January 28th, 2009
02:43 PM GMT
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30x30.todd.benjamin

I remember being at a gathering in Mumbai last November, and a CEO of a major company got up and said that as CEOs we've lost our confidence. It struck me not only for its bluntness but that he was saying it publicly. Now his pronouncement has become commonplace.

A new global survey of 1,124 executives by PricewaterhouseCoopers is echoing those doubts. Only 34 percent described themselves as very confident about the outlook for growth over the next three years, down from 42 percent last year. Only one in five are very confident their revenues will increase over the next 12 months, compared to 50 percent in last year's survey.

Every executive I've spoken with has told me he can't remember a time as bad as this.

The head of PwC, Sam DiPiazza, Jr., put it this way: "The speed and intensity of the recession have rocked the psyche of CEOs and created a global crisis of confidence. CEOs are most concerned about the immediate survival of their companies."

The overwhelming majority of chief executives, 80 percent, are facing higher finance costs, and nearly 70 percent anticipate postponing investments.

Given all the above, it's not suprising that about 76,000 layoffs were announced in just one day this month, and it's likely to get worse before it gets better.

One economist described the global economy like a car stuck in the mud. Authorities keep pushing the fiscal and monetary accelerator, and the wheels keep spinning. If the CEOs surveyed are right about the recession being a long, drawn-out affair, get used to the wheels spinning.

Do you think global CEOs are being too pessimistic about the economy? What advice would you have for a CEO facing a severe economic downturn?

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Filed under: BusinessQuestion of the week


soundoff (25 Responses)
  1. dan in Tucson

    I think CEO's need to get there brains back on track and off the golf course. Then maybe there will be better times for all. Businesses that are doing poorly need to fail. Get rid of the dead wood and make room for the busineeses that have a chance, work hard, and think of their bread and butter employees first instead of their investors. Simple economics show that your first priority is to the people that make the money for the company, not take it away. Oh, I forgot, thats what the CEO's do. NO MORE CORPORATE WELFARE.

    January 28, 2009 at 3:22 pm |
  2. sean

    I think the CEOs need to suck it up and shut up. 76,000 people laid off in one day. How many salaries could be paid for a year if CEOs took a pay cut and stopped whining about losing their $10 million bonus? Then when they do chose to take a pay cut they stand around looking for applause. Grow up.

    January 28, 2009 at 3:23 pm |
  3. Neva Boren

    Don't know if this is the correct site to go to but in regards to the new bailout plan: If the common person wanted a loan from a bank for most things, they would need to show the loan/bank/etc. a plan for goal, need/ plan for spending, method of repayment, etc. (I'm not an economist so don't know the proper terms) So, what is the procedure for "giving" money to the biggies and how/when will it be repaid? An oversight committee under the treasury department would review and okay or not okay the application.
    Too Dumb to Understand , I guess!

    January 28, 2009 at 3:43 pm |
  4. myke

    The CEO's are getting fat dumb and happy while so many people work hard to contribute to their bonus's. The CEO's never admit to their failings, they just blame the economy and start laying off employees just to protect the executive bonus.

    See http://middleincome.blogspot.com/ Its time that we as customers and consumers let these CEO's know that if they dont share in the pain of the employees, we are not going to be their customers. Join the effort – read the blog - do your part

    January 28, 2009 at 4:36 pm |
  5. Robin Knight

    why is Obama giving the CEO's the same old tired economy platform from the campaign? Same old speech if he didn't convince them then he sure won't now. Where is a US rep at Davos talking World Economy. His positions as President look very provincial to an international eye from what I hear from your own reporters there. Why is he still presenting a stimulus that looks like same old...

    January 28, 2009 at 5:01 pm |
  6. Jerome Fannin

    The CEOs are playing a game with the American people. And they
    are fooling with fire. They should know that if one company fake the
    need to lay off workers, the others will think that they are going to
    make more money, so they will do it also. At the end of the game
    no workers and no money moving around. NO" RICH" NO" POOR"
    NO" ANY" THING" STOP playing games OR NO" WORLD"

    SIGN: unemployed 15 months and worked 6 out of last 30

    January 28, 2009 at 6:27 pm |
  7. earle,florida

    Heres a a start. They grow up in affluent families. There tutored by pre-school professionals at the age of three! Then there off to the best ,"Private Grade Schools" money can buy. Finally ,daddy's money gets them into Harvard/Yale/Wharton,and Stanford,which happen to be the incubator/breeding ground for all financial wizardry scholars(remember,I'm using that term loosely) in the world! Walla,out comes a genius,and what do you get,"an army of empty suits,...?

