Bosses prepared to lure staff back to the office with higher pay and promotions

Global CEOs predict staff will be working full-time from offices in the next three years and that investing in AI will power global economic growth, according to a survey of top business leaders by international professional services company KPMG.

More than four in five company leaders (83%) think hybrid working will be soon be a thing of the past, up significantly from 64% (three-in-five) in 2023.

The majority of the bosses, drawn from 11 major global economies, including France, Germany, Italy, Spain, the UK, USA and China, reported a willingness to offer staff sweeteners to lure them back to the office.

Around 9 in 10 (87%) were happy to reward staff who made the effort to be in the office, with favourable assignments, pay rises or even promotions.

European confidence in global economic growth is lower than the average

The wide-ranging KPMG survey of 1,325 top CEOs overseeing companies with annual revenues between US$500m and US$10bn, provides a snapshot of their priorities, plans and concerns across 11 key industry sectors - asset management, automotive, banking, consumer and retail, energy, infrastructure, insurance, life sciences, manufacturing, technology, and telecommunications.

The polling found that confidence in the growth prospects of the global economy had fallen considerably over the past ten years since the survey was first conducted.

Only 72% of CEOs were confident about the direction of the world economy over the next three years, compared to 93 percent in 2015.

Across European nations, confidence rates were slightly lower than the average. Among business leaders in France, Spain and Italy only 68% believed global economic growth would improve in the next three years.

Only in Germany, Europe’s largest economy, and the UK, which sits outside the European trading bloc, were confidence levels slightly higher at 69% and 70%.

Supply chain challenges are a big concern for bosses

The threats to growth cited by company bosses have shifted over the past year. In 2023 the number one concern was geopolitics and political uncertainty, driven in part by the war in Ukraine and elections in countries including in the USA, UK and India. Cybersecurity challenges were also a major concern for bosses last year.

In the latest KPMG survey, supply chain challenges and operational issues were the biggest threats. The effective closure of one of the world’s major trading routes in the Red Sea, after terrorist attacks on shipping by forces sympathetic to Hamas, has severely affected the smooth flow of global trade.

As one of the world’s major trading arteries, Red Sea routes account for between 12-15% of global trade, disruption has proved catastrophic.

Avoiding the conflict zones is adding several days and millions of dollars in extra costs to companies and ultimately consumers. With instability in the Middle East region increasing, the prospects of a swift return to normal are slim.

Despite the challenges, KPMG International CEO Bill Thomas believes the route to global economic prosperity lies in brave bosses making brave investment decisions.

“Turbulence calls for leaders to be more resilient, agile and innovative than ever before. As we look ahead at the next ten years, CEOs who set bold strategies to adapt to our fast-changing world and invest in the right technologies and talent to make their plans a reality, can deliver sustainable, long-term growth,” he said.

AI is the future

The race to harness the potential of artificial intelligence (AI) is one of the top issues for CEOs as they look to drive growth through their investment decisions, the research found.

A majority (64%) identified AI as their top investment priority in 2024 – though most are looking at it as an investment that will pay off in the medium term, with 63% expecting to see a return on investments within the next three to five years. Bosses see the main benefits of AI as being a way to turbo-charge efficiency and productivity, upskill the workforce for future readiness, and increase organisational innovation, but they are aware that the new technology comes with risk.

Well over half (61%) of CEOs cited ethical challenges as some of the most difficult to address when implementing AI within their business, while a lack of regulation (50%) and technical skills and capabilities (48%) were other areas of concern.

Over three quarters (76 percent) of CEOs believe that AI will not fundamentally impact the number of jobs in their organisation, but only 38 percent felt their employees have the right skills to fully leverage the benefits of AI.