This week KPMG 2025 published their annual Global CEO Outlook report and its findings surprised a good many in HR

Transcript:

Hello Humans!

My name is Barry Phillips and welcome to the podcast that aims to summarise in five minutes or less each week an important development relevant to HR.

This week KPMG released its annual Global CEO outlook report. It’s findings are interesting and from an island of Ireland perspective also quite surprising.

The report finds that despite confidence in the global economy falling to pandemic levels, 79 percent of CEOs are optimistic about their own organizations’ prospects and are strongly backing a combination of investment in AI (71 percent) and retaining and retraining of high-potential talent (71 percent) to sustain and fuel future growth.

Most CEOs (72 percent) have already adjusted their growth strategies to tackle ongoing, interconnected challenges. Looking ahead, the majority anticipate rising revenues and an increased workforce over the next three years. Expectations for AI investment returns have also accelerated, with most leaders now predicting results within one to three years — far sooner than the three to five years projected in 2024.

In this complex environment, CEOs acknowledge they must rethink their organizations’ roles and capabilities as well as adapting their growth strategies. Greater agility and faster decision-making (26 percent), transparency in communication (24 percent), and the ability to identify, prioritize and manage risks (23 percent) are seen as the top leadership capabilities needed today.

To mitigate structural risks and ensure competitiveness, CEOs are signaling intent through investment in people, AI, M&A and organizational design. Ninety-two percent of leaders plan to increase headcount, while a remarkable  69 percent are allocating up to a fifth of their budget on AI. 

CEOs are also acknowledging the increasing challenges of their roles — 59 percent believe that expectations and complexity have evolved significantly in the last five years with nearly a quarter (23 percent) singling out AI and broader digital literacy as essential leadership skills. In addition, 80 percent of leaders say they feel under more pressure to ensure the long-term prosperity of the business. However, this is much the same as a year ago — despite the turbulence, business leaders feel well-equipped to navigate what has become a persistently disruptive business environment. Change and challenge have become the ‘new normal’ and leaders are rising to the occasion.

So why is it that if a large majority of CEO when asked claim to understand the importance of AI that so many HR professionals we speak to complain that their senior leadership team just don’t get AI and the importance of actioning it? Earlier this year we surveyed closely 60 organisations across the island of Ireland and all three sectors and lack of direction from senior leadership was a common thread throughout most of the surveys. 

The explanation could be as follows. The research sample doesn’t reflect the organisations here in Ireland.

In the KPMG survey all respondents oversee companies with annual revenues over US$500M and a third of the companies surveyed have more than US$10B in annual revenue. The survey included CEOs from 11 key markets (Australia, Canada, China, France, Germany, India, Italy, Japan, Spain, UK and US) and 12 key industries.

Secondly, it  could be that the CEOs believe they’re serious about leading on AI but fail to set down their AI strategy in any tangible way. Tony Blair used to say about strategy that if it wasn’t written down it wasn’t strategy. No doubt his side kick Alastair Campbell would add that even if written down it is destined to fail if not properly communicated.

Maybe the problem isn’t the tech or the talent — it’s the translation. CEOs swear they’ve got a bold AI strategy, but if HR is still shrugging, maybe all they’ve done is mumble it into the boardroom carpet. A strategy that no one understands is just a wish list with better stationery. The real winners in the AI race might not be the ones with the biggest budgets, but the ones who can explain it clearly enough that everyone else can actually run with it.

Until next week bye for now.