Staying competitive in a digital world of uncertainties. Albania CEO Survey as part of the 21 st Annual Global CEO Survey.

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1 Staying competitive in a digital world of uncertainties Albania CEO Survey as part of the 21 st Annual Global CEO Survey

2 2 s 21st CEO Survey: Albania Foreword For the first year, Albania is pleased to present the viewpoint of CEOs leading organisations on the Albanian market, with whom we have discussed important topics for the future of business and society. I would like to thank all leaders of Albanian businesses who shared their thoughts with us. Their active and candid participation is the single greatest factor in the success of s Annual Global CEO Survey. The Survey is now in its 21st year, and we are proud to present its first Albanian edition. This report provides an insight into the Albanian corporate thinking and defines current issues that CEOs face. I strongly believe we will continue to publish this survey and share CEOs insights, relevant for the Albanian market. Loreta Peci The optimism of growth of our business leaders, prevails over increasing levels of geopolitical upheaval, regulatory reforms uncertainties and an ever-high scarcity of talent, skilled to work within the quickly changing technological landscape. In our discussions with Albanian CEOs, we see that they are prepared to take on these challenges and are confident about the road ahead. They are also tactically prepared to steer their organisation toward sustainable achievements by anticipating an eminent employment wave. EU aspiration seem to be one of the major sources powering the optimism. Apart from the expectations for facilitation in the expansion in the traditionally aimed neighbour markets, EU accession is expected to help in tackling key concerns such as economic growth, increasing tax burden and geopolitical uncertainty. Therefore, we see among top threats that keep CEOs awake at night, the future of the Eurozone. In the digital disruption reality, despite heavily investing in new ICT platforms, our CEOs approach new technologies as tactical means for achieving specific goals rather than strategically steer digital transformation. Apparently, the digital trend is not expected to drive disruption in the mid term or one may argue for the scarcity on digital talents due to higher tendency of Albanian business leaders to partner or outsource to specialised third parties. It is encouraging that the business has realised its important role in shaping the future workforce, as business leaders are already working with educational institutions. Country Managing Partner, Albania & Kosovo

3 3 s 21st CEO Survey: Albania Content 4 Growth: Celebrating locally the prospects for global economic growth 13 Talent: Sense of purpose for digitally rationalized organizations 17 Trust: Integrity and data protection supported by transparency foundations 21 Point for Action 22 Participants Snapshot and Credits

4 4 s 21st CEO Survey: Albania 01 Growth: Celebrating locally the prospects for global economic growth 56% of Albanian CEOs believe that global economic growth will improve in the next 12 months 85% are confident in their company s revenue prospects for the next 3 years

5 5 s 21st CEO Survey: Albania Confidence in growth prospects This year s CEO survey results reveal the highest ever jump in business leaders optimism about the global economy more than half of CEOs globally believe that economic growth will improve over the next 12 months, while only 29% were this optimistic last year (see Figure 1). Albanian business leaders tend to be more optimistic than their CEE peers, aligning their expectations with global counterparts. They reported nearly the same confidence about the economic environment in comparison to global CEOs this year. As many as 53% of Albanian respondents expect that global economic growth will improve over the next 12 months. Moreover, they believe that the good wind will also positively impact their short- and mid-term results. Although striking at first sight, these results are not so surprising in light of the global economic situation over the past year, with most of the world s major economies experiencing positive growth (as compared to the economic state just a few years ago) 1. Figure 1: CEOs globally report higher than ever optimism regarding global economic growth, while being somewhat more cautious about short-term and long-term prospects for revenue growth of their own companies Q: Do you believe global economic growth will improve, stay the same, or decline over the next 12 months? Q: How confident are you about your company s prospects for revenue growth over the next 12 months? Q: How confident are you about your company s prospects for revenue growth over the next 3 years? 57% 47% 40% 49% 49% 46% 46% 44% 39% 39% 36% 35% 51% 38% 45% 42% 27% 29% 18% 15% Business leaders who believe global economic growth will improve over the next 12 months Business leaders, very confident about their company s prospects for revenue growth over the next 12 months Business leaders, very confident about their company s prospects for revenue growth over the next 3 years

