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Hear from the CEOs of Amazon, UPS, Bank of America, L’Oreal, PayPal, and others about the issues they’re focused on in 2022

February 2, 2022, 11:15 PM UTC
Left to right: Bank Of America CEO Brian Moynihan; Occidental Petroleum CEO Vicki Hollub; Amazon CEO Andy Jassy.
John Lamparski—Getty Images; Michael Kovac—Getty Images; David Ryder—Bloomberg/Getty Images

The World Economic Forum in Davos has been postponed until May, but that didn’t stop Fortune CEO Alan Murray from holding Fortune‘s annual meeting for CEOs pegged to the event. This year, instead of an in-person dinner, the CEOs met via Zoom.

“Why? Well, because we learn a lot from these gatherings. It’s a really a great opportunity to take the pulse of what corporate leaders are thinking and what they’re expecting for the year end,” Murray said.

On this week’s episode of Fortune‘s Leadership Next podcast, co-hosts Murray and Ellen McGirt are sharing some highlights from that conversation—playing back snippets of insights from Amazon’s Andy Jassy, UPS’s Carol Tomé, Bank of America’s Brian Moynihan, and others. Listen to the episode or read the transcript below to learn about the issues that are top of mind for CEOs today.


Alan Murray (0:09): Leadership Next is powered by the folks at Deloitte, who, like me, are super focused on how CEOs can lead in the context of disruption and evolving societal expectations. Welcome to Leadership Next, the podcast about the changing rules of business leadership. I’m Alan Murray, here with my stupendous co-host, Ellen McGirt.

Ellen McGirt (0:33): Alan, I live for these introductions. And hello everyone. We’ve got a very special episode here today. As listeners may or may not remember, the very first episode of this podcast started off in Davos at the annual dinner Fortune hosts there for CEOs. Last year, the World Economic Forum decided, no surprise, to make the event virtual. And this year, it was scheduled for an in-person event in January as usual. And then… Omicron.

Murray (0:59): Yeah, that’s right. And we had our dinner planned. Right there in the Swiss Alps. We had the guests invited, 50 or 60 great CEOs. My plane ticket was booked. All of that. But they’ve now rescheduled the Davos event to an in-person event in May. We wanted to go ahead regardless and convene a group of CEOs. Why? Well, because we learn a lot from these gatherings. It’s a really a great opportunity to take the pulse of what corporate leaders are thinking and what they’re expecting for the year end.

McGirt (1:31): Exactly. And today, we want to share some of that conversation with our Leadership Next listeners. We actually did this last year, too. And it’s been interesting to look back at the highlights we pulled for this show. The conversation was around developing vaccines, distributing vaccines, corporate moves to fight climate change, and the regulation of Big Tech. And sure enough, most of those topics were top of mind for companies and their workers and their customers last year, too. All right Alan, where should we begin?

Murray (1:58): Well, there are lots of places to start, but let’s start with the CEO that we have yet to have here on Leadership Next. His name is Nicolas Hieronimus. He is the new CEO of L’Oreal. He took over that job last May. And I wanted to start with him because he did a really good job summing up what are probably the two biggest challenges that seem to be facing companies this year.

Nicolas Hieronimus (2:25): I must say that, you know, like a lot of companies, 2021 has been a great year, and it’s been a year of fantastic rebound of consumption. We saw that the appetite for beauty products and for L’Oreal products in particular was higher than ever. At the end of September, because I can’t say more, we were at +18% versus 2020. And already a +9 versus 2019. Of course today we are, like everybody, penalized by an increase in raw materials, and some components and some tension on the supply chain side, even though most of our factories are located where people are buying the products, so we have less transportation issues. But there is inflation that will impact mainly our mass-market business. We are lucky to have, in some of our other businesses like luxury, very high gross margins that allow us to offset, to absorb the extra cost, but some of these inflations will have to be passed to the consumers.

McGirt (3:28): Yeah, Alan, I definitely stepped up my skincare game during the pandemic.

