Section 1: CEO Challenges and Issues
The first section deals with several general issues raised by CEOs during the qualitative stage of the research in 2006 and which were validated by the results of the previous two CEO surveys. In the first question, respondents are asked to rate the importance of 12 business issues on a seven point scale ranging from "not important" to "very important." Summary results are presented in Figure 1.
Most issues receive importance ratings that are statistically equal to ratings received in 2008, indicating that even in times of major economic change CEOs maintain a relatively consistent structure of priorities. "Customer loyalty and retention" and "corporate reputation" remain on top of this list, with "customer loyalty and retention" moving up slightly from last year. Two issues see their ratings decrease significantly from last year: "sustained, steady top-line growth" and "employee retention and recruitment." Both of these relatively small adjustments might be explained by the increased number of firms adopting a "maintenance" mentality rather than a growth mentality in early 2009.
At the other end of the importance continuum are the two global issues. As in the previous two years, these items rank at or below the scale midpoint. Once again, the lower rankings for these items do not indicate a general disinterest in global issues. Rather, the underlying distribution for each is bimodal, meaning that large numbers of executives think these issues are of great importance while large numbers also think these issues are unimportant. Specifically, 21.5 percent rate "growing internationally" a "6" or a "7," while 32.9 percent rate "global competition" a "6" or a "7."
Respondents rate the one new item, "raising capital or otherwise securing funding," near the middle of the scale. Some may find this ranking surprising given the well-publicized problems with credit markets in 2009. About half (55 percent) of the respondents rated this item a "6" or a "7."
The remaining items are spread across the top half of the scale, and have about the same ratings they had in 2008.
The second question of this section asks how likely it is that an organization will engage in one or more of several possible activities during the next 18 months. Summary results appear in Figure 2.
As in 2008, "succession planning" remains the highest rated planned activity on this scale, though it has dropped significantly over the past year. Not surprisingly, "adding jobs" has dropped while "reducing jobs" has increased relative to 2008 figures. In fact, since the first CEO survey in 2007, "adding jobs" has been on a steady decline while "reducing jobs" has steadily increased; the pace of both trends has increased over the past year.
All other activities remain unchanged from 2008 levels. Interestingly, there appears to be no generalized move toward "new sources of financing," "debt reduction," or "outsourcing;" likewise, there is no increase in the rating for "relocate outside Indiana." Once again, it appears our respondents are adopting a "maintenance" mentality and are dealing with the economic situation by changing the size of their workforces. There are no planned changes in organizational structure items such as "outsourcing" or "mergers, acquisitions or alliances."
The third question of this section asks about "how challenging" several issues are to executives and/or their organizations. Summary results appear in Figure 3.
"Having enough time" is once again perceived to be the most challenging of seven issues from our respondents’ perspectives, though its absolute rating is lower than it was last year.
The next grouping of challenges —"rising customer expectations," "customer retention and loyalty," "keeping up with technology," and "human resources" — contains the same items as it did last year. However, "human resources" is rated about 0.7 scale points lower than it was in 2008.
The two items receiving ratings just below the scale midpoint are "rising shareholder expectations" and "global business issues." Both of these items were also rated in the same relative positions in the 2007 and 2008 studies. However, as with the global items in question number one, a sizable minority of respondents (21.5 percent) rate this item a "6" or a "7."
We asked an open-ended question in the survey (Q4) to determine whether there are important issues on the minds of our respondents which are not reflected in the first three questions. One hundred three (29 percent) of the respondents mentioned at least one item. Of those responding to this question, about 41 percent mentioned political/regulatory factors, 22 percent mentioned macroeconomic issues, and 13 percent mentioned firm/industry-specific financial issues. In 2008, the top two issues were government and regulatory issues (mentioned by 20 percent) and employee acquisition and/or benefits issues (mentioned by 18 percent).
Given the magnitude of the economic downturn in late 2008 and early 2009, respondents were asked several questions related to their opinions about the downturn and their organizations’ response to it. Results appear in Figure 4.
There is wide variance in agreement with each of the statements presented except for the statement regarding the media’s role in making the crisis worse (complete wording for this item is as follows: "I believe the media have made the crisis worse by constantly covering negative news"). In fact, fewer than 15 percent of respondents disagreed with the statement by rating it a "1," "2," or "3." The only detectable pattern of responses to this item is that those who are less educated and those who are older are slightly more likely to agree with the statement.
As a follow-up question (Q6), respondents were asked to elaborate on what specific activities, if any, their organizations are taking "in response to current economic conditions." A total of 183 (50.8 percent) responded to this question, which is a relatively high percentage for an open-ended question. Of these, 154 (84.2 percent) mention a cost-related activity, while 63 (34.4 percent) mention a revenue-related activity. The two most-frequently mentioned cost-related activities are "reduction in staff" (24.0 percent) and "salary reduction/freeze" (17.5 percent). The two most frequently mentioned revenue-related activities are "more/different marketing activities" (14.2 percent) and "expand markets" (7.7 percent).
Interestingly, large firms are more likely than small firms to mention cost-reducing activities, while small firms are more likely than large firms to mention revenue-generating activities. While there are few industry-related differences, professional services firms are significantly more likely to mention revenue-generating activities than are firms in general, while life sciences firms are significantly less likely to mention revenue-generating activities than are firms in general.
