• PwC's Ryan says while the headlines can be scary, many CEOs he talks to say business is good.
  • The barrage of hurdles leaders face means 'There's never been a more challenging time to be a CEO.'
  • Corporate earnings should still be good in 2022 but it won't be a repeat of the banner 2021 numbers.

Tim Ryan, the US chair of the accounting firm PricewaterhouseCoopers, believes the landscape for US companies isn't as treacherous as it might appear from day-to-day headlines that ring of war, unchecked inflation, and slumping markets.

Even if surging prices and higher interest rates end up pushing the economy into a slower gear, Ryan told Insider he expected strong corporate dealmaking to continue and that a "war for talent" could stretch on for a decade.

The CEOs Ryan talks to are doing as much worrying as ever. Yet for many, business remains robust. 

"Demand is up. Revenue growth is good. When you look at the innovation capabilities that people have, they feel pretty good," Ryan said. "When you talk to a CEO, he or she generally would say, 'My business is doing well.'" 

There are clear exceptions, of course. Challenges at big names like Facebook's parent company, Meta, and Netflix have investors worried that there are bigger economic potholes ahead. After peaking in November, the tech-heavy Nasdaq has slumped more than 26%, while the S&P 500 index is off about 16% from its high at the start of the year.

Ryan, 56, said the CEOs he talked to didn't expect the US economy to crater, in part because spending by these companies' customers remains strong. 

He said companies were remaking their businesses to cultivate new sources of revenue and cutting costs where they could. Ryan also expects mergers and acquisitions to continue despite the Federal Reserve's interest-rate hikes, which are designed to slow inflation and keep the economy from overheating. 

"M&A is really strong, even though rates have gone up a little bit. We anticipate M&A will continue to be very strong," he said.

Corporate earnings

Ryan, who joined PwC at 22, predicted 2022 would prove a solid year for corporate earnings by historical standards, though not compared with the windfalls from 2021.

"What's on the minds of many CEOs is they feel like '22 will be a good year, but will it be enough for their investors?" he said. "I think it'll be younger companies reporting good numbers, but the comparables are going to be tough."

Leadership in the most challenging time

The number of fastballs coming at chief executives — from supply-chain worries to increased calls in some quarters for unionization of workforces — make the job increasingly difficult, Ryan said. Heads of companies, he said, are facing scrutiny on corporate-tax rates, data privacy and security, whether their algorithms are fair and ethical, workplace safety, and environmental, social, and governance concerns.

"There's never been a more challenging time to be a CEO," Ryan said.

The companies that succeed amid all this, he said, will be the ones where the CEO can drive change. 

"Almost every company needs to change, and the bigger the company, the harder it is to change." Ryan pointed to bigger companies' larger workforces, sprawling legacy systems, and global footprints. Each can present additional hurdles for making swift changes.

Another big challenge is simply understanding what is working, what isn't, and what the mood is among employees, customers, and suppliers. 

"Proximity to what is actually happening on the ground is critical," Ryan said. "When I look at the most successful companies, the CEO and the boards have a really good pulse on what's actually happening."

The best corporate boards focus on hiring and firing the CEO and avoid getting mired in issues that can seem important but are ultimately distractions, Ryan said. A danger for a board that takes on too much is that when a variety of issues seem to be under control, it's easy to overlook cracks that might be forming.

"You can lull yourself into a false sense of security that every single thing we're looking at is green, but nine greens or 19 greens don't add up to an overall green if you're not focused on the right things," he said.

The war for talent

Ryan said strong business formations, an aging workforce, and pandemic-inspired retirements for some workers meant it's likely companies would continue to compete with each other to bring on enough people for years, perhaps as long as a decade. 

"Even if the economy slows a bit," he said, "I think the war for talent continues to stay strong."

It's a battle in which PwC has been engaging as it seeks to add to its US workforce of about 55,000. Last year, the company said it would boost its global workforce by more than one-third by 2026 as it expanded into areas like artificial intelligence and cybersecurity. 

Ryan said the company had been studying how to better serve its workers before the pandemic and that some of the ideas — considerations like a four-day workweek — that seemed bold at the time now felt less so. The pandemic forced a worldwide experiment in new ways to work; many of these innovations are likely to endure. 

"Ultimately, what we concluded is that the debate around physical versus virtual was the wrong discussion and the wrong debate for us," Ryan said. "Talent wants choice." 

PwC surveyed its client-service staff and found more than three-quarters wanted a mix of in-office and remote work; 22% opted to be fully remote.

The No. 2 consultancy behind Deloitte in terms of revenue is giving workers greater autonomy to determine the types of assignments they take on, how much they work, and what kind of training they pursue to develop their skills. 

This flexibility for workers means companies like PwC will need to be more creative in how they draw up their labor pools. Ryan said that rather than requiring 55,000 people in the US, the firm might need 70,000 if some workers wanted to work 20 or 30 hours a week. 

Ultimately, Ryan said, successful businesses will be ones that treat their employees more like customers. "There isn't a business in their right mind that will tell the consumer what they want. The consumer says what they want," he said. 

What's next

The pandemic, inflation, and other challenges that seemed to emerge overnight have pushed many corporate leaders to think more about how to be ready for the unexpected. 

"The name of the game is scenario planning," Ryan said. That translates to things like reducing risks associated with supply chains or making sure operations aren't concentrated in one location. "The corporate world is doing a really good job of getting used to scenario planning. And then, obviously, being agile with what you know what you can't plan for," he added.

Ryan said he expected to see businesses change at a faster pace, as developments like Web3, which would remake the internet using blockchain technology, could once again reshape how businesses operate.

"I see more automation, more business-model transformation, than we've ever seen before. It's hard for us to find a client who is not focused on some type of transformation," he said. "I know this is cliché, but the pace of change has never been faster."

Disclosure: Mathias Döpfner, CEO of Business Insider's parent company, Axel Springer, is a Netflix board member.

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