The mood or overall sentiments among Chief Executive Officers (CEOs) of Germany based firms regarding the economic situation remains tense. This, according to an extensive update from KPMG.
Only a good three out of four (77%) company leaders still have “confidence in their firm’s overall growth prospects” during the upcoming three years – compared to 80% in 2023 and even 90% in 2022.
As stated in the Germany-focused update from KPMG, 74% or nearly three-fourths of business professionals are feeling “increasing pressure” to secure the “long-term” growth of their firms.
Despite this seemingly concerning outlook, the majority of firms in Germany are not planning any job cuts.
On the contrary: nealy all “top” managers now anticipate the number of workers at their firm to increase considerable during the next three years (93 per cent compared to 84 per cent in the previous year).
In the opinion of the vast majority of CEOs, the increased use of generative AI will not change this.
Merely 1 per cent believe that the technology will cost more jobs than it will create, 23 per cent even expect AI to “create more jobs and 76 per cent do not expect any major changes.”
These are the findings of this year’s “KPMG CEO Outlook”, in which over 1,300 CEOs worldwide and over 120 CEOs of German companies took part.
As stated in the report covering the Germany -based markets, 54 per cent of German CEOs see keeping pace with technology as the “biggest” challenge – ahead of the “uncertain economic environment (52 per cent) and dealing with geopolitical complexity (39 per cent).”
This year’s “KPMG CEO Outlook” shows that CEOs of German companies are primarily focusing on generative AI and by no means expect the AI boom to come to an end.
Company leaders consider the successful implementation of generative AI to be the most important driver of growth (16%), followed by further digitalization of the business (15%). 58 per cent consequently prioritise generative AI as a top investment, even in a difficult environment. This is accompanied by expected returns.
For instance, 26 per cent of CEOs hope for a “corresponding return” on investment in one to three years, 58 per cent in three to five years.
But top managers also see hurdles to implementation.
Just 39% stated that their company already has the necessary database, while merely 38% have the “right skills within the organization.”
66 per cent of them point to the ethically “correct use” of AI or artificial intelligence as one of the “biggest” or key challenges, and as many as 61 per cent of CEOs worldwide see it that way.
The topic of ESG also remains in the focus of German CEOs. 75 per cent state that they have already fully integrated ESG into their business in order to create additional value.
While the significant majority do not expect a short-term return on investment, 76 per cent assume that their ESG investments will “pay off in the medium to long term – in three to seven years.”
A third of CEOs see the greatest impact of their ESG strategy on their customer relationships and reputation, around a fifth “on their talent acquisition and 13 per cent on their financial performance.”
When it comes to sustainability reporting, most managers in Germany consider themselves to be well equipped: 80 per cent of CEOs state that they have the necessary skills and capacities to “meet standards and absorb the additional workload.”
Another finding of the “CEO Outlook”: German top executives in particular are unimpressed by arguments in favor of “working from home or a hybrid model.”
At 88 per cent, the vast majority expect their employees to “return to the office completely in the next three years.”
This expectation has therefore risen significantly compared to the previous year (68 per cent) and is also “higher than the global figure of 83 per cent of CEOs surveyed.”
German top managers can imagine incentivizing employees to return to the office: 92% want to reward employees “with attractive tasks, salary increases or promotions.”
About the “KPMG CEO Outlook”:
For the “KPMG CEO Outlook 2024”, 1,325 CEOs of large firms were interviewed worldwide and “across all industries between 25 July and 29 August 2024.”
The participants reportedly come from the markets of Australia, Canada, China, France, Germany, India, Italy, Japan, Spain, the UK and the USA.
The firms of all CEOs surveyed have “annual revenues” of over $500 million and are part of key industries (asset management, automotive, banking, insurance, consumer and retail, energy, infrastructure, life sciences, manufacturing, technology and telecommunications).