A majority of business leaders this year are turning their attention away from the pandemic to fighting inflation, recruiting and retaining workers, worrying about their supply chains, and digitally transforming the tax function and other parts of their business, according to a survey released Thursday by PricewaterhouseCoopers.
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Given the evolving global tax environment, other changes leaders are anticipating include automating processes (38%), making sizable technology investments (36%), increasing the use of outsourcing, managed services or third parties (29%), revisiting overall employee headcount (27%), changing capital investment strategy (27%) and rethinking deals strategy (26%). Over half (55%) of the respondents are anticipating higher U.S. corporate taxes are likely this year, but 12% believe those prospects are unlikely.
“The reality is that the CEOs we’re speaking with more and more these days are asking themselves the question: How do we stay ahead?” said PwC US chair and senior partner Tim Ryan during a conference call Thursday with reporters. “How do we meet the rising needs of our stakeholders, our customers, our investors, our employees, our communities? How do we make sure we’re doing the right things, whether it be what we pay in taxes, how we protect data with cyber and whether we use data the right way, whether our algorithms are biased, whether our usage of consumer data is ethical and meeting not only laws but what consumers’ expectations are. The bar on trust continues to rise with executives and how they treat their employees. The topic of trust and trust building and creating trust as an asset is very much on the minds of CEOs, and we’re seeing more and more investments in moving from a backward to a frontward building of trust as a competitive asset and advantage at many, many companies out there.”
The retention of talent will be key as many industries continue to experience labor shortages. The more than 650 C-suite executives polled by PwC cited the ability to hire and retain talent as both the most important factor (77%) and biggest risk (48%) in reaching their organizations’ growth goals in 2022.
Nevertheless, business leaders are less optimistic about the current labor market, with only 36% believing that voluntary turnover will return to the pre-pandemic rate by the end of the year, and only 31% expecting talent shortages to ease by the end of the year. The board members who responded to the survey see talent management as a top issue, with 73% planning to devote more time to workforce and diversity, equity and inclusion (DE&I) efforts.
Business leaders intend to maintain several initiatives to retain and attract talent, including offering hybrid work options for employees (43%), increasing career advancement and upskilling opportunities (36%), increasing compensation for employees (31%), making remote work a permanent option (30%) and improving benefits for employees (30%).
“It’s no major surprise that hiring and retaining talent is critical right now for organizations. In the volatile job market, employees are increasingly able to dictate their terms, whether that be around compensation, benefits, flexibility, even the nature of the work that they do on a day-to-day basis,” said PwC workforce transformation principal Julia Lamm. “Building a really solid employee value proposition is critical. Based on my conversations with business leaders across industries, 2022 is going to be a critical year to double down on trust between employers and their employees.”
Along with talent issues, executives pointed to supply chain disruptions and vulnerabilities (32%), the U.S. policy and regulatory environment (29%) and business model changes (28%) as the largest risks affecting their organizations’ growth. Only 45% of the respondents predict supply chain disruptions are likely to ease by the end of 2022, and 62% of business leaders said they will increase the price of goods and services in 2022 to manage against risks.
“An interesting phenomenon here, and we’re seeing this in the marketplace, is the rate of inflation obviously has been coming in at rates not seen in a long, long time, i.e., in about 40 years,” said PwC vice chair and consulting solutions co-leader Neil Dhar. “Many of our leaders in business are dealing with this issue for the first time in their careers, given how long ago it happened. We’re all learning together how to manage through this. The pressure that exists on the rising cost of goods, coupled with the continued impact of the pandemic and the Great Resignation, is demanding increased attention and new skills from these leaders.”
Many companies are relying on their tax departments to be automated and adjust to changing rules and regulations. “Tax has certainly been a focal point for action more than ever over the last couple of years as we’ve dealt with the world of technology disruption, a challenging geopolitical environment, increasing focus on climate change, and the enduring impacts of the COVID-19 pandemic we’re all dealing with,” said PwC US tax leader Ken Kuykendall. “Based on the conversations I’m having with tax leaders, what I’m seeing is businesses are continuing to navigate driving the policy decisions in Washington, D.C., and globally, and they’re also doing so against the backdrop of internal transformations in the digital focus.”