6 6 s 21st CEO Survey: Albania Figure 2: Unlike their global peers, Albanian CEOs are more optimistic about their companies short-term rather than long-term growth prospects Q: How confident are you about your company s prospects for revenue growth over the next 12 months/ three years? Short-term prospects Long-term prospects 35% 44% 46% 42% 50% 46% 53% 40% 42% 42% 32% 45% Albania CEE Global Very confident Albania CEE Global Somewhat confident When comparing CEOs optimism about the global economy to the confidence in their own company s growth prospects, we see a slight divergence, especially when we talk about longer-term perspectives. This shows an interesting contrast with the last years, when CEOs globally were less certain about short-term success (both in terms of overall economic growth and in terms of their own company s prospects over the next 12 months) and were counting more on the longer term growth potential. Now, they are starting to feel more cautious about the more distant future. When we look at what Albanian CEOs have told us, we see a similar trend, 53% of Albanian business leaders are very confident in their company s revenue prospects for the next 12 months, while fewer (42%) are very confident in what the next 3 years will bring (see Figure 2). Still, Albanian CEOs seem to have a more clear view of the road ahead as compared to their counterparts in CEE. Interestingly, CEOs in the rest of CEE seem to be the most uncertain about what s to come in the future only 32% feel very confident in their companies long-term prospects and this is the lowest rate of confidence across the globe. Clearly, business leaders in CEE are anxious about a number of factors that may impact the future, such as geopolitics (the tensions between Russia and the West, the impact of Brexit) or workforce quality, retention and demographics. Their Albanian peers do not seem so worried about such factors. Is this short-sighted optimism or sober confidence grounded in objective economic reality and sustainable economic models? During the past few years Albania has embarked in a number of infrastructure and energy projects, as well as regulatory and fiscal reforms to facilitate and improve the business environment. Other sectors have apparently been waiting behind the curtain, showing a more cautious way of doing business with major focus on improving current organizational operations. Considering this a preparatory phase, we expect in the near future the release of the accumulated potentials with business endeavouring in new and interesting projects. In the light of the results of the optimistic leaders, the recent developments in different sectors, such as M&A transactions and tourism investments, shall only be the beginning of what our optimistic Albanian CEOs have in store for the future. Annie Gjollma Assurance Services

7 7 s 21st CEO Survey: Albania When asked how they plan to drive company growth and profitability, Albanian CEOs believe that there is still space for improvements within their organization. Key drivers seem to be more related to enterprise improvement initiatives as fuel to their companies growth rather than new ventures or M&A transactions. Leaders in Albania (65%) will rely mainly on organic growth, which is not as optimistic as global trend of 79% (see Figure 3) but remains aligned as first growth driver. On the other hand it reveals a lower confidence in gaining more market share or foreseeing a market growth. A large portion of global CEOs (62%) will rely on cost-reduction initiatives to drive growth, while this number is more conservative for Albania, with 50% of business leaders planning cost reductions. Figure 3: Q: Which of the following activities are you planning in the next 12 months in order to drive corporate growth? Implement a costreduction initiative 50% 62% globally CEOs in Albania will rely mainly on organic growth as a key driver of their advancement Enter into a new strategic alliance or joint venture 35% 49% globally Outsourcing In Albania we see fewer CEOs (only 35%) which will rely on new strategic alliances or joint ventures compared to their global peers (49%). 18% of Albanian CEOs believe that partnerships in terms of outsourcing (most probably non-core activities) shall drive considerable improvements within their organizations, ranking this as their fourth pillar of profitability growth, despite the fact that they remain more conservative than their peers globally (21%). Focus on organic growth 65% 79% globally Globally CEOs seem quite eager to acquire new businesses, with 42% reporting they plan new M&A initiatives next year, ranking this as their fourth growth pillar. On the other hand, Albanian CEOs are less ambitious to acquire new companies, with 9% planning growth through a merger or an acquisition. Why M&A are not 18% 21% globally M&A 9% 42% globally In order to attempt M&A transactions, apart from the primary focus on adding value or market share, companies shall consider proper Post Merger Integration elements such as streamlined comparable operations as well as clear financial positions. In our market, companies tend to have smaller scale operations which lead to the standard biases of their sizes such as lack of clarity in terms of organization, operations as well as financial positions. Albanian CEOs, being aware of such elements are cautious in entering in M&A deals. Jonid Lamllari Assurance Services

