What CEOs Are Thinking These Days

200401764-001The Conference Board’s CEO Challenge 2013 surveyed 729 senior executives worldwide, who were asked to identify and rank the most pressing challenges they face, and their strategies for addressing each one. Worldwide, human capital — how best to develop, engage, manage and retain talent — was named the leading challenge (from a list of 10 challenges that included customer relationships, government regulation, corporate brand and reputation and global expansion). Operational excellence was in second place, followed by innovation and customer relationships.

It’s quite a change from the 2012 CEO Challenge survey, in which leaders chose “innovation” as the No. 1 challenge and “global political/economic risk” and “government regulation” ranked among the top four challenges. In this year’s survey, “leaders seem to be turning away from macro factors outside their control to look hard at their own organizations, employees, customers, level of efficiency, and capacity for innovation,” says Bart van Ark, the Conference Board’s executive vice president and chief economist.

Breaking out the results by region, human capital was the No. 1 challenge in Asia and Europe — indeed, in Europe it jumped from seventh place in last year’s survey. In the United States, operational excellence was cited as the No. 1 challenge, followed by government regulation (the Affordable Care Act and “fiscal cliff” skirmishes undoubtedly factors there) and innovation. When asked to select how they planned to respond to these challenges, CEOs chose “growing talent internally” as their No. 1 strategy for dealing with human capital. “Provide employee training and development” and “raise employee engagement” were also top choices.

Last year’s No. 1 challenge, innovation, fell to No. 3 in this year’s survey. Six of the top 10 approaches to innovation chosen by the leaders involved human capital, including “creating a culture of innovation,” “develop innovation skills for all employees” and “find, engage and incentivize innovative staff.” When considering innovation, it might be helpful to ensure that leaders and employees are both in agreement on innovation, as this recent HRE story points out.