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CEOs brace for a new wave of challenges in 2023

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CEO Survey: As economic outlook brightens, global uncertainty casts a shadow

Over the past several years, CEOs were forced to navigate the complexities of a global pandemic that shut down economies, snarled supply chains, and required employees to work remotely. Rather than getting a break as those pressures ease, CEOs now face a witch’s brew of new challenges including high inflation, spiking interest rates, faltering consumer confidence, and rising geopolitical tensions. Add the lingering complications caused by hybrid workplaces, and it’s no wonder CEOs haven’t got a cheery view of the world right now.In our survey of nearly 140 SoftBank portfolio company CEOs, conducted in November 2022, an overwhelming majority of respondents reported their outlook had darkened. Dig a little deeper, however, and it’s evident the concerns are far from uniform, differing broadly across region, industry, and stage of growth. You can explore and filter the full survey results using <a target="_blank" href="https://visionfund.com/insights/data/cmo-data-viz">Sōzō Pulse</a>.Despite the overall gloom, the survey also reveals a silver lining. Hiring and retaining talent—top areas of concern in recent years, as CEOs had to deal with a tight, competitive labor market and disruptions like the Great Resignation—have eased. Keeping workers is also easier, as employees now think twice before trying their luck in the job market.The data is a fascinating mix of blunt observations, nuanced details, and occasional contradictions. As CEOs seek to grapple with a new set of challenges, one of them captured the mood saying, “there is no crystal ball.” Here are five top insights uncovered by the survey.<h2>1. Pervasive economic concerns, but light at the end of the tunnel</h2>The challenges of COVID-19 have given way to new concerns. Falling equity markets, inflation, war in Europe, and tensions among superpowers are all contributing to an economic and funding environment that is radically different than just 12 months ago.None of this was lost on our participants. Four out of 5 respondents said they were less optimistic about the state of the economy than they had been a year earlier, while just 6% said they were more optimistic. When it comes to the issues most likely to affect their companies, <a target="_blank" href="https://visionfund.com/insights/finding-opportunity-in-cooling-market-conditions">market volatility</a> and inflation topped the list, with 50% and 45% of CEOs respectively saying their companies would be directly impacted. Those concerns were closely followed by access to capital (43%) and rising interest rates (42%). One concern is fading: Just 12% said COVID-19 would have a major impact on their companies in 2023. In something of a bright spot, many CEOs seem to believe that the worst may soon be over and don’t expect the <a target="_blank" href="https://visionfund.com/insights/leading-a-high-growth-company-through-an-economic-downturn">downturn</a> to persist long term. Nearly 41% say high inflation will be in the rearview mirror within 12 months, while another 31% believe that will be the case within 18 months. About 1 in 5 say inflation will stay high for two years, and only 6% say it will persist beyond that. Their views on the market, often seen as a leading indicator of where the wider economy is heading, seem to mirror that belief, as bulls outnumber bears. Almost half of CEOs say the S&amp;P 500 will be at least 5% higher at the end of 2023 than at the end of 2022, with 28% seeing a rise of at least 10%. Only 22% say the S&amp;P 500 will be lower by at least 5%, while 29% say it will be roughly unchanged.

<h2>2. Hunkering down</h2>The tough times have prompted CEOs to take a conservative approach to managing their businesses. Two out of 3 say they want to conserve cash and stabilize the business, while 53% are looking to grow organically. Prudence may be the watchword going forward, but the survey revealed many CEOs would temper that caution if an appealing opportunity presented itself. A little more than a quarter see 2023 as an opportunity to expand through M&amp;A. About a fifth see the new year as a chance to expand their company’s market share, while more than 1 in 5 see it as a time to “invest aggressively” in their product.

<h2>3. The pros and cons of hybrid</h2>The end of COVID-19 hasn’t brought an end to one of the pandemic era’s most transformative developments: the <a target="_blank" href="https://visionfund.com/insights/hybrid-work-statistics-2022">hybrid workplace</a>. Seven in 10 CEOs reported their companies would be hybrid in 2023. While still high, the number is down slightly from the beginning of 2022, when CHROs of 81% of companies told us that they would be hybrid. Conversely, the number of companies that plan to be fully in office has inched back up, but remains well below pre-pandemic levels. Fewer than 1 in 5 CEOs said they expected to be fully in office in 2023, compared to just 6% of companies early in 2022. Companies in Asia and the Middle East, however, are rejecting the hybrid and remote models in far greater numbers, with 53% saying they plan to be fully in office. Just 1 in 10 companies globally are fully remote. CEOs aren’t necessarily fans of this state of affairs. More than half reported that running hybrid teams made their jobs more difficult, likely a reflection of the competing benefits and challenges the setup creates. More than 7 in 10 expressed concerns that it’s more difficult to build culture in a hybrid workplace, while 43% say it makes product development harder. Opinions about the impact of hybrid work on productivity were more evenly divided, with 36% saying output per employee increases, and 31% saying it decreases. On the positive side, 48% of CEOs said hybrid work leads to lower turnover, and 34% said it makes it easier to build a more equitable workplace.Given that hybrid work has become the dominant modality, CEOs said they were looking for new approaches to foster company culture.

<h2>4. Hiring: A little relief</h2>A bright spot for CEOs in 2023 is the loosening of a historically tight labor market. As the global economy sputters, a host of big companies that bulked up during the pandemic have suddenly reversed course. Layoffs, particularly in the tech sector, have been a consistent theme in recent business news. While painful for the employees affected, it’s shifted the market back in the favor of employers.CEOs have certainly noticed. Nearly 3 in 4 respondents said they found it easier to find talent than they did a year ago. The trend was consistent across most regions, industries, and stages of growth. Similarly, 72% said it was easier to retain talent. Managing staff through a difficult economy remains a challenge for CEOs. They expressed a need to communicate candidly with employees about the state of their business as a way to foster trust and boost morale within organizations.

<h2>5. Stress and wellness</h2>The blur of crises and managerial challenges is weighing on CEOs. More than half of respondents said they were experiencing more stress today than they were a year ago. Just 7% said stress levels were down. By industry, health tech CEOs had it the worst, with 64% reporting their stress levels had risen.CEOs said they look to family, friends, and spouses for help dealing with stress and for support. CEOs also said they leaned on senior-level peers, co-founders, and other colleagues.The difficult times may be creating a cohort of superfit CEOs. More than a third cited exercise, gym workouts, and other forms of physical activity as ways they deal with stress. (One especially disciplined CEO reported running triathlons as stress management.) Meditation, yoga, and healthy diets were also common tactics for reducing stress.

CEOs tackle economic challenges and look ahead

CEOs - Q4 2022

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CEOs brace for a new wave of challenges in 2023

Our exclusive survey shows how leaders are grappling with rising interest rates, market volatility, and stress.

CEOs’ predictions for where the S&P 500 will be at the end of 2023 compared to the end of 2022

Expectations for how long high inflation will persist

CEOs see 2023 as a year to:

Planned approach to work

Impact of hybrid work on the CEO job

Talent acquisition is easier than a year ago

Talent retention is easier than a year ago

Companies that cited hiring and retention challenges as a top concern that would affect their business

Change in CEO’s stress level since the beginning of 2022

CEOs tackle economic challenges and look ahead

Paper’s fast learning curve