8 8 s 21st CEO Survey: Albania Figure 4: Globally USA, China and Germany are once again the top 3 countries selected by the largest number of CEOs as important for their companies growth Q: Which three countries, excluding the country in which you are based, do you consider most important for your organisation s overall growth prospects over the next 12 months? USA China Germany UK India Japan 46% 33% 20% 15% 9% 8% Figure 5: Italy and Greece continue to be the most important foreign markets for Albanian business leaders Q: Which three countries, excluding the country in which you are based, do you consider most important for your organisation s overall growth prospects over the next 12 months? 66% 56% 25% 47% 22% 16% 13% 25% Italy Greece Germany Turkey Austria USA When talking about growth prospects, foreign markets play a key role, both in terms of export potential and opportunities for investments. Echoing last years results, globally USA, China and Germany are recognised as those countries who have the greatest impact on the economic climate and being the most important export destinations (see Figure 4). When it comes to Albania, Italy is considered the most important market for growth by local CEOs 66% (see Figure 5). This comes as no surprise since Italy has been traditionally a key commercial partner for our market. Greece holds the second position, with 56% of CEOs listing it as an important country for their success. Germany holds the third position with 47% of CEOs mentioning it, followed by Turkey 22%, Austria 16% and US by 13%. None of the Asian giants in the top rankings of global CEOs has made it to the Albanian list. Why such a focus in the EU countries? Having in mind the EU aspirations of our country and the expected economic development, such a picture proves also that the CEO optimism in terms of growth is fueled by this EU factor. Notably we see our clients rising exports as well as consolidating imports with better trade terms which are not anymore biased by the country reputational Arben Sulko challenges. Manager Lorena GegaAdvisory Tax Services

9 9 s 21st CEO Survey: Albania Threats that keep CEOs awake at night Geopolitical uncertainty continues to be the top reason for concern for CEOs across Figure 6: the globe. Albanian CEOs appear more focused on the need to deal with pragmatic issues such as increasing tax burden, future of the Eurozone and inadequate basic infrastructure. Q: How concerned are you with the following potential economic, policy, social, environmental and business threats to your organisation s growth prospects?* Geopolitical uncertainty 84% 85% Increasing tax burden Over-regulation 83% 82% Future of the Eurozone Cyber threats 80% 82% Inadequate basic infrastructure Availability of key skills 79% 79% Geopolitical uncertainty Increasing tax burden 78% 79% Uncertain economic growth Terrorism 77% 79% Availability of key skills Protectionism 77% 76% Social instability Populism 77% 74% Changing consumer behaviour Speed of technological change 76% 70% Terrorism Uncertain economic growth 74% 68% Exchange rate volatility Social instability 73% 66% Over-regulation Exchange rate volatility 70% 65% Readiness to respond to crisis * Note: Percentage of respondents who indicated Somewhat Concerned and Extremely Concerned This year CEOs across the globe report a different mix of economic, policy, social, environmental and business threats as the most concerning. They seem increasingly anxious about broader societal and policy issues such as geopolitical uncertainty, over-regulation, terrorism, populism and protectionism. (see Figure 6 ). The concerns of Albanian business leaders are more related to local social, political and economic developments which in turn seem to have a major impact in their apparently fragile businesses. Increasing tax burden, future of the Eurozone, inadequate basic infrastructure and uncertain economic growth are top anxious thought of Albanian business executives. Why do we have such a shift of priorities locally? Recent fiscal upgrades seem to be attempting harmonisation with the EU models, naturally have created transitory concerns in our business leaders minds. This is shown also in more conservative future projections. However, this increase in focus toward tax burden form business leaders, in the short to medium term shall impact in a better widebasis fiscal changes, filtering and acceptance. Whereas, in the long run it shall enhance the ability of Albania to address the negative transition effect making a smother accession phase. Mirjeta Emini Tax & Reporting Strategy

10 10 s 21st CEO Survey: Albania Despite their optimism, CEOs globally and in Albania consider the existing threats to growth prospects. Both are greatly concerned about uncertain economic growth (sizing respectively 74% and 79% of respondents concerns). The concern on future of the Eurozone seem to be an Albanian translation ranking second (82%) or a proof of the concerns of the general economic developments in their business. Broader social threats make their way in top of the list of concerns of both global and local CEOs like geopolitical uncertainty and terrorism. Again, locally we see also translation of such threats in more concrete elements such as social instability, which in the past has revealed major impact in the business climate. Therefore, their organization readiness to respond to crisis appears of the list of concerns keeping CEOs in Albania awake at night (as reported by 65% of Albanian CEO respondents). Skills shortages of the labour force unites CEOs globally and locally as they reported the same degree of concern (79%). In fact for our region in the view of the ongoing process of constant move of qualified labor force to bigger and more developed economies such a concerns reflects mostly in the availability of specialized skills such as digital talents. Provision of new services and products form cutting age technologies, of course would have a major impact in the behaviour of relatively young population with obvious tendency to innovation. Also, businesses are forced to follow such a path. Changing consumer behaviour has made Albanian business leaders anxious over the years and will probably continue to be a major concern over the next periods. As many as 74% of CEOs in Albania vs. 62% globally are quite worried about this change. Technology related concerns like cyber threats and speed of technology changes seem to differentiate Albanian CEOs from their global peers. Despite the fact that we have seen considerable investments with this regard in the past few years, the cyber-attacks events in the business arena worried 62% of Albanian respondents in comparison to the 80% globally.