    January 28, 2009 at 6:47 pm |
  8. Patrick Wacker

    CEOs have lost their confidence because their main focus has been on following an almost sacrosanct economic ideology that 'making money' is the first and foremost purpose of economic activity. But realistically if that were not the case, they might at some point of time begin to lose confidence in their vocation and the economic model they have so faithfully or maybe even greedily been adhering to. Money, product or service, or human beings performing economic tasks; which one should we 'first and foremost' ideologize and prioritize. If CEOs cannot figure it out, they just might lose their confidence.

    January 28, 2009 at 7:56 pm |
  9. Pennie

    Good Day.
    Looking up the meaning of Barrack Hussein Obama's name it actually mean: Barack = lighting, biblical, valiant warrior
    Hussein = good looking
    Obama = uncertain
    This is off topic for today but did anyone bother to look up the meaning of the name before they started in with criticism?

    Today's topic is just a waste of time, they went to school for the most part ...to earn these types of salaries. I just want to know why they took the easy way out and sold the whole country under after being paid those huge salaries...for what end ?...they should all be prosecuted. Those that just went along and those that started it...selling notes on homes time after time just because, these intelligent people surely knew the dam would burst eventually. Just like Katrina was the catalyst that wiped out New Orleans. And now they have the nerve to be a day late and a dollar short....Please

    January 28, 2009 at 8:53 pm |
  10. Stacy from Fairfax, VA

    The CEO's are being realistic. This is a time for pragmatic solutions to the problems facing America and our economy and not a time for unrealistic optimism.
    What should the CEO's do? First, remember why your company exists in the first place, your core competency. And no, it's not to make your shareholders richer. Your company was initially created to provide a product or service to your customers, first and foremost. Don't forget that.
    Next, if you are forced to have layoffs make sure the remaining employees know that they are vital to the continued success of the company.
    Bottom line: Don't neglect your customers or your employees. They matter more to your business in the long run than shareholders.

    January 28, 2009 at 11:10 pm |
  11. d. griffith

    CEOs never had confidence in themselves it is in money. I don't believe they are pessimistic about the economy. They are worried about the money. The advice I have for the CEOs is repentance.

    January 29, 2009 at 12:24 am |
  12. hideaki nagano

    bad is not good.
    bad is bad.
    so why do we need?

    January 29, 2009 at 3:36 am |
  13. Phil

    The CEOs lost more than their confidence, they lost all respect for mankind and their employees. They've gotten greedy and thinking only of themselves. A person taking an salary over $500,000 has their minds set on being overly rich, and doesn't have the time to think of his company or his employees. The big 3 auto CEOs are out there begging for the Government to help them, while the bailouts can't even cover their annual salaries. Eliminate the CEOs and big Exec salaries and watch the sales add up. Tax the foreign cars like they do to us and the competition's cars will only be bought by the rich, like they are in foreign country's. We are in trouble only because the United States isn't smart enough to see Japan and Europe laughing all the way to the bank.

    January 29, 2009 at 8:25 am |
  14. Steve Duvall

    I think all of America needs to pay attention to Ford Motor Company and learn a thing or two! This company is able to sustain itself for one year with there financial reserves, the CEO has waived his salary for the year, look folks he will only make one dollar! This is what its gonna take folks, sacrifice!

    This bailout is a joke! The problem is there is no demand for US products not even in the US. Wake up people BUY AMERICAN this is your BAILOUT!

    If there is a greater demand for American products then there will be more jobs required in America!

    Where is all the money going or where did it go, this is what they need to be finding out, our currency is based on debt, if every American was to give there money to the government there would be no debt !

    When the gas prices was around 4 dollars a gallon who was getting this money. Billions of dollars gone to where, if we dont keep track of where our money goes before we know it we will owe a foreign country more than we are worth and at that point and time, this country will be solely owned by another government! Think about it!

    one 1947 quarter when melted down is worth more than a gallon of gas at 4 dollars a gallon, didnt any one catch this!

    This debt we owe as a nation is not owed to the government it is owed to the federal reserve, the federal reserve is a private company yes they want to print us more money, they want us to bailout all these mis managed companies, it just means we owe the federal researve that much more money, our products lose value because our dollar is worth less, who are we paying who do these giant corporations owe all this money to that they are going to go bankrupt with out government assistance for what! Where is it going! some one answer that who are we giving our money to!

