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More than three quarters of Australian business leaders surveyed by KPMG have identified talent as a top five issue keeping them up at night for 2023, as "nuts and bolts" matters came to the fore ahead of concerns such as Environmental, social, and governance (ESG) and remote working.
Talent, acquisition and upskilling was the leading category in the previous 'Keeping us up at night' report, but for the latest instalment it has risen by eight percentage points to 77 per cent.
"The top three concerns of Australian CEOs reported are very much ‘nuts and bolts’ issues – the economy, the shortage of skilled staff, and cyber security," KPMG Australia chairman Alison Kitchen and chief economist Brendan Rynne wrote in the report.
"These are notably different from a year ago, when their concerns involved staff working remotely, designing an ESG strategy, and ensuring diversity in organisational leadership.
"It may be that these issues have slipped down the priority list for business leaders because they have been operationalised during the past year, and are now an existing element of the business. Others may have decided they will take time to resolve, and more time-sensitive issues have come to the fore."
Extracting organisation value from digital transformation was the second-most cited priority at 46 per cent, followed by dealing with cyber risks at 40 per cent. In joint fourth place on the list for 35 per cent of respondents were Dealing with evolving regulatory processes and the need for greater agility and flexibility.
Cyber security actually fell down one spot, but the survey of 473 senior executives took place before issues relating to Optus and Medibank (ASX: MPL) came to light.
This year's report shows a much greater concentration of certain topics within the top five concerns for business leaders, with the remaining issues more dispersed.
The challenges and benefits of remote working, for example, dropped by a massive 22 percentage points down to 26 per cent, from third position to 8th.
ESG fell by seven percentage points to 25 per cent, diversity fell from 25 per cent to 14 per cent, transparency fell from 20 per cent to 15 per cent, and the ethics of new technologies dropped from 15 per cent to 12 per cent.
In the report, KPMG's managing director - client growth and markets Martin Sheppard noted business growth had jumped from 11th spot to 6th - a ranking previously held by ESG.
"This reflects the fact that while the COVID pandemic resulted in disruption to markets the world over, causing volatility in sales and profits, the global economy today is now larger than it was at the start of 2020," Sheppard said.
"It seems that our survey respondents believe in the same philosophy as Sun Tzu; that in the context of a deteriorating business environment adopting a growth strategy is the best form of defence."
Dorothy Hisgrove, KPMG's national managing partner – people & inclusion, said the intertwining of human capital, intellectual property, innovation and physical capital have become more explicitly recognised by organisations and their leadership over the last few years.
"With skills being the new currency and the war for talent highly competitive, upskilling and reskilling has never been so important for business," she said.
"The business case is clear: provide true flexibility to retain and grow your workforce."
Alison Kitchen, KPMG's chairman, highlighted the underlying economic reasons behind the large uptick in focus on talent.
“Finding and keeping good quality staff is vital at the best of times, but with unemployment at its lowest level in over 50 years the challenge has become greater due to a smaller pool of talent," she said.
"While we are advocating for an improvement in Australia's migration system to help address the talent supply, our respondents rightly acknowledge they need to implement actions to keep talented people, and provide a work environment that fosters learning development and growth."
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