11 11 s 21st CEO Survey: Albania Navigating through a fragmented world Figure 7: Although globalization has facilitated universal connectivity and the movement of capital, people, goods and information, it has come short in other important areas, such as the integrity and effectiveness of global tax systems, climate change and managing geopolitical risks. Q: In your view, to what extent has globalisation helped with the following areas?* Enabling universal connectivity Creating a skilled and educated labor force Improving the moving of capital, people, goods & information Harmonizing regulations Universal access to infrastructure and basic services Upholding data protection & ethical standards Managing geopolitical risks Full and meaningful employment Integrity and effectiveness of global tax systems Averting systemic failure Averting climate change and resource scarcity Closing the gap between rich and poor Global Albania 82% 70% 79% 77% 61% 63% 67% 59% 63% 59% 56% 44% 95% 100% 92% 90% 100% 87% 95% 97% 96% 85% 94% 86% 87% 88% 92% 79% 76% 79% 78% 67% 75% 71% 63% 73% CEE * Note: Percentage of respondents who indicated To a large extent CEOs continue to recognise that the promise of globalisation has been realised to a large extent in select areas such as easing the movement of capital, people, goods and information and enabling universal connectivity (see Figure 7). Albanian CEOs recognize also a major impact in creating a skilled and educated labour force. However, globalization which we define as the process by which the world is becoming increasingly integrated has not been as effective in addressing other important issues. Almost, half of CEOs in Albania believe that globalization has not helped in closing the gap between the rich and the poor or in creating integrity and effectiveness of global tax systems. The world has also failed to unite and coordinate on its efforts to fight climate change and resource scarcity. Albanian business leaders recognize at best the globalization impact in universal connectivity, in enhancing workforce capabilities as well as the movement of capital, people, goods and information. They also, envisage the good impact toward they key pragmatic concerns on regulations and basic infrastructure. Nearly one third of Albanian CEOs believe that globalisation has not helped enough in managing the geopolitical risks, which on the other hand these days is in on the top of the uncertainties that keep business leaders awake at night. Is this a reflection of a global perception or an impact of the difficulties to expand the business from a non EU country? Despite the globalization trend, we see reflected our CEOs pragmatic needs in terms of regulations, infrastructure and geopolitical risks. Naturally our entrepreneurs have seen and still see EU neighbor countries as key areas for business development. In this corner of the world geopolitical risk is still a concern and businesses do see the mitigation of such risk through the aspiration for EU accession. Such process will have a major impact on Albania and its local businesses toward their way of globalization. Arben Sulko Advisory services

12 12 s 21st CEO Survey: Albania Figure 8: Albanian CEOs note that although the business world is integrating its forces globally, we are moving towards increasing geopolitical and social fragmentation Q: For each alternative, please select the one that you believe the world is moving towards. Singular, seamless ecosystem..... Multiple, fragmented ecosystems Open access to the internet 88% 6% Restricted access to the internet Corporate integration (e.g. bigger and more influential organizations) 88% 12% Corporate fragmentation Economic unions and unified economic models Harmonization of global tax rules Political unions 52% 48% 45% 39% 45% 48% Multiple economic models Increasing use of tax competition Nationalism and devolved nations Measuring prosperity primarily through financial measures 42% 52% 30% 58% Measuring prosperity through multifaceted metrics Regional trading blocs A single global marketplace Widespread economic growth benefiting more people A single global rule of law and liberties Common global beliefs and value systems 30% 64% 21% 70% 21% 76% Concentrated economic growth benefiting fewer people Multiple rules of law and liberties Multiple beliefs and value systems Despite globalization playing its role as a key driving force, Albanian CEOs and their global counterparts as well note more fragmentation than integration in the world in a number of areas (see Figure 8). From a business perspective, corporations seem to be getting more and more integrated globally, which gives them expanded reach and impact. This is aided by the open access to the internet, which facilitates universal communication and allows instantaneous exchange of information. When it comes to geopolitical and social topics, however, business leaders globally see more fragmentation than globalization. 82% of CEOs globally and 76% of business leaders in Albania believe that the world is moving towards multiple beliefs and value systems. More than 70% globally and more than half of Albanian CEOs note a tendency towards regional trading blocks, rather than a single global market place. These conflicting tendencies pose quite a challenge to the CEO, striving for global presence and impact but having to navigate through many regional specifics. The implications are both in terms of corporate vision and values, as well as workforce management practices. What more than half of CEOs agree on (both in Albania and globally) is that prosperity is increasingly measured not only through financial indicators but also through multifaceted indices like quality of life, corporate social responsibility, trust. Building a sustainable business means much more than ensuring shareholders return and achieving nonfinancial outcomes becomes even more difficult in the fragmented world of the new reality. The workforce and corporate culture implications of an integrated vs. fragmented world at play with the diverging forces of individualism vs. collectivism are further illustrated in the Side note: Which way are we going?, which follows next.

