EY survey: Talent is not top of CEO priority list for 2022
ESG and digital transformation outrank talent retention and attraction.
Why You Should Care
Sustainability and digital transformation are top of the CEO priority list, according to EY.
Find out why talent isn't up there, but why CEOs must not overlook labor challenges.
The pandemic has challenged organizations across all sectors. For the past two years, employers have been grappling with how to protect their workers, keep their businesses alive and thriving, as well as continue to innovate and provide top class products to their clients.
CEOs have been leading the charge. They will need to continue to keep abreast of upcoming challenges to business and employee success as the COVID-19 continues to disrupt the global economy.
Looking ahead to 2022, climate change is a major risk to their company’s future growth, according to consultancy Ernst & Young (EY)’s 2022 survey of 336 US CEOs.
Mitch Berlin, Americas vice-chair of strategy and transactions at EY.
The risk was particularly prevalent for sectors like healthcare, life sciences, technology and telecommunications, EY Americas vice-chair of strategy and transactions Mitch Berlin tells UNLEASH.
Berlin explains that he was pleasantly surprised to see how climate change, and environmental, social and governance (ESG) concerns were moving up the CEO agenda.
It is clear that US CEOs see “ESG as a key driver for their business – and nearly all have developed a sustainability strategy”; this links to the fact that investor, employee, and societal expectations are evolving around ESG success.
Looking to the future, US CEOs have made it clear they want to “buy assets that accelerate sustainability strategies”.
Berlin notes that “25% of CEOs say their upcoming deal activity will be to strengthen their ranking, performance or sustainable footprint”.
CEOs overlook talent as a priority
Of course, companies and CEOs getting on board with ESG goals and strategies is amazing progress that will make a real difference in tackling climate change in the years and decades to come.
However, here at UNLEASH we were surprised to see that “[US CEOs] cited accelerated of climate change impacts twice as often as talent scarcity and cost”.
Credit: EY 2022 CEO survey.
In addition, EY found that planned investment in sustainability is also roughly double their expected investment in talent attraction and retention.
It is clear that sustainability has leapfrogged the war for talent for CEOs; an odd situation given the ongoing ‘Great Resignation’.
Berlin warns that although sustainability, geopolitical concerns around trade conflicts and supply chain bottlenecks might be “pressing constraints right now, the labor challenge loom below the surface and many leaders may not yet fully understand it”.
On another note, EY’s research shows that CEOs are very interested in mergers and acquisitions (M&As). 60% of the 336 CEOs surveyed said they expected to M&A in the next year, while 80% thought megadeals were coming next year.
Berlin notes that it is crucial that CEOs think about their people strategy around these deals. They can use M&A to acquire talent and fill skills gaps, and this can “make or break the value of the transaction”.
“Without a well thought out talent strategy, acquirers may be putting their capital at risk”, adds Berlin.
Tech intersects with talent
EY’s research did find, fortunately, that US CEOs are taking digital transformation seriously. It is among the top capital strategy issues for CEOs, alongside sustainability and investing in organic growth.
Credit: EY 2022 CEO survey.
Berlin notes that CEOs’ focus on tech and digital transformation has “matured” in the 2020s. “It’s not only that CEOs recognize the importance of investment in tech and digital, but they’re now asking: ‘How can we use tech and digital to accelerate our strategic journey?’”
CEOs are also thinking about how to use tech to “interact and build relationships with prospective talent”.
To do this, “we’ll continue to see companies invest in artificial intelligence, especially for sourcing and screening because it plays a critical role in the ability to identify and assess candidates better and faster”, according to Berlin.
Also, 22% of US CEOs told EY that they see using technology and automation to replace higher-cost labor roles and improve scalability as the second biggest strategic driver of profit margins.
Credit: EY 2022 CEO survey.
By applying “intelligent automation”, companies can use tech to make work more efficient, by freeing up humans to “focus on high-value-added tasks while taking care of repetitive, highly manual and low-skilled ones”, such as some payroll, finance, and accounting jobs.
“Most jobs will be based on human-digital interaction, offering humans the opportunity to focus on higher value-add”, as well as more strategic work, explains Berlin.
Now is the time for businesses to act. “CEOs who can’t or won’t take bold steps face a tough future,” concludes Berlin.