Murray (3:35): I did not. But I want to be clear, Ellen, skincare was not one of the top topics at the dinner. I think that was pretty much limited to Nicolas Hieronimus. But the other things he touched on—the supply chain problem, the continuing pandemic, the talent—I think the U.S. CEOs were even more focused on the battle for talent, the Great Resignation, and how all of those things are coming together into accelerated inflation. 

McGirt (4:02): Yeah, and Brian Moynihan of Bank of America also has a lot to say about inflation. Let’s listen to that now.

Brian Moynihan (4:13): Is inflation a problem? Absolutely. Inflation is already here. And the number in December is 5.5%. These are numbers that, in most of our working lives, we’ve never even thought about, let alone seen. And so the Fed’s gonna have to move—you know, the market hasn’t moved four times in 2022—to get to 1%.

Now, just step back and think about 2019. We all felt pretty good towards the end of 2019. U.S. economy was size. It’s about the same size today. The interest rate was 2% on the Fed funds rate. I want to talk about getting to 1% this year. The unemployment rate is already down to four [percent], and back then it was like 3.6—it’s really 3.9 now. The projections are that the unemployment rate goes to 3.1 this year. Talk about a tight labor market now. Wait until we have another 100 basis point change in terms of the unemployment rate. So, this Fed, with these voters, with this chair, had rates at 2% short term rates, and now they’re only talking about 1%. So, I think, as you think about the balance here in the near term, the inflation relative to the Feds, where they want to operate is gonna let it run hot to make sure it stays above the target inflation rate, which we never got to after the Great Recession. 

But on the other end, how hot can you let it run, given that all the dynamics of a full employment are already in the economy? And all the dynamics of size economy recovered fully from COVID—it’s already there, and it’s picked to grow at twice the rate it was picked to grow in ’19. Not the equivalent, but twice the rate. So the Fed will move, it’s their job. So what that has, in terms of markets, is, you know, you start off bouncing around. We basically have the core projection for the S&P is flat for the year, and that largely comes to just, slow down economy, and evaluations come back online. And so that’s what our experts say.

I’d leave you with a thought: tremendous consumer demand. So the momentum is behind the U.S. consumer. They have money in their accounts and a lot of capacity to borrow is still there. And that bodes well for the U.S. economy, which frankly bodes well for the world economy.

McGirt (6:00): All right, that’s an Alan Murray comment if I ever heard one. Walk us through what Brian just said, please.

Murray (6:06): Yeah, and I’m gonna, I’m gonna play McGirt here and tell you about the cloud that he was pointing to even as he was delivering the good news, because the good news is, the economy is incredibly strong, unemployment is very low, and the Fed is moving so slowly. It won’t keep that from continuing this year. But I would really look at the emphasis he put on the fact that the Fed is going to raise interest rates four times this year, they say, and it’s still only gonna have its key interest rate at 1%. One percent! Ellen, the last time inflation was at the level it is right now, 7%, I had to pay 15% on a home mortgage. So the message there is that the Fed has kind of gotten itself behind the curve here. If inflation continues at this kind of a rate, they’re going to have to move much more aggressively. And that’s probably not going to hurt the economy in 2022. But look out in 2023, 2024.

McGirt (7:09): So how were Brian’s remarks received in the room?

Murray (7:12): I think everybody understands this, when he said multiple times that even after the tightening this year, the Fed funds rate, which is the interest rate the Federal Reserve controls, will still only be 1%. One percent, and when inflation is at 7%. And most of the folks in the room understand that the supply chain problems and the labor problems are not temporary. They’re the ones who were having to deal with increased costs in their supply chain. They’re the ones who are having to step up wages across the board in order to get the people they need to run their business. And those two things together are going to keep inflation going. So I think everybody understands that, while we can have a great celebration in 2022, there will be a reckoning at some point in the next few years.

McGirt (8:01): All right, that is some very good cloud analysis. Alan, I appreciate that, and am sufficiently concerned. You have got my attention. But I want to build on Brian’s final point about consumer demand and consumer spending, because I think it leads us beautifully to another CEO that we need to have on the podcast, Andy Jassy of Amazon. He took over from Jeff Bezos in July, so we’ll give them a pass. I know it’s been busy. But he’s been busier than even I expected. Some of the details he shared about the early days of the pandemic and how it impacted Amazon were kind of mind-blowing.

