The mid-year ‘pulse’* of leaders and their organizations as we are half-way through 2023, shows that overall, there is a significant degree of wary optimism about the next six-to-12 months amongst senior executives, both for the global economy and their companies, yet there is an acute understanding that major market challenges remain.

The survey was completed by leaders responsible for medium-to-large scale businesses in a variety of sectors, including financial services, consumer, industrial, technology, and infrastructure. We asked them to take a view on where their expectations lie for the next six-to-12 months, and what their biggest priorities are, and if this has changed since the start of 2023.

Moderate Optimism for the Economy
Slightly more than half (51%) of the respondents are positive about the prospects for the global economy in the next six-to-12 months, with 26% saying they are very optimistic. However, most respondents (30%) are simply unsure what the short-to medium term economic future holds. Considering the downcast economic forecasts for the rest of 2023 and 2024, and the fact that some countries (e.g. Germany and New Zealand) are already in a recession, it is surprising that only 8% of leaders feel extremely pessimistic about the future health of the global economy.

Stronger Optimism for Company Performance
There is a greater degree of optimism when leaders were asked about expectations for their own company’s performance in the next 12 months. The majority of respondents (52%) are optimistic, although most leaders are only slightly optimistic. A small number (7%) feel that their company’s performance will be significantly weaker this year compared to last.

The most common reasons for this optimism include inflationary pressures weakening, as well as the labor market continuing to be both strong and resilient (although some mentioned that this is also a negative – see below). Another positive metric is that consumer spending is near or at all-time highs in the major economies of the US, China and India. Whilst consumer confidence in OECD countries is nowhere near as high as it was in 2018-19, it has rebounded strongly from a year ago, when it reached its lowest point in 10 years.

Top Priority: Customer Acquisition, Retention
Presented with a list of organizational priorities that respondents ranked from most to least important right now, leaders said that customer acquisition and retention is the most critical element, followed closely by talent acquisition and retention. The least important is digital transformation and technology adoption, and the next least important is regulatory compliance and risk management. Of moderate importance was financial stability and profitability and innovation and staying ahead of competitors.

However, it is important to note that when averaged out, the quantitative margins for all six factors were quite small. In other words, of all these priorities, none were significantly more important than any of the others (see below).

When asked if there were any additional priorities that were not on the list, quite a number of leaders mentioned banking and vendor management. The US banking crisis in March which resulted in the collapse of three banks, most notably Silicon Valley Bank, forced many organizations to question their vendor choices, structures, and processes for things like banking and payroll.

“Digital transformation and technology adoption has decreased in importance in recent years, as the more immediate concerns of customer acquisition and securing the right leadership in an inflationary environment have taken center-stage,” said Julian Buckeridge, Managing Partner at NGS Global’s office in Shanghai, China. “However, I expect tech and digital prioritization to resurge in importance in coming quarters, as the rapid adoption and upscaling of artificial intelligence turns into a major opportunity for businesses.”

Talent Market Remains Tight, Challenging
As the second-most important priority, more important than even financial stability and profitability, talent acquisition and retention remains a huge challenge for companies throughout 2023. When asked about the difficulty of hiring leaders and executives at their organizations now compared with 12 months ago, most respondents (31%) said it is about the same, but more than one in five (22%) said it is slightly worse, whilst similar numbers (18%) think it is slightly better. Whilst these results are mixed, they do indicate that there is no end in sight, with only 8% saying that the availability of talent has vastly improved since last year.

When asked to elaborate on this issue, a considerable number of leaders suggested that they need both vision and flexibility to secure and retain top talent, and in the current climate, this is more important than monetary salary.

“This survey indicates a perhaps unexpected degree of positive sentiment amongst business executives and leaders, albeit tempered by ongoing concerns around the extreme competitiveness for talent and customer acquisition,” explained Dr. Udo Maier, Managing Partner for NGS Global in Munich, Germany. “Companies that can provide genuine yet differentiated value and support for both their client-base and employees are best-positioned in the current climate.”

*NGS Global