Business Talent Prioritise Social Values

Eight out of 10 Australian CEOs have acknowledged in a new report that their top talent want to work with companies with social values that align with their own.

The PwC 2016 Annual Global CEO Report found that Australia’s economy is readjusting after the mining boom, China’s economy is slowing, and the speed of technological change and a huge leap in cyber-attacks means volatility is the everyday norm.

“We’re seeing Australian CEOs respond by focussing on cost-cutting measures and reducing headcount. While there’s merit in this, the focus should be on productivity, innovation and R&D, as these will lead to the long-term sustainable growth Australia needs,” the report said.

“The stakeholder pool is broadening and with it comes challenges of who, and how, companies can effectively communicate organisational values and purpose to. It’s no longer just financial investors or regulators that are essential stakeholders, rather customers, industry competitors and local communities who seem to yield significant impact on organisational strategies.”

On the talent side, the report found that 78 per cent of Australian CEOs said that their top talent wanted to work with organisations that share their social values.

At the same time, only 20 per cent of CEOs said investors were seeking ethical investments. However it was predicted that this rate would rise over time, with one-third of CEOs saying it will be important in five years.

The report said CEOs know that keeping the trust of their customers and stakeholders is fundamental to their organisation’s long-term viability “but trust, it appears, is slowly eroding”.

“Two years ago 40 per cent of Australia’s CEOs were concerned about the lack of trust in business. That number has now jumped to 57 per cent,” the report said.

“CEOs are aiming to rebuild trust by doing a better job of meeting the widening expectations being placed on them. For example, one-third say they have changed their organisation’s purpose in the last three years to take account of the broader impact they have on society.

“But they recognise there’s more to do: more than half say that business should be doing more to communicate organisation purpose and value for stakeholders.”

The report said business leaders were also looking to deepen their organisation’s purpose into the future.

“A significant number of Australia’s CEOs say that the organisations who will be successful in five years time will prioritise long-term over short-term profitability (92 per cent), address wider stakeholder needs (86 per cent), report on financial and non-nancial matters (80 per cent) and put corporate responsibility at the core of everything they do (73 per cent),” the report said.

“Despite the strong incentives to do so, there are major barriers CEOs must face in order to respond to changing customer and stakeholder needs.”

Almost half are concerned about the additional cost to their business, and one-third cite conflict between stakeholder interests and financial performance expectations and more than one-quarter of Australia’s CEOs believe they don’t have the right capabilities to meet expectations.

The 2016 report discussed key issues across the CEO agenda including growth, transformation, measuring success and managing stakeholders. It considered the role that government has to play, in particular tax reform and helping secure a skilled and adaptable workforce with a focus on science, technology, engineering and maths (STEM).