13 Which way are we going? A summary of s Workforce of the Future: The competing forces shaping 2030 report When we discuss economic, as well as corporate growth, we look at three major forces - globalization, technology disruptions and shifts in economic powers which are quickly shaping the future of the world we know today. These drivers of change and the way people and organisations respond to the challenges and opportunities they bring, create a complex network of interdependencies that may result in various scenarios for the future. Megatrends provide the context for the future scenarios but they do not dictate their shape or features at a specific point in time. Still the public sentiment and the government are the main forces to decide the push and pull effect of collectivism versus individualism, and corporate integration versus business fragmentation. In an effort to get a better understanding for how all of these factors and trends might interact to shape our future, s recent report Workforce of the Future: The competing forces shaping 2030 explores several different scenarios of the world in These scenarios have distributed the weight of the megatrends and the human dynamics in four different ways, each forming a unique vision of a possible world. In the Yellow World, workers and companies seek out greater meaning and relevance in what they do. Technology has helped to create the vibrant Yellow World by lowering barriers to entry by providing easy access to crowdfunded capital and a worldwide market. This allows entrepreneurial companies to compete in areas previously the domain of large organisations. But there is a central conflict around technology and automation. As more people are impacted by technical advances and see their skills become obsolete, disaffection and the push-back against policies that seem to favour the elite grow. In the Green World, trust is the basic currency underpinning business and employment. Corporate responsibility isn t just a nice-to-have it s a business imperative. The CEO drives the people strategy for the organisation, believing that the people in the organisation, their behaviours and role in society have a direct link to the organisation s success or failure. Employees trust their employer to treat them fairly in terms of pay, development and conditions and in return reflect the culture of the company in their approach to work and overall behaviour. The Red World is a perfect incubator for innovation. Anxious to compete, larger employers fragment to create their own internal markets and networks to cut through oldstyle hierarchies and encourage and reward workers to come up with new ideas. Specialism is highly prized in the Red World and a career, rather than being defined by an employer or institution, is built from individual blocks of skills, experience and networks. In the Blue World, companies see their size and influence as the best way to protect their prized profit margins against intense competition from their peers and aggressive new market entrants. Corporations grow to such a scale, and exert such influence, that some become more powerful than nation states. Exceptional talent is in high demand employers secure a core group of pivotal high-performers by offering excellent rewards but otherwise buy in flexible talent and skills as and when they re needed. For workers in the Blue World, the pressure to perform is relentless. Managing the impact of the trends and forces shaping our Four Worlds of Work won t be easy. It requires collaboration and engagement from governments, organisations and society at large. As individuals be it business leaders, workers, students, parents or consumers it s important to have a clear view of what the future, driven by the megatrends and our own actions, may look like, what role we will play in it, and what is the direction WE want to take it to.

14 14 s 21st CEO Survey: Albania 02 Talent: Sense of purpose for digitally rationalized organizations 50% of 86% 79% of Albanian business leaders report that it is difficult for them to attract digital talent of business leaders are modernizing their workplace in an effort to attract the right employees participants see partnering with external providers or improving compensation & benefit as equally viable tactics in the endeavor of brining on board digital talent

