Slovak CEO Survey 2021

The availability of key competencies will determine success

Věra Výtvarová, Country Managing Partner, PwC Slovensko

It is very gratifying to see the optimism of CEOs regarding the development of the economy, sales growth, profit, and headcount. They strongly believe that we have overcome the recent complicated period and the next one will only be better for business. However, the survey raises a few issues to consider, as future success is not self-evident.

One third of CEOs say their company's revenue forecasts are higher than current figures, and for four out of ten the same is true for profit forecasts. A third of CEOs do not know how the forecasts for the return on advertising and brand building, or investment in science and research, product innovation or return on capital, differ from the current numbers. According to the results, there is a lot of room for improvement in financial planning.

Three-quarters of companies are making changes or considering changes to their company's goals to strengthen its position in society. CEOs are questioning whether and how to redefine the goals of their companies and the meaning of their business. Both the pandemic and the onset of change under the influence of climate change have brought new initiatives.

After a year and a half of streamlining, the scope for cost reduction has narrowed, and CEOs have been preparing new plans based on the experience of essential digital transformation over the last 18 months. The highest increase in long-term investment over the next three years will be in digital transformation, science and research, and cyber / data security. In human resources management, CEOs will be paying the most attention to employee skills and adaptability and performance via automation and technology. All these priorities of CEOs are the logical consequences of the pandemic, and we are seeing these trends continue in recent months.

CEOs in Slovakia state that, in addition to populism, pandemics and the increasing tax burden, they are most concerned about a shortage of key competencies, which has been one of the biggest threats in Slovakia for many years. Creating a skilled, educated and flexible workforce is clearly a key priority for government and business, as shown from the CEOs’ ranking in the survey. Companies in Slovakia and globally will have to focus even more on increasing the training of their employees in digital transformation and other areas.

Věra Výtvarová

Country Managing Partner

What will people appreciate? New management

The pandemic has disrupted traditional bonds between companies and their employees. Some people were left to work from home. Some lost their jobs. Others had to go to work, because home office was not an option. They all stepped out of their comfort zone.

At the same time, the pandemic has accelerated the technological changes that have been going on for a number of years. It has changed the behaviour of customers. It has changed business models in several industries. Here too, many had to leave their comfort zone to meet new demands.

The optimism that emerges from the current survey of Slovak CEOs is based on the expectation of economic recovery and continuing demand from customers, who evidently have money left over from their holidays and entertainment plans.

However, the real question remains - what impact will labour market changes have on these optimistic plans and expectations? Everyone is aware that the lack of quality, qualified and passionate people will be the biggest challenge for the growth of their businesses.

Because if companies have so far had to solve how to attract new young talents, educate their people and keep the best ones, several new aspects will be added to each task - How to reconcile new technologies with people? How to combine home office and work at the office? How to create new communication channels? How to replace chance encounters in the kitchen? How to put those who want to work flexibly on an equal footing with those working at the office? But most importantly - how to prepare managers for all this?

It has been said that people do not leave bad work, but rather bad bosses. The new era has also pulled managers out of their comfort zone. For many of them, it is natural to go back to old ways. However, in an era of intense competition for talent, combined with a huge change in work routines, old ways could lead to a very different destination than companies and their bosses would like.

Juraj Porubský
Editor-in-chief, Forbes Slovakia

Juraj Porubský

Editor-in-chief, Forbes Slovakia

Survey conclusions

A record percentage of CEOs in Slovakia and worldwide are optimistic about global economic development and company growth
Companies expect better results than actual figures are, monitor more closely revenue growth and profitability and less closely return on investments
Digital transformation will see the highest investment increase
Most CEOs in Slovakia are extremely concerned about populism and the availability of key skills
CEOs in Slovakia plan to focus on skills and the adaptability of their employees and on productivity increases via automation and technology

A record percentage of CEOs in Slovakia and worldwide are optimistic about global economic development and company growth

73% of CEOs in Slovakia are confident that global economic growth will improve over the next 12 months – this is the highest percentage since 2012, when PwC started conducting the CEO Survey in Slovakia. At the beginning of 2021, 76% of CEOs in other parts of the world were similarly optimistic about the development of the global economy. 55% of CEOs in Slovakia strongly believe that their company will grow over the next 12 months. And company growth over the next 3 years is expected by 63% of CEOs in Slovakia, which is also the highest percentage since 2012.

Companies expect better results than actual figures are, monitor more closely revenue growth and profitability and less closely return on investments

According to the opinions of CEOs, companies in Slovakia are better able to forecast revenue growth and profitability for the next 12 months than return on capital investments. One-third of CEOs state that forecasts of revenue growth and profitability are almost identical with actual results (±2%). Another third of CEOs state that revenue and profitability forecasts are higher, and a quarter of CEOs state that these forecasts are lower, than actual figures.

Digital transformation will see the highest investment increase

When asked how CEOs plan to change long-term investments over the next 3 years due to the COVID-19 crisis, CEOs unequivocally state that the highest increase will relate to digital transformation. A moderate increase will affect initiatives to realize cost efficiencies, organic growth programmes, cybersecurity, and data privacy.

