A Swiss CEO says: “The biggest issue today is to establish growth – long-term growth for investors and shareholders – and, at the same time, to achieve a balance for social issues.”
An Italian CEO says: “We have to accept the idea that we are now operating in a market with more elements of risk.”
A German CEO says: “The problem with globalization is that poor people get poorer. We need to think about that and do something.”
How is a chief executive officer (CEO) to reconcile the three views above? If a CEO is to keep hold of the reins of power, the business challenges that he or she will face today are numerous and fundamental: grow the business in difficult economic and politically sensitive times; create and manage an efficient organization and balance returns to shareholders with increasingly vocal calls for corporate social responsibility (CSR).
Little wonder that CEOs the world over – and certainly in Europe – are, according to PricewaterhouseCoopers' fifth annual Global CEO Survey, displaying a mixture of nervousness and optimism with regard to their own role in shaping the future of the global economy.
As the global and European business communities enter a period of unusually rapid organizational change – seemingly characterised by a long-term pattern of workforce reductions and the outsourcing of non-core business processes – CEOs will be under increasing pressure to marshal their resources and management teams to pull it all together. Not an easy task in the best of economic and political times. A test of monumental proportions today.
A changing world
The reverberations of 11 September were heard across the globe. As one CEO in Australia said: “People are uncertain and unsettled by events in the world. We are not machines. People were genuinely rocked by what they saw.” Another in Venezuela added: “I try to do business as usual, but it is not the same.”Not surprisingly, considering Europe's strong ties with the US, European companies and their CEOs were strongly affected, either directly or emotionally.
Although, overall, European CEOs appear to have been the most moderate of any world region in their response to 11 September (besides Europe, interviews took place in North America, South America and Asia), their short-term reactions have nonetheless included revising financial forecasts downwards, creating or updating disaster recovery plans, imposing travel restrictions and cutting overall spending.
Over the longer term, European CEOs see the most likely impacts to be potential vulnerabilities in their global supply chains, continued stagnation in the global economy, reduced emphasis on overseas investment and expansion and growing opposition to globalization.
Interestingly, though, certain other potential impediments to success – such as the existence of corrupt business practices, lack of effective judicial and legal systems and unstable economic prices – appear to be less significant worries for European CEOs than for those from any other part of the world.
Also, in spite of Genoa and other such protests, European CEOs remain almost uniformly pro-globalization, believing that it will be a positive force for economic change. Indeed, the majority of them also believe that globalization will be positive for social change and very few see anti-globalization protest movements as a genuine threat to business in the 21st century.
An increased focus on corporate social responsibility
Fewer European CEOs consider that their company is already seen as having a positive social reputation, when measured against their American peers. At first sight, this might seem puzzling, given the greater emphasis on social models within Europe, but in reality this may simply indicate that corporate social responsibility (CSR) has become more fashionable and widespread – in concept if not always necessarily in substance – more quickly across the Atlantic.
Thirty-five per cent of European CEOs (the highest of any region) still see CSR as largely a public relations issue. This is reflected in the fact that there is the lowest formal reporting of CSR in Europe, in either the annual report or elsewhere.
In Europe, the greatest factors influencing the development of a company's social reputation appear to be the provision of a safe and healthy working environment, the need to act responsibly towards all stakeholders and maintaining a good environmental performance, while still creating value for shareholders.
This article was first published in European Business Forum Issue 10, Summer 2002.