15 15 s 21st CEO Survey: Albania Planned growth fuelled by people When discussing CEOs view on their companies growth prospects, the question about headcount definitely comes up, especially in the context of technological advancements and the impact that automation might have on the number of employees. Similarly to their global peers, Albanian business leaders, confident in their short & mid term growth, plan significant increases in headcount over the next year, with 50% reporting an expected increase and only 9% expecting decrease (see Figure 9). To explore the effects of automation on organisations people strategies, we asked those CEOs who plan headcount decreases whether these plans would be a result of automation or other technologies. All of the respondents in Albania noted that their plans to decrease their workforce are at least partially due to some type of technological advancement. Globally, 18% of CEOs are planning decreases and 80% of the headcount deductions are related to technology. Figure 9: Being technology driven or as a results of evolutionary growth, it is obvious that the employment wave foreseen by our CEOs will face organizations with transformational challenges. With this regard, it looks that not only attracting new talents but also retaining and developing existing ones shall be on top of CEO s human capital agenda. Q: Do you expect headcount at your organisation to increase, decrease or stay the same over the next 12 months? Global On the other hand, not only millennials but also other generation have revealed that the extra mile is achieved mainly when they see a sense of purpose. Apparently, the lack of such perspective is also a key driver for employees leaving their jobs. In the endeavour to rationalize their organizations and in the meantime give to employees (at lest to the ones necessary for the realisation of future plans) the desired sense of purpose, transformation-focused employers will make their way to the top of the labour market differentiators. Neritan Sota Advisory services More than half of CEOs globally as well as locally are planning to increase their workforce, while 41% of Albanian CEOs plan a headcount status-quo, only 9% of for staff decrease. 54% 18% Increase 28% Decrease 41% Headcount will remain the same 50% 9% Albania Overall, it seems that the impact that we expect technology to have on the workforce is not that much related to headcount, at least not yet. What we need to be focusing on now is the skillset required of employees changes. In light of an eminent trend of decrease of the unemployment rate and, on the other hand, the corporate culture effect of brining new workforce on board, naturally we foresee an evolutionary need of the organizations to adapt/transform. What impact shall these have in the tight CEO agendas?

16 16 s 21st CEO Survey: Albania Talents for strategy or for digital transformation? Figure 10: Q:To what extent is your organisation using the following strategies and tactics to attract or develop digital talent? Global Modernizing the working environment Partnering with external providers Business leaders in Albania realize that their organisations need to get on the digital wave if they want to attract digital talents Outsourcing to external providers Implementing continuous learning and dev. prog. Improving compensation & benefit packages Changing brand perception through marketing & adv. Working with educational institutions Implementing new flexible ways of working Relocating operations closer to available talent pools Changing employee dress codes Not at all Large extent 51% 43% 15% 15% 20% 15% 20% 50% 19% 22% 6% 16% 23% 47% 3% 23% 43% 3% 19% 10% 32% 58% 30% 23% 23% 3% 55% 30% 52% 45% Through the implementation of new solutions certainly a company transforms; it transforms in behavior, goals, necessities and skillset required. Whether the priority in the human capital strategy is to increase the number of new talents or to develop current employees is defined by the Company s future vision. However, the ability to on-board digital skills will be a game changer in shaping our destiny. Some extent Markel Nikolla Risk Assurancey Services Albania 57% 32% 3% 3% Short term 3% With the increasing number of ICT companies and with players in all fields and from all sectors investing in digital platforms, there is an increasing demand for employees skilled in the use of current and emerging technologies, or what we refer to as digital talent. Half of Albanian business leaders (50%) report that it is somewhat difficult or very difficult for them to attract digital talent. In fact, from the survey it results that in comparison to their global peers they have a tendency to bring on-board digital capabilities by partnering with external providers or even outsourcing some operations to them. A considerable number of CEOs in Albania (compared to their global peers), are relatively sceptical in applying organizational change tactics in order to make their businesses attractive for digital talents (see Figure 10). Despite the fact that most of the CEOs do realize that in order to attract employees with a modern skillset, they need to ensure their working environment and practices are also modernized as many as 90% of business leaders are engaging in some type of initiative aimed at modernizing the workplace whereas none of them aim to implement such initiatives in a short term period. Albanian CEOs recognize the inability of the education system to address this increasing business need by producing sufficiently qualified resources. 66% of respondents are planning to work with education institutions in this regard and 3% have already started to do so. Are business tackling properly the scarcity of digital talents?

