U.S chief executives officers got their mojo back. PricewaterhouseCooper’s latest global CEO survey indicates that optimism arises as growth and sourcing opportunities emerge. Meanwhile, business-government collaboration on key issues is seen as a driver for competitiveness and job growth, along with plans to increase the talent roster.

The relatively slower recovery in the United States hasn’t dimmed the optimism of its chief executive officers. Three years into the recession, their short-term confidence returned to pre-2007 levels and came in sync with CEOs around the world.
Nearly 56 percent of U.S. CEOs are very confident about business prospects for the next three years, according to PricewaterhouseCooper’s (PwC) 14th Annual Global CEO Survey (www.pwc.com/ceosurvey). U.S. CEOs who indicated they are “very confident” over the next 12 months rose from 35 percent in 2007 to 45 percent in 2010, after a big 15-percent dip in 2008. Confidence rose close to 2006 levels, when 53 percent of U.S. CEOs were quite optimistic about revenue-growth outlook.

Growth Sources: Capitalizing on Quality and Innovation
PwC’s survey—which entailed 1,201 interviews conducted with CEOs in 69 countries during the last quarter of 2010—revealed that U.S. CEOs expect to grow their operations internationally, particularly in Asia and Latin America. But growth may not come exclusively from emerging markets. Sourcing within the United States seems to be a significant driver of opportunity, as outside CEOs see the country as both a market opportunity and a sourcing solution.

In fact, the United States is next only to China—and ahead of India and Brazil—as the country most important to CEOs’ sourcing needs. These business leaders cite the higher quality of products and services that U.S. companies can provide, as well as other advantages: financially-stable, cost-competitive suppliers; companies with decades of proven experience serving international markets; the United States’ extremely low overall risk profile; and business partners capable of innovating products on the fly.

Leading firms in other countries also look to the United States for market potential. Once again, after China, it was the country most often named by non-U.S. based CEOs as important to growth prospects over the next three years – ahead of Brazil, India and Germany. U.S. CEOs recognize these opportunities: 68 percent say they plan to increase their commitment to generating innovations and safeguarding intellectual property over the next three years.

“Emerging market-headquartered companies are enhancing their global networks of suppliers and partners,” said Bob Moritz, chairman and senior partner, PwC US. “There is a tremendous potential here to create new opportunities, including jobs, to revitalize the U.S. economy. A renewed focus on quality, innovation and talent pools—where we appear to have a competitive advantage—will further establish the United States as an attractive sourcing location for these companies.”

Shared Priorities
In many economies around the world, governments and private sectors forged alliances, especially as countries tackle structural weaknesses exposed by the recession. This is particularly true in three big areas: talent, innovation and safeguarding intellectual property, and improving infrastructure. Unlike global CEOs, who expect government and business to share responsibilities, U.S. CEOs currently see a shared responsibility for just innovation and safeguarding intellectual property. This gap, particularly in talent development, holds the potential to create a short- and long-term threat to the competitiveness of the U.S. economy.

“We cannot overstate the importance of shaping a constructive working relationship between U.S. business and government to help drive growth and create jobs,” said Moritz. “The recently announced review of regulations that impede the ability of U.S. businesses to compete around the world is clearly a step in the right direction. But this is only a start. Tangible actions and ongoing collaboration are needed to serve the short- and long-term interest of the economy.”

Talent back on the Agenda
More global CEOs (82 percent) say they plan to increase their commitment to creating and fostering a skilled workforce than U.S. CEOs (76 percent). However, U.S. CEOs are more likely to put primary responsibility for talent management on government, whereas global CEOs see it as more of a shared challenge and plan to significantly increase their own commitment.

More than half of global CEOs (51 percent) and U.S. CEOs (55 percent) plan to increase their headcount in the next 12 months, but they fear they may not have access to people with the right skills in the right places. Fifty-six percent of global CEOs and 38 percent of U.S. CEOs expressed this talent availability concern. Many cite issues such as integrating young employees and forecasting talent availability in emerging markets as the challenges they and their leadership teams need to address.

“Talent is being shaped in different ways,” said Moritz. “Business leaders must be deeply involved in these efforts, strategically and tactically, when needed. We expect to see innovative partnerships develop and deploy talent as the demand for education soars worldwide while many government budgets shrink. Without a strong pipeline of future talent, companies won’t have the capacity to pursue new opportunities and organizations won’t realize their full potential.”

Delicate Balance: Risk and Growth
U.S. CEOs temper confidence with a greater focus on managing risk and competitive threats to business. More than anywhere else, U.S. CEOs aggressively address risk management, particularly expanding responsibility and accountability throughout their organizations. Indeed, more U.S. CEOs (86 percent) say they are changing their strategies to allocate more senior management attention to risk management than global CEOs (72 percent) and adjusting performance incentives to account for risk (54 percent in US vs. 36 percent globally). Further, more U.S. CEOs say they are incorporating risk scenarios into strategic planning (82 percent vs. 67 percent) and allocating more board meeting attention to risk management (68 percent vs. 58 percent).

When asked which global risks posed the greatest potential challenge to growth over the next three years, U.S. CEOs cite political instability first at 39 percent, with 65 percent factoring this into strategic planning and risk management activities. Other key challenges to growth include natural disasters (which 31 percent cite), pandemics and other health crises (27 percent), terrorism (27 percent), scarcity of natural resources (25 percent) and climate change (17 percent). U.S. CEOs cite economic growth forecasts or uncertainty, however, as the primary factor that has influenced their business strategy in fundamental ways.

“U.S. CEOs stand out from others in being more attuned to risks they face to a sustained recovery,” said Moritz. “It’s important, however, that CEOs balance such heightened risk awareness with smart risk-taking as the United States looks to seize new growth opportunities.”

PricewaterhouseCoopers (PwC) delivers value-added professional services to clients. PwC focuses on audit and assurance, tax and advisory services. In the United States, PwC concentrates on 16 key industries, providing targeted services that include—but are not limited to—human resources, deals, forensics and consulting services. For more information, visit www.pwc.com/us.


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