As 2021 winds to a close, many companies are seeing opportunities for growth, but chief executives continue to contend with challenges the pandemic ushered in, including inflation, supply chain disruptions, labor shortages and staff turnover. Against this backdrop, YPO, the global leadership community of more than 30,000 chief executives, surveyed its members to gather insight on their current outlook and plans for 2022. Participants in this latest YPO Global Pulse represent chief executives in 101 countries and 44 industry sectors.
Many CEOs are optimistic as 2022 approaches, with 34% of the 1,700 surveyed reporting a very favorable outlook for their businesses for the coming year, and nearly half (47%) reporting a somewhat favorable outlook. Only 1% said their outlook was unfavorable. But some owners are seeing a rosier picture than others. Of those leading entrepreneurial companies, 40% said they have a very favorable outlook, compared to 28% of family business operators.
Among the most optimistic industries, 91% of respondents in Product Services have a very or somewhat favorable outlook.
The least optimistic industries are Aerospace/Aviation, and Food and Beverage, where 17% of respondents in each industry reported a somewhat or very unfavorable outlook for their primary business in 2022. The pain in aviation seems likely to continue, with 77% of all respondents saying their business travel will be slightly or significantly reduced from pre-pandemic levels and only 4% expecting it to be greater than pre-pandemic.
Inflationary concerns loom
The effect inflation is having on many companies came through loud and clear in the survey with 71% of survey respondents very or somewhat concerned about the impact of inflation on their businesses. Fifty-one percent said they will raise prices to mitigate the effects of inflation, while 43% plan to analyze for efficiencies, and 28% will pursue automation.
Some companies are not sure how they will tackle rising wage pressures at a time other costs are going up. “How do we deal with employees asking for more money, due to inflation, in an environment where revenue and profits are down?” asked one member.
Reaction to inflationary pressures depended on the industry. The top three industries where respondents were “somewhat” or “very” concerned about inflation are:
- Food and Beverage – 85%
- Manufacturing – 80%
- Construction – 78%
Inflation is hitting hardest in specific regions, the survey found. The top three regions where respondents are somewhat or very concerned about inflation are:
- Western U.S. – 85%
- Southeast U.S. and Caribbean (SEC) – 83%
- Mid-America U.S. – 80%
The terrible three
Globally, companies are coping with three major challenges that have surfaced since the pandemic arrived:
- Supply chain disruptions (29%)
- Difficulty in finding and retaining the right talent (26%)
- Operating restrictions from the government (12%)
There seems to be no immediate end in sight for the supply chain issues, with only 2% of respondents believing they will be resolved in early 2022. Thirty-nine percent believe resolution will come at the end of 2022, and 38% expect it in 2023 or later.
Some are simply unsure. “Will we continue to feel the impact of COVID over the long term, whether in the form of supply chain disruption or otherwise?” asked one respondent.
The pulse of revenue growth and hiring in 2021
The good news is that things are looking up for many companies when it comes to two critical business factors: revenue growth and hiring.
Among the CEOs surveyed, 37% reported a 20% increase in revenue or more since the beginning of 2021, and only 17% said they saw a decrease of 10% or more since the beginning of the year. In October 2020, only 19% of respondents expected an increase in revenue of 20% or more. However, entrepreneurs seem to be faring better than family business operators, with 70% of entrepreneurs reporting a 10% increase or more in revenue versus 57% of family business operators.
The top three industries expressing a 10% increase or more in revenue since 2021 include:
- Media/Entertainment (79%)
- Product Services (technology, SaaS, etc.) (75%)
- Financial Services (73%)
The top three sectors reporting a 10% decrease or more in revenue are:
- Hospitality/Restaurant (37%)
- Telecommunications (32%)
- Energy/Oil/Gas (29%)
Hiring has picked up among some firms, with 38% of respondents experiencing a 10% increase or more in the number of employees since the beginning of 2021, though 45% said their total head count is about the same as it was in early 2021 and 16% said they saw a decrease.
Hiring challenges loom
With growth on the horizon, the global labor shortage continues to pose challenges for many companies, with 67% of respondents saying it is somewhat or very difficult for their businesses to find employees for the general workforce and 57% of respondents reporting the same levels of difficulty when it comes to C-suite and executive hires.
The picture is similar when it comes to seasonal and temporary help, with 57% of respondents saying it is somewhat or very difficult for their businesses to find employees. Smaller companies, with fewer than 100 employees have an edge, with 54% saying it is somewhat or very difficult to find these temp workers, compared to 62% of those with 100 to 500 employees.
Among the industries having the most trouble finding rank-and-file workers are
- Health care (83%)
- Construction (78%)
- Product Services (76%)
The regions where employers are seeing the most difficulty in the hunt for general talent are:
- Australia/New Zealand (88%)
- Mid-America, U.S. (87%)
- Northeastern U.S. (87%)
Many employers are also struggling with keeping the people they have on staff, with 30% saying the main reason employees leave is being hired by a competitor with a higher offer, and 19% reporting changes in employees’ life goals. For professional services firms, there were higher levels of turnover due to employee life goals (49%), burnout or mental health reasons (34%) and a backlog of workers who wanted to resign before the pandemic but stayed on longer (8%).
In a push to make their workplaces more attractive, 32% of respondents are offering permanent flexible work schedules. Twenty-eight percent will offer part-time remote work, and 14% will offer full-time remote work. But remote work has its detractors, with 40% of respondents saying employees are less productive at home than in the office.
With pandemic pressures taking their toll on teams, some businesses are taking steps to improve mental health benefits, with 35% reporting some type of mental health investment or strategy for employees and 16% saying they don’t have one now but plan to add one.
Other chief executives are addressing the pressures on employees in their own ways, some of which don’t require a financial investment. As one member put it, “Recognizing there already is burnout, [we are] limiting our requests/projects to a few things so we focus on ‘critical’ but not necessarily ‘nice.’”
Although cryptocurrencies are a hot topic in the headlines, only 28% of surveyed leaders said they have invested in it, and just 13% planning to do so in the future. The majority (60%) say they have no plans to invest in cryptocurrencies personally. However, there are regional variations, with 41% of respondents in Northeastern U.S., the highest of all regions, planning to invest. Meanwhile, 73% of respondents in South Asia plan to not invest.
As business leaders prepare for 2022, YPO respondents shared that all should focus on a few key areas, including improving employee engagement and work culture/retention; exploring alternative cash streams and protecting existing cash flow; preparing for the impact of inflation and future supply chain woes; and understanding evolving customer needs.