'Rapid Changes in Business Environment Due to COVID-19' Will There Be a Mass CEO Resignation Next Year?

(Photo by Bloomberg)

[Asia Economy Reporter Yujin Cho] A survey has revealed that a mass layoff of global company CEOs could occur next year due to changes in the business environment triggered by COVID-19. This is interpreted as a result of companies aiming to find breakthroughs through leadership changes as they pursue business model transformation and new business ventures in the post-pandemic new normal era.

On the 27th (local time), Bloomberg cited a survey by management consulting firm AlixPartners, reporting that 72% of global company CEOs are concerned about mass layoffs next year. As the crisis of management difficulties triggered by COVID-19 and rapid market changes intensifies the need to reorganize business models, CEOs are increasingly worried about their own positions.

Among global CEOs concerned about layoffs, 94% responded that they need to completely change their existing business models within three years. On the other hand, only 54% of executives said they are sufficiently prepared for the post-pandemic new normal era. The survey targeted 3,000 C-level executives (CEO, CTO, CRO, etc.) from global companies with sales exceeding $1 billion across 10 industry sectors in North America, Europe, the Middle East, and the Asia-Pacific region.

Simon Freakley, Global CEO of AlixPartners, said, "This survey shows very surprising results," interpreting that "the collapse of supply chains and changes in the labor market are expected to bring disruptive economic problems." He added, "Many companies have realized that the business models they have maintained for years are no longer valid after going through the COVID-19 crisis." The worsening performance and financial conditions during the COVID-19 period have also intensified shareholder pressure for growth, further accelerating these changes. Change is inevitable for sustainable growth.

Global CEOs participating in this survey cited supply chain deterioration, labor market issues, and digitalization as the biggest concerns for the business environment next year. The supply chain crisis and inflation following the COVID-19 pandemic are tightening the global economy, and with rapidly changing market conditions, there is an assessment that long-standing business models may no longer be valid. With the rapid rise of the untact culture, digital transformation is accelerating across industries, and the spread of remote work is intensifying these changes.

There is also a view that companies that chose stability over change during the pandemic are now seeing the crisis as ending and are making leadership changes. Earlier this month, Doug Parker, CEO of American Airlines, announced his retirement, and Gary Kelly, CEO of Southwest Airlines, revealed plans to step down early next year. Cases of leadership changes are increasing in industries such as aviation, travel, and services, which were directly hit by the COVID-19 crisis. This is seen as a personnel renewal based on the judgment that the crisis has peaked. In fact, only 3% of respondents cited COVID-19 as a direct concern for next year's business environment.

The IT sector, which rapidly grew this year benefiting from the untact market, saw the highest increase in CEO resignations at 17% compared to the previous year. In October alone, 39 CEOs resigned, and the number rose to 162 in November. Notable examples include Jeff Bezos and Jack Dorsey, founders of Amazon and Twitter respectively, who stepped down from their CEO positions held since the companies' founding in 1994 and 2006. Bezos was succeeded by Andy Jassy, who led Amazon Web Services (AWS), which generates more than half of Amazon's revenue, while Dorsey handed over his position to Parag Agrawal, a software engineer and Chief Technology Officer (CTO).

This content was produced with the assistance of AI translation services.