17 17 s 21st CEO Survey: Albania Taking the future into our hands Figure 11: Although digital skills are scarce, it will be our soft skills that will truly differentiate us in the future, including from artificial intelligence. Q: To what extent do you agree or disagree with the following statements about your organisation s talent activities?* Global Albania We need to strengthen soft skills in our organization alongside digital skills 91% 94% We make decisions on automation of tasks & jobs based on how best to deliver our corporate purpose We have a responsibility to retrain employees whose tasks & jobs are automated by technology We expect to grow our workforce through internships & apprenticeships We are rethinking our Human Resources function We plan for multiple and emerging visions of the future using a scenariobased approach We are clear how Robotics & AI can improve customer experience 82% 67% 66% 60% 63% 47% 68% 47% 56% 56% 53% 44% Since the availability of key skills, including digital ones, is a major concern for CEOs globally, it is only logical that they should conceive strategies to address this growing issue. CEOs in Albania, slightly more than their global peers (94% vs 91%) realise the need to strengthen employees soft skills (e.g. teamwork, communication), which alongside emotional intelligence and empathy cannot be replicated by machines and technology. Apparently this tendency is in line with their approach of putting less efforts on retaining employees whose tasks & jobs are automated by technology (47% of Albanian CEOs recognize such retention as a need compared to 67% globally). Instead of focusing on technical/ digital skills they consider such skills better provided by external partners. * Note: Percentage of respondents who indicated To a large extent Another option is to stay ahead of the problem and work with universities to make sure graduates are equipped with the right skills where internship programs seem to be the most common form of cooperation as in this way the business is giving the opportunity to students to step into the real working environment, to explore different options and to make an informed decision about their future careers. On the other hand, CEOs (both locally and globally) reveal themselves vulnerable in missing of a clear picture on how robotics & artificial intelligence can improve customer experience. Thus, having on board digital skills, be it by hiring digital talent or entering strategic partnership is becoming gradually a concern that shall be addressed in the near future.

18 18 s 21st CEO Survey: Albania 03 Trust: Integrity and data protection supported by transparent foundations 68% 52% of CEOs are challenged to deliver business results in shorter time of business leaders believe prosperity and success should not be measured only by financial metrics

19 19 s 21st CEO Survey: Albania Figure 12: CEOs globally agree that there is increasing pressure to hold individual leaders accountable for any organisational misconduct, while CEOs in Albania seem more concerned about the increasing pressure to deliver results sooner. Q: To what extent do you agree or disagree that you are currently experiencing the following challenges?* Pressure to deliver business results in shorter time Pressure to hold individual leaders accountable for org. misconduct Declining trust between your organization & government Pressure from employees & customers to take social or political stances Decreasing tenure of the chief executive Declining trust between workforce & senior leadership Declining trust from your customers 6% 11% 19% 17% 18% 3% 14% 18% 3% 24% 18% 29% 22% 44% 38% 40% 60% 61% 59% 53% *Note: Percentage of respondents who indicated Strongly agree or Agree 68% Global Albania CEE Delivering on short-term goals is an increasing concern among CEOs globally and much more for Albanian CEOs (see Figure 12). The challenge in front of CEOs is particularly big in light of the fact that 52% of them believe prosperity and success should not be measured only by financial metrics (see Figure 8). On the other hand, it can sometimes come at the expense of longer-term sustainability goals such as corporate social responsibility, people development agenda or building strong corporate values and trust in employees and in society overall. We asked CEOs if they have experienced erosion of trust with important stakeholder groups such as customers, employees and the government. The latter managed to get on the top 3 challenges of Albanian CEOs, revealing the high impact that politics in general and outstanding reforms in particular have in the way they do business. Interestingly, when asked regarding the trust from employees and customers, Albanian CEOs seem to be less concerned than their peers. Their answers indicate that they as business leaders have more urgent and important things on their agendas, such as the increasing pressure to deliver business results under shorter timelines and individual accountability. It is interesting to consider to what extent this perception reflects reality and whether they underestimate a potential issue that is looming just behind the corner

