CEO confidence takes a dip [Q2 Vistage CEO Index]

“It’s not swimming, but it’s not drowning.” While that phrase describes a 4-year-old in a pool, it can also be applied to wavering Vistage CEO confidence. After four consecutive quarters of gain, the Q2 2024 Vistage CEO Confidence Index dropped from last quarter’s 85.9 to 83.3. CEOs have yet to see signs of a growth cycle with most struggling to manage inflation and interest rates. The dip in confidence expressed by 1,708 CEOs pulls the Vistage CEO Confidence Index back beneath the low points of the 2010s.

Driving workforce productivity

However, CEOs are not treading water while waiting for the economy to reignite. When asked what they are doing to improve productivity, our analysis of CEO responses identified four key strategies they are focused on:

1. AI and Automation: New tools have been adopted to handle routine and repetitive tasks, allowing employees to focus on more complex and value-added activities.
2. Enhanced training and development: CEOs are upskilling their workforce through continuous training and development programs for workers and leaders.
3. Streamlining processes and implementing new technologies: Leaders are reviewing and refining their existing processes to eliminate inefficiencies, including implementing new technologies like Enterprise Resource Planning (ERP) systems, Customer Relationship Management (CRM) tools, and project management software to improve workflow and communication.
4. Improving employee engagement and culture: Engaged employees are more productive and more likely to stay. Building a positive and engaging workplace culture is a priority.

The promise of a future growth cycle remains. Based on the fluctuation of the Vistage CEO Confidence Index, the start of that cycle may be further out than hoped. Meanwhile, the threat of a broad recession seems to have passed, leaving the relative stability of the status quo in place.

Expert perspective: ITR Economics

Lauren Saidel-Baker from ITR Economics looked at the data using their Rates-of-Change Methodology. Despite the dip in the Vistage CEO Confidence Index, she believes it’s crucial to contextualize this data within broader trends. Long-term rates of change are still rising, suggesting that the current decline might not signal a prolonged downturn.

The U.S. Industrial Production Index is expected to slightly decline in 2024, but growth is anticipated for 2025, particularly in various sub-sectors such as manufacturing and consumer spending. “High interest rates have led many CEOs to delay investments, but I anticipate rate cuts in the near future — possibly starting in September — which could ease some financial pressures,” says Saidel-Baker.

“Regarding labor market trends, wage inflation remains a significant issue due to a mismatch between job openings and available workers,” she continued. “CEOs should focus on retaining top talent and making efficient investments like AI and technology to prepare for the anticipated growth in 2025. Strategic planning and investment in people and technology are crucial to navigating the current economic challenges and capitalizing on future opportunities.”

Focus: Artificial Intelligence

Artificial Intelligence (AI) is rapidly transforming the present business landscape, offering unique advantages to businesses that adopt it early. Currently, 30% of CEOs are increasing their AI budgets, while 12% are reallocating funds toward AI. However, 55% of companies have not made any budgetary, staffing, or training adjustments yet.

In terms of use, AI adoption varies across business functions, with 49% of CEOs using it for sales and marketing, and 23% for customer service. Key benefits include enhanced digital marketing, customer engagement and operational efficiency. 

For small and midsize businesses, generative AI tools like ChatGPT are widely used for content creation, while industry-specific AI tools support specialized operations. As CEOs focus on the efficiency and effectiveness of their workforce, AI enhances productivity by automating routine tasks and improving decision-making. Those who are early adopters will reap the benefits, while it will be nearly impossible for those with a wait-and-see attitude to catch up.

Read the complete analysis in our Q2 2024 Vistage CEO Confidence Index report and examine trends over time in the data center.

Since 2003, the Vistage CEO Confidence Index has been the definitive voice of high-performing, high-integrity small and midsize business leaders. It’s provided the world-class insights that chief decision-makers need in service to our vision of being the most trusted resource to SMBs.

The next Vistage CEO Confidence survey will be in the field September 3-17, 2024, capturing CEOs’ sentiment as the election year heats up.

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