At the beginning of the year, the promise of a post-pandemic boom still seemed a real possibility. Despite some uncertainties, most economies seemed robust.
Consulting firm McKinsey even titled one of its outlooks, "The CEO agenda in 2022: Harnessing the potential of growth jolts" Such lofty ambitions now seem a distant memory. Considering all the drama that unfolded since, I decided to ask leaders what their main concerns are today.
The questions were inspired by the annual survey conducted by The Conference Board. While they collect data from the C-Suite only, I deliberately included middle managers. The logic is simply: most strategies fail during execution. If the rank-and-file has a different view of the world, a CEO's agenda is likely to fall on deaf ears. Of the 204 responses, 45 percent are from senior executives and 55 percent from middle managers.
The Main Challenges
The two topics that dominated the news in 2020 and 2021 are not expected to matter much in the next 12 months. When leaders were asked which external factor they expect to have the greatest impact on their business, just 0.5 percent picked social justice and 4 percent Covid-19 disruptions.
Instead, the prospect of recession has shifted the focus of many bosses whose response was reminiscent of Bill Clinton's 1992 election campaign slogan: "it's the economy, stupid!"
Inflation is by far the biggest concern with a full quarter of respondents picking it as the most important factor. That is followed by labor shortages (15 percent) and supply chain issues (13 percent), highlighting that companies are worried about threats to day-to-day operations. In the US labor shortage even tops the list.
The unrelenting march towards a digital future has not been forgotten either. Digital transformation and changes in consumer behavior also make the list of pressing issues.
The conclusion from this is obvious: deal with immediate economic threats first but do not forget the fundamental shifts in how consumers purchase products and services
Managers and Executives Are Broadly—But not Entirely—Aligned
The good news first: broadly speaking senior executives and middle managers agree on what issues are most pressing. Both put rising inflation on top if the list.
There are also a couple of surprises though. Climate change is considered an important issue for senior executives. Clearly the pressure from external stakeholders and a realization that companies need to invest now if they don't want to be left behind has sunk in. Unfortunately, they have not been able to communicate this sufficiently to middle managers. Only social justice is less important for them.
The second insight: senior executives are not fully aware of the operational issues faced by middle managers dealing with supply chain disruptions. Here a dangerous disconnect looms.
Senior executives need to open the board room more widely. As strategic issues are discussed, they should reach out to middle managers. It's the only effective way to overcome the perception gap. While this might be more time-consuming initially, it will pay off during execution.
What Companies Are Doing
The survey also asked on which issues the respondents companies actually focus on. Respondents were able to pick more than one in this question.
Building a resilient supply chain is sixth out of ten, underlining that this is an issue that does not receive sufficient attention. Other than this, actions align with those issues what matter.
More than one third (34 percent) of companies try hard to attract talent, 31 percent invest in the development of new businesses, which is underpinned by accelerating digitalization (31 percent) and developing a better understanding of changing consumer needs (22 percent). Finally, the pressures on the labour market also spurred companies to invest in new ways of working (15 percent).
For the moment, the good news is that order books full and companies have the luxury to invest in all these issues. Once the economy tightens, they will have to make hard choices. The danger is that digitalization will fall off the radar the same way climate change and social justice already has. In the long run the winners will be those who will continue to invest in these fundamental shifts.
This article was written by Christian Stadler from Forbes and was legally licensed through the Industry Dive Content Marketplace. Please direct all licensing questions to email@example.com.