Most CEOs in Slovakia are extremely concerned about populism and the availability of key skills

Most CEOs in Slovakia are somewhat or extremely concerned about the increasing tax burden, the COVID-19 pandemic, and tax policy uncertainty. They believe that the growing national debt will affect tax policy changes, which will increase their organization’s overall tax obligation and will result in a reassessment of its cost structure.

A record percentage of CEOs in Slovakia and worldwide are optimistic about global economic development and company growth

73% of CEOs in Slovakia are confident that global economic growth will improve over the next 12 months – this is the highest percentage since 2012, when PwC started conducting the CEO Survey in Slovakia. At the beginning of 2021, 76% of CEOs in other parts of the world were similarly optimistic about the development of the global economy. 55% of CEOs in Slovakia strongly believe that their company will grow over the next 12 months. And company growth over the next 3 years is expected by 66% of CEOs in Slovakia, which is also the highest percentage since 2012.

The strong optimism of CEOs in Slovakia and worldwide reflects improving COVID-19 vaccination rates. Survey respondents have been in charge of their companies for the last 18 months and, as they have successfully managed this difficult period, they trust the economy, their firms, and their capabilities.

CEOs in Slovakia are a little less optimistic about profitability – 47% of them are very confident, and 35% are somewhat confident, that their firm’s profit will grow over the next 12 months.

55% of CEOs in Slovakia believe their employee headcount will increase over the next 12 months

Over the last 12 months, the number of staff decreased at one-fifth of survey respondents’ organizations. 43% of CEOs in Slovakia expect a moderate, and 12% a significant, increase in their employee headcount in the next 12 months. For the 3-year horizon, they are even more optimistic – 44% expect a moderate, and 25% a significant, staff increase.

Companies expect better results than actual figures are, monitor more closely revenue growth and profitability and less closely return on investments

According to the opinions of CEOs, companies in Slovakia are better able to forecast revenue growth and profitability for the next 12 months than return on investments. One-third of CEOs state that forecasts of revenue growth and profitability are almost identical with actual results (±2%). Another third of CEOs state that revenue and profitability forecasts are higher, and a quarter of CEOs state that these forecasts are lower, than actual figures.

Regarding return-on-investments forecasts, almost one-third of CEOs in Slovakia do not know to what extent ROI forecasts related to advertising and brand-building, R&D and new product innovation, or to capital investments differ from actual figures. Almost half of CEOs predict that return on investments in advertising and brand-building is the same or higher than actual. As regards return on investments in R&D, almost one-third of CEOs expect better results than actual figures. And as to return on capital investments, the highest percentage of CEOs (39%) state that their forecasts are almost identical with actual results.

The percentage of CEOs in Slovakia looking for space for further optimizations dropped year-on-year from 74% to 50%

As regards growth initiatives, 62% of CEOs in Slovakia will seek organic company growth. Last year, three-quarters of CEOs planned to pursue initiatives aimed at increasing production or operational efficiency, but only 50% of CEOs plan to do the same this year. Last year, more CEOs (64%) stated they planned to introduce new products or services than this year (53%). The willingness to collaborate with other entrepreneurs or start-ups has also dropped by half from 20% to 10%. CEOs in other countries, when compared to CEOs in Slovakia, more often plan cooperation with other entrepreneurs or start-ups, new mergers or acquisitions, strategic alliances, or are considering selling the business. CEOs considering a merger or acquisition in Slovakia state they want to acquire talents, technologies, or processes.

18% of CEOs in Slovakia, and 21% in CEE, are considering new mergers and acquisitions to drive growth in the next 12 months, compared to 38% globally. The formation of a new strategic alliance or a joint venture is planned by 14% of CEOs in Slovakia and 20% of CEOs in CEE, compared to 35% worldwide.

Digital transformation will see the highest investment increase

When asked how CEOs plan to change long-term investments over the next 3 years due to the COVID-19 crisis, they unequivocally stated that the highest increase will relate to digital transformation. A moderate increase will affect initiatives to realize cost efficiencies, organic growth programmes, cybersecurity, and data privacy. Investments in supply chain restructuring, capital investments, advertising and brand-building, and in R&D will remain unchanged.

CEOs plan the highest increase in long-term investments to digital transformation

The availability of key competencies will determine success

Věra Výtvarová

What will people appreciate? New management

Juraj Porubský

Survey conclusions

A record percentage of CEOs in Slovakia and worldwide are optimistic about global economic development and company growth

Companies expect better results than actual figures are, monitor more closely revenue growth and profitability and less closely return on investments

Digital transformation will see the highest investment increase

Most CEOs in Slovakia are extremely concerned about populism and the availability of key skills

CEOs in Slovakia plan to focus on skills and the adaptability of their employees and on productivity increases via automation and technology

To increase competitiveness, CEOs plan to place the focus of their company’s HR strategy on the skills and adaptability of employees and on productivity increases via automation and technology.

A record percentage of CEOs in Slovakia and worldwide are optimistic about global economic development and company growth

55% of CEOs in Slovakia believe their employee headcount will increase over the next 12 months

Companies expect better results than actual figures are, monitor more closely revenue growth and profitability and less closely return on investments

The percentage of CEOs in Slovakia looking for space for further optimizations dropped year-on-year from 74% to 50%

Digital transformation will see the highest investment increase

38% of CEOs plan the biggest increase in investments in digital transformation

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