    January 29, 2009 at 9:17 am |
  15. Rich

    What are we doing! There is zero accountability in this country. If you run a company into the ground, let it fail. The better run competing company will grow to take it's place. If the top ten hedge fund managers make a combined $10billion in bonuses (which is the equivalent of 100 thousand people making $100k a year) while not being regulated in any way, people are going to loose confidence in the market.. They will pull their money out! If people live beyond their means and get their mortgage rates adjusted when they find themselves in trouble while a responsible person that did not take money out of their house to buy that new car or go on a spending spree pays the price.. Nobody is going go have confidence.

    January 29, 2009 at 10:08 am |
  16. Rajendra K. Aneja*

    FIGHTING THE RECESSION

    BY

    Rajendra K. Aneja

    The International Labor Organization (ILO) has forecast that up to 51 million jobs globally could be lost due to the recession in 2009. It has opined that 30 million people could lose jobs, but the worst case scenario could be 51 million. The earlier estimate of job loss was 20 million.

    On the 27th January, 72,000 people lost their jobs globally, across the world. The political/economic failure of global leaders across the world, combined with unbridled greed of mortgage and investment bankers has led to the current crisis of confidence.

    Some of the steps that need to be taken to avert further agony are:

    1. Leaders’ Confidence: Global leaders with formal authority like Presidents and Prime Ministers, should show and express confidence that the deteriorating situation can be arrested and will be resolved. When leaders themselves appear hesitant and floundering, they create more panic.

    2. Employment generating Projects: Governments should divert funds to employment generating projects. The private sector may be myopic and chase short run profits and refrain from investments. Governments must invest aggressively, but productively! USA must stop squandering money on space programmes and build garment factories, to reduce their dependence on imports of underwears!

    3. Infrastructure Projects: Governments must invest heavily in public infrastructure e.g. railways, airlines, dams, power generation, projects, etc. India should stop wasting money on trying to reach the moon, and build toilets for 700 Mn. bereft citizens. What is the use of going to go to the skies/space, if the earth itself is muddled?

    4. Maturity-Corporate leaders: Sacking employees in large numbers is detrimental to the business they are trying to save. The most valuable assets of any company are its employees. The salary/wage component of any company ranges from 4-10% of it sales, depending on the business. So, termination of employees is not problem-resolving. The talents/skills of employees should be used to diversify, expand, enter new markets, evolve new products.

    5. Commercialisation of agriculture: Provides massive opportunities for employment and augmenting productivity. The world will always need food to eat. In 2007-2008, prices of foods rose by 30-50% due to shortages. Commercialization of agriculture, especially in developing countries, combined with better storage and transportation, can improve output, reduce waste and feed people at lower prices. It also creates productive jobs.

    6. Incentivize new Entrepreneurs: Governments should encourage new entrepreneurs and provide incentives like low interest rates, tax holidays, subsidized utilities. This will create more jobs and renew confidence.

    7. Start your business: Those who have lost jobs, should focus on re-education and re-engineering their skills and talents. Better still, start your own business, even if it is a tiny shop. Many great retail names like Wal-Mart, have grown from small stores. This is the time to become an entrepreneur, and control your own destiny in the future. You can also provide jobs to fellowmen and treat them better in difficult times.

    8. Part-time jobs: If you have a part time job, or have some spare time daily, take a second part-time job in a school, office, hotel, nursery. Or, convert a hobby like gardening into a profession by selling plants, seeds, etc. This is the time to be creative. If you are smart, you could make more money, than you made in your regular job! Every crisis, contains within it, seeds of opportunity!

    9. Shop sensibly: Shop at co-operatives, they are cheaper. Take advantage of sales, promotions, discount offers. Avoid wastage. This will reduce the monthly shopping bill by about 15%. Shun opulence.

    10. Keep fit in mind, body. Whether you lead a country or a company or you are an ordinary person like me, remember, that the recession will also end. Have confidence in the world and yourself. You, will overcome. Keep physically fit. Run/walk a kilometer daily. To fight tough times, you have to be physically and mentally tougher. Remember, tomorrow is another day, and good times are never far away!

    January 29, 2009 at 11:26 am |
  17. Nam(South Korea,Busan)

    The entrepreneurship is dead.

