EMEIA board priorities 2024

In the EU, more than 75% of companies are struggling to find professionals with the necessary skills to fill jobs, according to Eurostat.² Meanwhile, the 2023 EY Workplace Reimagined Survey showed that the challenging macro environment is not preventing dissatisfied people from leaving roles.³ More than a third (34%) of employees said they were willing to change jobs within the next 12 months, with pay being their primary concern.

To address their skills gaps, companies are investing in strategic workforce planning and training, including reskilling and upskilling. They are also rethinking how they attract and retain their people and exploring opportunities to tap a broader talent pool, including neurodivergent and other underrepresented communities. As a result of the economic slowdown, some employers have cut their diversity, equity and inclusion (DE&I) budgets, but this is likely to put them at a disadvantage when competing for talent.

Over the past year, there has been a push by some organizations to encourage a “return to the office.” Typically, they are concerned that team productivity and collaboration may be declining due to hybrid and remote-working practices. Yet, returning to the office is counter to the expectations and preferences of many knowledge workers. The 2023 EY Workplace Reimagined Survey found that less than 20% of workers across all sectors wanted to work full-time in the office. What’s more, while hybrid work was generally favored over fully remote-working practices, half of employees preferred to work in the office no more than one day per week.

GenAI potentially enables companies to restructure their workforce. Nevertheless, companies should be sensitive to possible workforce anxiety around the use of GenAI. Similarly, there is a risk that GenAI tools could worsen existing workplace inequalities if the people who benefit from them most already belong to the most privileged demographic groups. To make effective use of GenAI tools, employees need training on how to deploy them and to understand the risks they pose. 

Nearly half of respondents (45%) to the latest EY Global Board Risk Survey saw geopolitical events as a potentially severe threat to their business over the next 12 months, while 43% were very concerned by the prospect of regulatory changes and 40% saw unfavorable economic conditions as a serious risk.⁴

Arguably economic conditions have declined further since the survey was published in July 2023. Global growth is set to remain sluggish in 2024 and some key economies — including the eurozone and the UK — are on the brink of recession. In its latest World Economic Outlook Update, the International Monetary Fund (IMF) predicts global growth of 3.1% in 2024, the same as for 2023, and only marginally higher growth of 3.2% in 2025.⁵

In this slow-growth environment, businesses are battling with some significant economic headwinds. Inflation is a particular pressure since it is driving up costs and squeezing margins. Additionally, high interest rates are making debt more expensive for businesses to obtain and driving up their cost of capital, which may constrain M&A activity.

In response to this context, businesses are making cost savings and prioritizing cash flow. Over a quarter of respondents to the 2023 EY DNA of the CFO report said that the challenging market environment was increasing pressure on finance leaders to drive cost-efficiencies and hit short-term earnings targets. What’s more, 90% of finance leaders were planning to reduce or pause spending in areas ranging from marketing to people development, despite some of these areas being long-term business priorities.⁶ The board can play a vital role here by challenging short-termism and working with management to balance near-term needs with longer-term strategic aims.

Geopolitical risk will continue to heavily influence regulatory agendas and drive trade restrictions that promote domestic manufacturing. Policy-makers will increasingly have national security goals front of mind when introducing new trade and industrial policies. This is likely to result in subsidies and other incentives being made available to businesses in critical sectors — for example, microchip producers, renewable energy providers and electric vehicle makers.

Notably, 2024 will be a year of elections, with 54% of the global population going to the polls, representing 60% of global GDP.⁷ This will generate regulatory and policy uncertainty in the short and medium term and could result in some significant shifts by policymakers.

Supply chain disruption has been a persistent concern for companies over the past four years due to Covid-19 and the war in Ukraine. The recent outbreak of conflict in the Middle East has piled further pressure on supply chains, with shipping in the Red Sea disrupted by attacks from Yemeni-based military group Houthi. Ships that would normally have traveled through the Red Sea and Suez Canal are now re-routing around the Cape of Good Hope, increasing travel time as well as freight costs.

To add to the disruption, the Panama Canal – which serves as a critical link between the Atlantic and Pacific Oceans — has been affected by a serious drought that has hampered its lock system. As a result, the number of ships able to pass through the canal each day has fallen significantly. Supply chain disruption will therefore remain a prominent concern for boards during 2024.

Other developments are also testing the resilience of supply chains. Companies are under pressure to adopt a more sustainable approach to their operations in response to customer expectations and regulation such as the EU’s proposed Corporate Sustainability Due Diligence Directive. The rise of the circular economy will also demand that companies rethink their supply chains so that they become circular, rather than linear, minimizing waste and incorporating the recycling and reuse of products and raw materials.

Traditionally, supply chains were designed according to the three key principles of time, cost and quality. These principles remain crucial – not least cost, since rising prices are putting pressure on companies’ margins. Nevertheless, companies are responding to geopolitical and regulatory events, as well as changing customer expectations, by adopting a more holistic supply chain strategy.

Specifically, companies are looking to improve the agility and resilience of their supply chains, so they become enablers of their business models, rather than simply cost centers. This is particularly important in the digital age, when more sales are made online, and consumers expect their goods to be shipped and delivered quickly. 

Technology can play a key role in improving the performance of supply chains, while driving down costs. Today companies can already capitalize on innovations, such as robots that undertake picking in warehouses and control tower solutions that automatically collect and analyze data from across the supply chain. In the future, they will increasingly use AI-enabled “intermediary tech” to ensure their products are sent directly from warehouses to consumers. They may also use self-driving vehicles to make deliveries. 

The following EY professionals contributed to this article: Catriona Campbell (chapter 1); Renaud Chalmin (chapter 2); Martijn de Jong (overall); Marco Duso (chapter 4); Alessandro Faini (chapter 3 & 5); Gerard Gallagher (chapter 4); Richard Jackson (chapter 1); Famke Krumbmüller (chapter 3 & 5); Dr Eva-Marie Muller-Stuler (chapter 1); Hanne Christine Thornam (chapter 4); Hendrik N. Walter (chapter 5).