Private companies find themselves transforming as they seek to meet the changing expectations of their customers and employees. A new study finds that CEOs from private companies across the globe are positive about their growth prospects in the years ahead, although many say that they are undergoing significant changes to meet a growing demand for more socially responsible and environmentally sustainable operations. Meeting the changing expectations of talent, in a bid to keep them on board, too is expected to see companies push through cultural and behavioural changes in the coming years.
A new report from PwC explores how CEOs around the globe are rising to the challenge of what has become a period of rapid change; in which private companies benefit by accelerating pace of technological advances, as well as the effects of profound geopolitical, environmental, and economic shifts. The survey involved 1,400+ interviews that were conducted in 83 countries. By region, 476 interviews were conducted in Asia Pacific, 314 in Western Europe, 170 in Central and Eastern Europe, 169 in Latin America, 146 in North America, 87 in Africa and 47 in the Middle East.
The survey finds that CEOs are upbeat about growth prospects for their respective firms in the coming year. The most confident are private partnerships, where 86% expect growth, while for private companies, 81% are confidence that their company is set to grow. Public companies, too, are positive about the short-term, with 84% expecting growth. In the coming three years, private companies are even more confident about their growth prospects, with 91% believing that they will continue to grow. In terms of the market from which growth is derived: 37% believe the US will be the driver, 31% China and 19% Germany.
The research highlights that expectations of a business’s role within society, from the perspective of a range of stakeholders, is changing. These changes are placing increased pressure on organisations to transform in order to meet expectations. The biggest driver for change comes, maybe unsurprisingly, from consumer expectations – although employee expectations, too, are changing fast. As it stands, 90% of all CEOs say customers have a high or very high impact in this respect, and the figure is marginally higher for private company CEOs, at 91%. One example of changes within the consumer sphere, is meeting an increasing demand for ‘ethical’ products and services, with 74% of private companies doing this to some extent, and 27% are making significant changes. Companies, according to the report, are also seeking to transform their wider business practice in light of changing expectations – with private companies less concerned about the effect meeting expectations will have on their bottom line: 30%, versus 37% for public companies.
Responding to expectations
A number of different techniques are being deployed to meet the changing expectations of business stakeholders. The largest change is related to the use of technology to assess and deliver on wider stakeholder expectations, with 54% making significant changes and 36% making some changes. Companies are also changing the way that they define and manage risks, as changes to what is important in the minds of stakeholders impose new problems for companies. Accountability and success, too, are changing, with 33% saying that significant changes in the area are in the pipeline, while 49% say that some change will take place.
The areas of least concern are how tax affairs are managed – an area in which large corporates have copped significant flak in recent years – with only 19% seeing significant changes, while 34% see no changes at all. Another area in which considerable social and environmental questions are raised, is the company supply chain, for which 20% plan no changes while 24% will significantly change their practice.
According to the survey, companies are more and more concerned about having the right people in their pipeline to lead the company – cited by 47% of respondents. Workplace culture and behaviour, too, is seen as concerning for companies. The report highlights that one of the business stakeholders of particular concern, for private businesses, are millennials. This group, which is projected to be the dominant pool of talent within a decade, brings with them a strong set of personal values that – if a company wishes them to stay – needs to be reflected in the culture and practice of the company.
Interestingly, one of the areas of least concern to private businesses is focus on automation, at 17%, while diversity and inclusion – another issue highlighted as boosting business growth – is seen as a concern by 18%. The survey further finds that another issue highlighted as important, the focus on employees health and well-being, is also of little concern to CEOs surveyed at 19% - while a reputation as an ethical and socially responsible employer comes in at 29%.