Andy Jassy (8:36): You know, whatever role we thought we were playing in the world in our retail business before the pandemic, we realized pretty quickly once it started that that was going to be magnified with everything being closed. And so we just had unprecedented demand. You know, we grew two to three times faster in the first 18 months than we anticipated. And that demand didn’t just kind of steadily happen. It really arrived overnight. You know, we had a footprint that we’ve built, our fulfillment centers, in the first 25 years of Amazon, which is a pretty big footprint that we’ve had to double in the last 24 months. You know, try and do that very quickly, very difficult, and then hire, all the while, hire hundreds of thousands of people to be able to get products out there. 

Murray (9:18): Well, I know web services has also been growing at a crazy rate. If you pass that forward, if you look at the year ahead, what does that tell you about the year ahead? Surely growth isn’t going to continue at that kind of rate. But what do you see in, for the next 12 months?

Andy Jassy (9:32): I think, we had so many conversations that, for years, large enterprises thinking about what their move might be to the cloud, and when you have to do something really discontinuous overnight, like move from your offices, where you normally do your work to home, you have to change the way you operate. I think people saw during the pandemic that those that were in the cloud had an easier time doing it. It was more cost effective, and they had the plasticity to scale up when they needed to, and then stop paying for it when there were demand issues in their business. So there are so many of these conversations that went from talking about making a big shift to the cloud, to happening and planning during that time. So I just think, if anything, it probably accelerated people moving to the cloud by a few years.

McGirt (10:21): See, now this is a different kind of cloud. This is a good cloud that Andy was talking about.

Murray (10:27): I like this sort of cloud, the accelerated cloud. Everybody move into the cloud. There are big things happening out there in the world of business that are going to be transformative.

McGirt (10:35): Yeah. Yep. Speaking of transformative, another CEO who had some really interesting thoughts on technology was Carol Tomé of UPS. Listeners, if you missed our conversation with her last season, please go back and check it out. She literally came out of retirement for this job and had a lot to say—some very moving things to say about worker safety, about transforming cultures, even when the world is just turned upside down. But let’s hear what she had to say at this meeting.

Carol Tomé (11:06): It’s really important to invest in automation. What we’ve learned is that people move supply chain from warehouse workers to dock workers to sorters to loaders to drivers to pilots. We need to automate everywhere we can so we don’t have such a reliance on people. We must, in the supply chain world, improve our end-to-end visibility and transparency, particularly in the areas of ocean and air freight. This is very paper intensive. It’s manual. So we’ve got to digitize this experience. It’s critically important. And we must deploy blockchain technologies in ways that we haven’t before. But with blockchain, you have to have trust, and so we’re gonna have to work together to build the trust factor. And finally, to improve our competitive positioning, we’re gonna have to invest in infrastructure, particularly here in the United States.

McGirt (12:02): All right, so this is a good time to bring in a CEO who was also at the event, our longtime partner on this podcast, Joe Ucuzoglu of Deloitte US. Joe, it’s really good to be with you. Thank you for joining.

Joe Ucuzoglu (12:14): Ellen, great to be here and appreciate the invitation. 

Murray (12:16): So Joe, the Fortune/Deloitte CEO survey that we did in mid January showed a couple of really interesting things. One is that the CEOs were surprisingly optimistic still about the economy despite the Omicron virus. But second that on their list of concerns, talent, the battle for talent, the Great Resignation, whatever you want to call it, was top of mind.

Ucuzoglu (12:42): Alan, that’s absolutely right. And I actually don’t think that comes as a surprise to any of us, because as leaders we’re all living this day to day, this incredibly competitive talent market. We’re seeing that across the board, in the blue collar space, in the white collar space. On the one hand, that is presenting a set of significant challenges. You’re seeing wage escalation, you’re seeing worker shortages serve as a constraint to growth for some. 

