
Canadian CEOs remain concerned about the effects of disruptive technologies on their businesses but are taking less action than their global counterparts.
|Want employees to innovate without fear of failure||75%||84%|
|Plan to upskill more than 40 per cent of workforce with digital capabilities||44%||81%|
|Information security is a source of competitive advantage||64%||71%|
|Cyber attack will hit my company||60%||53%|
|Very well prepared to contain a cyber attack||59%||69%|
“Canadian CEOs recognize the need to innovate with the vast majority (75 per cent) saying they want a culture where failure in pursuit of innovation is tolerated,” explains Peter Hughes, Partner and Digital Services Leader for KPMG. “But barely half (56 per cent) say that this culture is in place.
“Interestingly, CEOs are not as focused on being the disruptor in their industry as they were a year ago. Today 69 per cent have set that as a goal, which is down from 96 per cent in 2018. However, 73 per cent of Canadian CEOs are confident in their ability to stay competitive in the face of disruption.”
The report found that Canadian organizations understand that competing in the future isn’t just about machines but is also about equipping employees with the digital skills and mindset to operate in a tech-enabled world. “This explains why 44 per cent of Canadian CEOs plan to upskill more than 40 per cent of their workforce in digital capabilities, and why 53 per cent plan to hire new skills regardless of growth prospects, a 27 per cent increase over 2019,” says Soula Courlas, National Lead, People & Change at KPMG.
“But this likely is not enough. Global CEOs are doing the same but at a much greater scale. As future-ready as Canadian CEOs appear on paper, their ability – and perhaps eagerness – to find human talent who can drive their vision lags behind their global counterpoints. One explanation is that Canadian organizations are cautiously optimistic by nature and may be taking a ‘wait and see’ approach to workforce transformation.
“The gap could also be attributed to the fact that it is no small task finding and retaining the right individuals. Thanks to an aging workforce, demand and supply imbalances, skills mismatches, and other contributing factors, Canada is on track for a major technology talent shortage in the next five years. And with global tech juggernauts like Amazon, Google, Uber, and others jockeying for talent on our home soil, the competition is fiercer than ever. Given these labour market conditions, it is no wonder that 63 per cent of CEOs say ‘finding workers they need’ is a roadblock that is negatively impacting growth.”
Mixed confidence in the skills of Canada’s tech workforce
|Emerging technology specialists||73%||74%|
|Data scientists – up 27 per cent over 2018||63%||83%|
|Cyber security specialists – majority expect cyber attack||60%||69%|
|Sustainability experts – the top risk this year||51%||46%|
“This year’s CEO Outlook 2019 reveals a country of big thinkers and even bigger ambitions,” adds Thomas. “It also indicates that Canadian organizations are at different stages in their journey than their global peers. Chalk it up to less experience with new technologies or the cautious ’Canadian way’, but Canada has been slow to catch up to the new digital ’normal’. Digital is driving fundamental change at a rapid pace. To continue to compete with the world Canada needs to step on the pedal.”
Access a full copy of the KPMG 2019 Canadian CEO Outlook.
This survey includes perspectives from 75 Canadian CEOs, and is part of a global KPMG study including nearly 1,300 international CEOs. Nearly half (40 per cent) of the Canadian CEOs who responded report annual revenues between $1 billion and $9.99 billion (9 per cent earning more than $10 billion and 51 per cent earning between $500 million and $999 million). Of the respondents, 59 percent have held their position between 4 and 9 years.
The study represents CEOs of companies from a wide range of industries, the top three being banking, energy and asset management. CEOs from insurance, consumer and retail, infrastructure, automotive, telecommunications, life sciences, manufacturing and technology were also represented.
KPMG LLP, an Audit, Tax and Advisory firm and a Canadian limited liability partnership established under the laws of Ontario, is the Canadian member firm of KPMG International Cooperative (“KPMG International”). KPMG member firms around the world have 207,000 professionals, in 153 countries.
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