Our economy has never been hit so hard so fast. Even the 1929 market crash pales in comparison to the deep economic shock caused by the coronavirus. And just as the virus was appearing to wane, cases are skyrocketing across the U.S.
Meanwhile, the nation is undergoing social unrest following the killing of George Floyd. As the country faces economic, health, and social crises all at once, Fortune decided it’s a pressing time to survey CEOs to find out how businesses are reacting and changing in the middle of it all.
Fortune conducted a survey of CEOs in collaboration with Deloitte. We received 222 CEO responses from June 8 to 12.*
Here’s what we found.
The numbers to know
- … of CEOs plan policy changes in response to the social unrest that followed the killing of George Floyd on May 25.
- … of CEOs say revenues have already recovered or never dropped. 21% of CEOs expect their revenues to return to pre-crisis levels between now and January 2021, while a more pessimistic 45% expect that recovery to occur between January 2021 and June 2022. And 4% say it won’t recover in the foreseeable future.
- … of CEOs say their company’s digital transformation was significantly accelerated during the economic crisis. 40% are spending more on IT infrastructure/platforms.
- … of CEOs say their company furloughed or laid off employees or reduced employees pay in response to the crisis.
- … of CEOs reduced executive pay in response to the crisis.
The big picture
- CEOs are no longer shying away from racial injustice. Heading into the 2018 NFL season, Nike shocked some of the business world when it ran its ad on Colin Kaepernick ad and made a public stand on the issue of racial injustice. But now that type of action, as well as internal changes, might be the new norm: 62% of CEOs plan policy changes in response to the events that followed the death of George Floyd. CEOs told us these actions include reevaluating sales of certain products, implementing anti-racism training, and changing hiring practices.
- Businesses are already amid a recovery. Just over half of CEOs (51%) expect their revenues to be fully recovered by January 2021. But the crisis has been uneven and its recovery will be too. 41% of companies have laid off or furloughed workers or cut their pay. On the other hand, 19% of companies actually increased hiring during the crisis. The ones best positioned for growth and recovery are those who can ride the digital transformation wave.
A few deeper takeaways
1. A majority of companies aren’t hiring right now.
Around 4 in 10 CEOs say their companies have furloughed or laid off workers or cut their pay. That’s helped pushed the total number of unemployed Americans to 21 million as of May.
And it’s looking like many of those out-of-work Americans might struggle to find new jobs: Around 6 in 10 CEOs say their company has implemented a hiring freeze or deferred new hiring. A small minority of firms are still growing, with 19% of CEOs saying they’ve expanded hiring since the start of the crisis.
In an attempt to cut costs, CEOs have also turned to decreasing executive pay (35%), reducing employee benefits (15%), and offering voluntary retirement or exit packages (11%).
2. The digital transformation of business just went into overdrive.
I recently interviewed Adobe CEO Shantanu Narayen over a video call from his California home, where he’s remotely running the software giant. He says that the digital transformation trends that were growing steadily before the pandemic are now rapidly undergoing implementation. His company’s growth during the crisis speaks to that digital wave: Adobe, known for everything from its cloud-computing business to creativity software products, reported a record revenue for the last quarter.
The move to digital is clearly gaining more attention and investment from the C-suite. 77% of CEOs say their company’s digital transformation was significantly accelerated during the crisis. 40% are already spending more on IT infrastructure/platforms. That expense was second only to workplace safety spending, which has majorly increased at 50% of companies.
One more thing: Among CEOs surveyed by Fortune, 9% say they’ve spent more on mergers and acquisitions since the start of the pandemic. That is a bigger deal than the number might first appear to be: Firms are seizing business opportunities caused by this deep economic shock.
3. It’s no longer just a tagline. WFH might actually be the new normal.
Before the crisis, just 13% of workers were remote at firms run by the Fortune CEO community. That percentage stood at a staggering 73% in June, even after states eased their lockdowns. CEOs interviewed by Fortune estimate that number will fall to 43% by January 2021, but only to 36% by the start of 2022. CEOs are serious about allowing more of their workforce to work from home.
Some companies like Facebook and Twitter have already announced policies that allow more employees to work from home permanently. Others, like Adobe CEO Narayen, say it’s too early to commit to specific policies—but once the crisis ends, they will incorporate more remote working for staff who prefer it.
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*Methodology: Fortune surveyed CEOs in collaboration with Deloitte between June 8 to 12. A total of 222 CEOs responded to the survey, which was sent to Fortune CEO Community. That Fortune CEO Community includes Fortune 1000 CEOs, Global 1000 CEOs, and CEOs who attend Fortune conferences.