But there’s also a lot of opportunity and good in this. We have market forces at work that are requiring all organizations to demonstrate a premium talent experience, to be able to attract in great people, to retain them, to have them excited about a vibrant long-term career path. And as a result, you’re seeing workers with real choice, and you’re seeing differentiation in those organizations that are able to do this well. They’re able to deliver on a premium talent experience being net winners and attracting in on a net basis more people than the number that are choosing to exit and pursue an opportunity elsewhere.

McGirt (13:51): I love it. The other big item that was flagged was the supply chain. And I’m curious what you take from those responses, specifically what kind of supply chain-related actions CEOs are planning in 2022.

Ucuzoglu (14:06): The elevation of that topic in the survey results certainly lines up with what we’re hearing across our client base. The level of disruption is significant. There is an expectation that there will not be an easy short-term fix, that this will take a number of quarters to ultimately improve. Many organizations are demonstrating resilience in finding solutions here and ultimate sources of supply. But there’s a broader, long-term theme underlying this in that, pre-pandemic, there was a tremendous emphasis placed on supply chain efficiency, trying to wring out costs. And what you’re seeing now is a real move toward resilience, understanding risks, understanding the potential for shocks, diversifying, bringing some near shore, all of those things in the spirit of recognizing that it’s likely a world that’s subject to periodic disruptions, and that running that tight even with the corresponding cost advantage simply isn’t worth it when considering the risk of disruptions that we’re all living through right now.

Murray (15:17): And Joe, the survey also showed that those two topics we just mentioned, the battle for talent and the supply chain problems, are coming together to make what is clearly the third concern: inflation, rising prices, the fact that it becomes a spiral, the possibility that the Fed has to substantially increase its reactive response and what that means for the economy—maybe not in 2022, but in 2023.

Ucuzoglu (15:48): Again, probably not all that great of a shock that the basic laws of economics still hold.

Murray (15:55): I was hoping—we’ve had a good year—I was hoping they had been repealed.

Ucuzoglu (16:01): You don’t see many people these days talking about modern monetary theory. And remember last summer, when we had this conversation at the time, there was a lot of talk about the inflation being transitory, and a number of us were sitting around wondering, well, what if it wasn’t? Yeah, and that’s another word that has been stricken from the vocabulary. The reality is that the inflation pressures are pervasive. And that’ll be one of the big stories of 2022 is the underlying policy dilemma. We see the Fed signaling that it’s going to need to act, to try and tamp down those pressures and avoid getting into the brunt of a classic wage price spiral. And obviously, the objective is to do that in a way that drives the economy to a soft landing, but we’ll see that play out over 2022 and beyond.

McGirt (16:57): This is where I get to ask the sunshine and blue sky question, Alan, which is not typically what I get to do. But despite all of these concerns and uncertainty, and with the hope of having happy employees prepared to handle any disruption that comes up, it’s worth pointing out that the survey also found that well over half of CEOs, that they believe their company’s growth will be either strong or very strong this year. Joe, how did that hit your ear? Does that sound about right?

Ucuzoglu (17:25): It’s fascinating because this survey data was accumulated in the early January timeframe, as we’re sitting here in the full brunt of the Omicron surge. And yet, not withstanding, the really difficult societal circumstances and challenges that many of our people are having in their day-to-day lives, that we’re all trying to support them through. There’s a complete disconnect in terms of the business outlook remaining incredibly optimistic and that data hasn’t deteriorated at all from the fall timeframe, pre-Omicron. And I would attribute that not only to the fact that most expect this current COVID surge to be relatively short lived, but it’s moreso indicative of the confidence that business leaders have in the ability to work through these things, that we’ve been through two years now of constant curveballs, whether it’s COVID surges, new variants, supply chain disruptions, underlying societal issues coming to the fore. And yet, with all of the success that we’ve had in successfully navigating through each one of these curveballs that gets thrown at us, there’s a growing realization, this is the new normal. It will always be something, and a likelihood that we will nevertheless be able to successfully navigate it, drive productive results for our respective businesses, and all the while, do things that are in the interests of society at large.

Murray (18:56): I think that’s an optimistic ending, Joe, thank you so much. Thank you so much for wrapping it up that way. And Joe, thank you for your support for this podcast. It means the world to us.

Ucuzoglu (19:07): The feeling is mutual, great conversation as always, and it was a pleasure to join.