20 20 s 21st CEO Survey: Albania Transparency and integrity at the core of trust Figure 13: Businesses understand the value of transparency and CEOs in Albania reveal to have a high degree of confidence in this regard Q: To what extent is your organisation building trust with its workforce by creating transparency in the following areas?* Organizations' values Employees contribution to the overall business Compensation and benefits strategy Diversity and inclusion policies People strategy The impacts of automation & AI on your workforce * Note: Percentage of respondents who indicated To a large extent Based on the survey results, Albanian CEOs seem much more confident in the degree of transparency they exert towards their employees than their global peers. The good news is that even though trust has been moved to the side by more pressing issues, leaders continue to take action in the right direction. When thinking about building trust in the workforce, companies are focused on creating transparency in organisational values, employees contribution to the overall business results as well as in the companies remuneration strategies (see Figure 13). 61% 63% 56% 94% 100% 95% 92% 100% 95% 90% 94% 92% 89% 91% 85% 91% 88% 92% Global Albania CEE Figure 14: Customer trust is built over transparency and is enhanced further by integrity and data protection. Employees reputation impacts organizations image among customers. Q: Тo what extent is your organisation using the following strategies and tactics to build trust with its customers? Creating transparency in your supply chain Creating transparency in the usage and storage of data Collaboration with edu. & policy to improve employability of workers Creating transparency around the taxes you pay Helping to promote diversity & inclusion Investing heavily in cyber security Creating transparency on your business strategy Contributing to combating environmental issues Contributing to philanthropic activities 47% 41% 42% 45% 41% 42% 36% 41% Some extend 62% 45% 42% 44% 39% 42% 32% 44% 21% Albania 21% Large Extend When talking about building trust with customers, CEOs realise the significance of transparent practices related to their interaction with institutions and good corporate citizen standing (see Figure 14). Another important topic coming up in the context of customer trust is the security of data. With cyber threats being a big concern and with the feared negative impact from breaches of data privacy on stakeholder trust (according to 87% of the Albanian participants in the s 20 th CEO survey), business leaders increasingly realise that ensuring full compliance with regulations such as GDPR and others as well as investing in IT security should be on top of their agenda.

21 21 s 21st CEO Survey: Albania

22 22 s 21st CEO Survey: Albania 05 Points for Action Our business leaders are caught between trying to satisfy their own business priorities which require strategies that can be quickly adapted to various scenarios based on a lot of uncertainties and trying to resolve different stakeholder demands which on top have increased pressure to hold individual leaders more and more accountable. They have to navigate also through their vision on enhancing values such as trust, engagement whose metrics point to long term plans together with the pressure to deliver business results in shorter time. We believe that in order to be successful, business leaders should focus on strategies that will be effective regardless of the direction the world heads towards. Commit to a purpose. The way that companies can navigate through the multitude of forces shaping the business and social environment is by having a clear purpose which incorporate a broader set of values, that guide organizational decisions for a sustainable and meaningful future. We live in an age when transparency, fairness and clear accountability are critical for building trust in both employees and society as a whole. It is our responsibility as business leaders to find ways and consciously build this trust in the young generations so they start believing that the future we are shaping for them here in Albania is worth sticking around for. Anticipate the obvious: Help strengthen and improve the role of technology in society. There is a clear risk that in the future technology may displace more and more of the human workforce causing social isolation as well. However, emerging technologies can also help meet human needs in new and profound ways so in order to create new industries and unforeseen types of new jobs jobs that will be more creative and fulfilling. Instead of being anxious about what technology will bring, it would be more productive if we focus on the ways in which we can develop our own skills and those of our workforce so we can manage technology effectively and to our advantage. Managing the impact of the trends shaping our economy might be feasible. However, it requires collaboration and engagement from government, organizations and society at large. For us as business leaders, it is important to have a clear view of what the future, shaped by the EU accession/globalization trends and our own actions, may look like, what role we will play in it, and what is the direction we want to take it to. Not limiting the view to regulatory compliance or economic risks, there are key concerns already experienced by our peers such as shift in consumers behavior, talents scarcity, digital disruption and work environment transformation that shall start to be addressed.

23 23 s 21st CEO Survey: Albania 06 Participants snapshot and credits 34 57% Albanian CEOs took part in the third Albanian CEO Survey of participants are operating within the Consumer and Industrial Products and Services (CIPS) sector

24 24 s 21st CEO Survey: Albania Participant snapshot 36% 34 Albanian business leaders completed the CEO Survey face-to-face 32% interviews 28% 57% are operating within Financial Services sector 14% 17% of participants are operating within CIPS* sector are operating within Technology & Communications sector * Consumer and Industrial Products and Services Globally 12% Other sectors female respondents have been CEOs in this organisations for more than 5 years 1,293 CEOs interviewed in 85 countries

25 25 s 21st CEO Survey: Albania Credits Research and project team Loreta Peci Albena Markova Neritan Sota Arben Sulko Data analysis Data analysis was coordinated by UK, located in Belfast, Northern Ireland Find out what global business leaders had to say by visiting Here, you can dig deeper and uncover current perspectives. Want to take part in the discussion next year? If you are a CEO interested in participating in next year s survey, please contact Arben Sulko (arben.sulko@pwc.com) and share your thoughts with us.

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