CEOs Weigh in On COVID-19 Pandemic
While much uncertainty and volatility exist, chief executives are staying calm, focusing on the facts and planning in the early weeks of the spread of COVID-19.
In a recent snapshot of sentiment among global business leaders conducted 10-13 March, the YPO Chief Executive Global Survey on the Business Impact of COVID-19 found that of the more than 2,750 respondents, most have experienced negative business impact and many more expect to experience it in the next six months.
While many projections are dependent on the overall severity and timing of outbreak peaks around the world, the majority of leaders expect no significant negative impacts on revenue (54%), number of employees (77%) and total fixed investment (70%) a year from now and are working to stay ahead of anticipated challenges.
Projected COVID-19 impact
Business travel (87%), new business development (62%) and revenues (58%) are the three top areas most chief executives say they are currently experiencing COVID-19 impact. However, even this can change as CEOs may feel differently after the peak of the virus outbreak. Those in areas currently experiencing COVID-19 outbreaks are more pessimistic than the average. China appears past its peak and more optimistic than the sentiment of chief executives who are currently experiencing the height of the virus in their countries.
- Asia* (84%), South Asia** (78%), MENA (74%), and Europe (70%) are the regions where the most chief executives have experienced a negative impact on revenues. The regions where the least chief executives have experienced a negative impact on revenues are the U.S. (50%), Australia/New Zealand (52%) and Canada (45%).
- Globally, chief executives from the construction industry (36%) are the least likely to be seeing impact to revenue, while hospitality/travel (89%) and retail and wholesale leaders (61%) are among the most likely to be experiencing negative impact. However, 10% of sector-specific retail and wholesale leaders as well as leaders of production firms (agriculture, factories, mines and utilities) are reporting a positive impact to their revenue.
CEOs expect things to get worse before they get better
Almost all business leaders (82%) are expecting declines in revenues over the next six months, but one year from now, more than half (54%) expect revenue to remain the same or be better. Chief executives in countries with the highest numbers of reported COVID-19 cases are more likely to report expecting a more than 20% decrease in sales over the next year.
- Sixty-one percent of chief executives expect their total fixed investments to remain unchanged year-over-year.
- Seventy percent of respondents expect their businesses’ total number of employees to remain the same by this time next year. Businesses in MENA (33%), Europe (29%) and South Asia** (27%) are the most likely to be expecting a decrease in total number of employees while businesses in the U.S. (20%) and Latin America (23%) are the least likely.
- In Asia (excluding South Asia) and MENA, 34% and 33% of chief executives respectively expect a greater than 20% decrease in sales (turnover) within the next year, the largest of any region. In the United States, only 13% of chief executives expect a greater than 20% decrease in sales (turnover) within the next year, the lowest of any region.
Focused and swift
Ninety-five percent of leaders report taking action in response to COVID-19. These actions include communicating more regularly with employees (68%), adopting new health and safety procedures (67%), cancelling major events (64%), and halting business travel (53%). This new environment has also driven chief executives to shift short-term goals (32%), research new business innovations (28%) and make changes to their supply chains (18%). Looking at the data regionally, nearly half (49%) of European chief executives and Asian (excluding South Asia) chief executives (42%) have implemented remote working for all employees.
As of 13 March 2020 (when the survey closed), the majority of companies globally have halted business travel; the lowest numbers come from North America (U.S. 45%, Canada 46%), Latin America (51%) and Australia/New Zealand (50%).
Leading through this crisis: CEO-to-CEO advice
YPO asked survey respondents to offer their best leadership advice for other chief executives during this global pandemic. Here are their recommendations:
- Stay calm. Make decisions based on facts and think beyond the crisis. We will recover.
- Anticipate. Be optimistic but plan for the worst. Prepare well in advance of a government mandated closure or quarantine. Set up a contingency plan and be ready to implement it.
- Communicate. Over communicate and reinforce what is precautionary and in the best interest of employees and the community. Be available to your employees and customers.
- Protect employee well-being. Assure the health and well-being of your team is a top priority. Work remotely as much as possible. Ensure support for staff during absences for medical issues, and plan for rotation of staff, and shared responsibilities to cover any potential staff shortage.
- Ensure financial resiliency. Focus on strategic financial resiliency plans. Cut costs wherever possible and keep cash. Make strategic investments to last through the recession.
- Find opportunities. Use this crisis to find opportunities to innovate or provide unique value. Negotiate better leases, hire available talent and increase market share through superior performance.
- Reduce travel and gatherings. Encourage and embrace working-from-home and virtual meetings. Implement home office policies. Send home anyone sick or showing signs of illness.
- Work from facts, not rumors. Choose your sources of information carefully. Rely on high-quality, balanced information to make decisions.
- Stabilize your supply chain. Reassess the risk exposure of your supply chain. Increase inventory for all materials coming from heavily affected countries. Look for alternate procurement channels.
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YPO Chief Executive Global Survey infographic
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*Asia includes Cambodia, China, Hong Kong, Indonesia, Japan, Republic of Korea, Malaysia, Mongolia, Myanmar, Philippines, Singapore, Taiwan, Thailand and Vietnam.
**South Asia includes India, Nepal and Sri Lanka.