    January 29, 2009 at 12:42 pm |
  18. Kilgore Trout

    In as much as the CEOs may be losing confidence, the people are indeed losing confidence in the CEOs themselves.

    Here is my analysis, of one CEO ...

    IBM CEO (Sam P) strategy ...

    1. Announce positive earning report
    2. Announce positive future earnings
    3. Implement unannounced layoffs
    4. Pander for stimulus money with President Obama
    5. Create jobs overseas

    Strange how a flurry of layoffs have happened since it appears the stimulus bill will happen in whatever form.

    Now, it (IBM) appears to be well positioned to create jobs overseas.

    My opinion, we first create US jobs, and as a indirect result overseas jobs will get created.

    Questions:

    If bond ratings drop will the same thing that happened with AIG etc happen to IBM?

    What exposure do they (IBM) have in the Credit Default Swap market?

    It does seem that IBM (IBM Global Finance) borrows money and lends money (or via leases) to clients. If clients default, then it seems that any debt and /or leases lose their value. That impacts debt to asset and /or equity ratios. When leverage goes up and bond rating ultimately go down it results in a need to shore up assets with some infusion of, usually, cash. Hmm, think stimulus money.

    Is this why the flurry of layoffs are happening?

    I just hope, President Obama is fooled by panders.

    January 29, 2009 at 2:16 pm |
  19. Lauro Silva - Brazil

    -Why have CEOs lost their confidence? Because they know much better than us how deep the mess they themselves have created is.- Are the CEOs too pessimistic about the economy? No, by no means. They´re pretty sure.- What advice for a CEO to face the downturn? Probably get his way home and do another different business.

    January 29, 2009 at 2:33 pm |
  20. Randy MCLain

    First I think many CEOs were reckless in the hunt for bonuses and stock upticks at any costs. They over-extended their companies and when the economies tanked their companies did as well.

    I fault first and foremost the boards of directors. They allowed these crooks to do it, and then rewarded them for their lunacy. Governments did not monitor these actions as they were in bed with them.

    The only ones left to handle this are the poor people. We have the legacy of fixing this, and we need to establish some rules for these new upper management folks:

    1. Your pay is based on a salary. NOT bonuses. If you want a bonus you get stock in the company, and CANNOT sell it until you leave the company and after a 5 year wait. That way you can't game the system for stock manipulation.

    2. Your pay is based on performance. Improve the company's bottom line, reduce debt, innovate, do whatever but do NOT risk the entire future on a bet.

    3. If you do well, good for you. If you screw up, you will be fired. And when you are, you cannot work for anyone else that competes with your current company.

    4. Last, if you allow the company to be ruined due to your lack of fidelity and integrity, you have to agree to NEVER work in that capacity for any other again.

    I am sick and tired of Americans not taking responsibility, as well as other CEOs in other countries. YOU screwed this up. FIX IT.

    January 30, 2009 at 6:27 pm |
  21. Andi

    poor poor babies. loss of confidence.

    Sure beats the LOSS OF YOUR JOB the rest of us are facing

    January 30, 2009 at 7:24 pm |
  22. rafael cabeza

    nobody knows when the crisis will finish because nobody could forseen when the crisis started. We can't trust the economists when they say it will finish in 2010

    January 30, 2009 at 11:04 pm |
  23. TAS

    Some of the CEO's/CFO's I've known work incredible hours each week and they have no life most of the time. They are at the beck and call of many. Some things are beyond their control like monetary policy...and some things are not like the rush to globalize and outsource all to make/save more of the almighty bucks and AT THE EXPENSE of those who built these companies – Americans

    Let's drastically reduce or eliminate taxes at the federal and state level and give the American people most of the stimulas money. We'll spend it and stimulate the economy while reducing government FAT and interference in our free market system and PAYCHECKS and allow our CEO/CFO's to relax and sleep at night.

    February 1, 2009 at 3:22 am |
  24. Mark Boughtwood

    A lot of CEO's are being realistic. They recognise that there must be more focus on retaining market share and re-vitalising or rebranding their services/products. Those who can act quickly will make the changes overnight and this must give them the edge. The bigger the corporates the slower the reaction time. There will be some tall timber to fall over the next 12 months.

    March 5, 2009 at 12:55 am |
  25. Altagraciaq Cobeya

    Hey there! I've been reading your weblog for a long time now and finally got the courage to go ahead and give you a shout out from Houston Tx! Just wanted to say keep up the excellent work!

    July 8, 2012 at 2:17 pm |

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