McGirt (19:14): Okay, there’s one other person I would love for our listeners to hear from today. And that’s Vicki Hollub, the CEO of Occidental Petroleum. And I think I know the answer this question, but why did you think it was important to have her included in this conversation?

Murray (19:27): I’ve gotten to know Vicki pretty well over the last couple of years, and she is a great example of an oil company CEO who really worries about climate change. I mean, really worries about climate change, and tries to figure out what is her role running a big oil company and helping us deal with this problem. Listen to what she had to say about it.

Vicki Hollub (19:49): Our strategy as an oil and gas company is to take our core expertise and, along with the assets that we have, the infrastructure, use that to help reduce CO2 not only from emissions from industrial sites, but from the atmosphere. And we’ve gotten good results out of COP26, because one of the things that, a declaration that came out of COP26 was that we absolutely cannot limit global warming to 1.5 degrees without removing CO2 from the atmosphere. 

Currently the atmosphere has 50% more CO2 than at pre-industrial times. It’s over 400 parts per million. So we are continuing with our direct air capture, and thanks to COP and some of the things that came out of that, we are starting to get calls from companies corporations that are working toward their net-zero goals, wanting to buy CO2 offsets from our direct air capture. So that is happening. And so while a lot of people talk about, it can’t happen without a carbon tax, I do believe that the commitment of corporate America, the commitment of corporations around the world, is going to drive our ability to continue to execute our strategy to not only build direct air capture, but to capture CO2 from industry as well.

Murray (21:07): Yeah, that’s really impressive. Vicki, I wonder if I could just ask you quickly, because I do think pretty much every company on this call has made a commitment to net zero by 2050 or sooner. You’re closest to the fossil fuel industry and to the technology development in some ways. Do you think net zero 2050 is an achievable goal?

Hollub (21:29): Not unless we put together a plan where we bring every segment together, and we lay out what the specific pathway is. It’s going to take anywhere from five to 10 trillion dollars to make this transition. And what we need to have happen is, we need people to recognize this is a transition, it cannot happen overnight. The oil industry cannot go away overnight. But we can work on lowering our emotions and be a part of the solution to the transition.

McGirt (22:00): So we’ve got some clouds ahead—some good, some not so good. Getting to net zero, improving supply chains, fixing the labor shortage. There are clearly some big challenges ahead. And as we’ve learned in the years to come, but as Joe pointed out earlier, these CEOs are a positive bunch. And leave it to PayPal’s Dan Schulman to really put the Leadership Next spin on things. I know I said Vicki was the last person we were going to hear from, but let’s just quickly play the end of Dan’s remarks.

Dan Schulman (22:32): We have a tremendous opportunity as CEOs and businesses to be a force for good, to take and seize the leadership moment that we have in front of us. We have more trust than other institutions do. We can’t go too far on that, but bringing our desires to change the world together at scale, there’s a huge opportunity as well.

Murray (23:01): Go Dan. Change the world together at scale. That’s a great way to end this podcast, Ellen.

McGirt (23:08): Oh, I absolutely agree. It’s good to end on a positive note, even if you’re worried about the storm clouds that may be coming on the horizon.

Murray (23:16): And hey, if you are listening to this podcast and you haven’t become a subscriber yet, please do that now. Forget Joe Rogan, right? This is the place you want to be. We will be back here with a new episode next week.

McGirt (23:31): Oh my god, all the Joe Rogan fans are gonna come for you, Alan. What? I’ll protect you.

Murray (23:38): Thank you. I know you’ll be there for me. Thanks. And thanks to all of you for listening. Leadership Next is edited by Nicole Vergalla. Written by me, Alan Murray, along with my amazing colleagues, McGirt and Megan Arnold. Our theme is by Jason Snell. Executive producers are Mason Cohn and Megan Arnold. Leadership Next is a production of Fortune Media. Leadership Next episodes are produced by Fortune‘s editorial team. The views and opinions expressed by podcast speakers and guests are solely their own and do not reflect the opinions of Deloitte or its personnel. Nor does Deloitte advocate or endorse any individuals or entities featured on the episodes.

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