While the rise of generative AI has sparked fears of job cuts, a new survey suggests that most executives are more concerned about the need for employee upskilling and data readiness. Despite these challenges, 86% remain optimistic about the technology’s potential to drive business growth.
A majority of Australian (58%) and global (64%) CEOs consider Generative AI (Gen AI) a top investment priority, despite the current economic uncertainty, according to KPMG International’s annual CEO Outlook survey. Now in its 10th year, the survey covers 1,325 CEOs across 11 leading economies, including Australia. The survey found that most Australian CEOs remain optimistic about the growth prospects for their companies over the next three years, even as they face increasing concerns about an economic slowdown. Yet, CEOs are feeling heightened pressures, with nearly two-thirds (64%) of Australian leaders and 72% of international CEOs reporting increased stress over ensuring long-term business success.
While 75% of CEOs worldwide, including Australia, believe their C-suite has a clear understanding of how Gen AI can drive competitive advantage, less than half (42% Australian, 35% global) feel their data is adequately prepared for a safe and effective Gen AI integration. Despite this, 72% of Australian and 76% of global CEOs do not expect Gen AI to affect staffing levels in their businesses.
Even though most (60% Australian, 63% global) do not foresee returns from AI investments for another 3-5 years, CEOs remain committed to Gen AI, viewing it primarily as a tool for increased efficiency through automation. The greatest challenge in AI adoption, however, is seen as ethical, identified by 52% of Australian and 61% of global CEOs. Additional concerns include technical capabilities, regulatory uncertainty, costs, and security issues. Only 40% of Australian CEOs (38% global) believe their employees possess the necessary skills to leverage Gen AI, but 50% of Australian (57% global) CEOs say the technology has prompted them to rethink employee training and development. Moreover, 69% of Australian CEOs (56% global) indicated that the integration of AI will influence the skill requirements for entry-level staff.
Economy and Challenges to Growth
A significant majority of Australian (86%) and global (76%) CEOs are confident about their companies’ growth prospects for the next three years, though 20% of Australian and 23% of global CEOs reported a decline in revenue over the past year due to the challenging economic environment. Some Australian CEOs (12%) are forecasting strong growth of between 10-20%, while others are more restrained, with 50% predicting growth of less than 2.5%.
On headcount, optimism prevails, with 54% of Australian CEOs and 58% of global CEOs forecasting growth in staff levels of up to 5%, and 36% (Australian) predicting growth between 6-10%. Only 4% anticipated staff cuts, a marked shift from last year’s survey when many expected reductions.
Surprisingly, 88% of Australian CEOs expressed confidence in the national economy, compared to 78% of overseas leaders about their own economies. Confidence in their specific industry sectors was also high, with 78% of Australian and 74% of global CEOs optimistic, though only 62% of Australian and 72% of international CEOs were confident in the global economy.
Return to Office and Talent Management
Most CEOs (82% Australian, 83% global) predict that traditional white-collar roles will fully return to the office within three years, up from 66% in the previous survey. A large majority (78% Australian, 87% global) plan to reward employees who make the effort to work from the office, with rewards like raises, promotions, and better project assignments.
Beyond workplace location debates, other talent-related concerns remain significant. Over a third of Australian CEOs (36%) are worried about labor market shifts, including a wave of impending retirements and a lack of skilled replacements. To counter the talent shortage, 84% of Australian CEOs (80% global) agree on the need to invest in skills development and lifelong learning within local communities.
ESG and Climate
ESG concerns have taken on greater importance for Australian CEOs, with 82% saying they would divest a profitable business segment if it were damaging the company’s reputation—a notable rise from 54% last year. Likewise, 82% are willing to take a stand on contentious political or social issues, even against board concerns.
However, heightened ESG awareness has also increased the risks for CEOs. Over a quarter of Australian CEOs (26%) see a failure to meet ESG expectations as a threat to their tenure, while a significant proportion (43%) admit they are not adequately prepared to withstand the scrutiny that comes with unmet stakeholder expectations.
Operationally, 80% of Australian CEOs say they have fully embedded ESG into their business processes to increase value. They believe ESG strategies are most effective in building customer relationships and brand reputation, rather than driving immediate financial performance.
Regarding climate goals, 70% of Australian CEOs believe they will meet their net zero targets by 2030, though they cite complex supply chain decarbonization and a skills gap as significant obstacles. A majority (62% Australian, 60% global) agree that businesses are expected to lead on issues such as Inclusion, Diversity, and Equity (IDE) as trust in governments declines—a notable increase from 44% of Australian CEOs last year. CEOs also expect increased scrutiny over IDE in the coming years and agree on the importance of investing in skills and lifelong learning to promote social mobility.
Achieving gender equality in the C-suite is viewed as crucial by 80% of Australian CEOs, while fewer expressed concern over mandated diversity quotas compared to their global peers.
Andrew Yates’ Insights
Andrew Yates, CEO of KPMG Australia, notes that Gen AI’s potential to transform businesses explains its high priority among CEOs, and he is encouraged by the technology’s perceived role in improving job productivity rather than threatening employment. He also emphasizes the value of government initiatives like the voluntary AI Safety Standard in ensuring ethical AI deployment.
On ESG, Yates acknowledges that while most companies have embraced the “new ESG era,” there are ongoing challenges, particularly as Australia moves towards mandatory reporting, which will reveal the true extent of ESG integration in business operations.
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