Healthcare A Top Concern For U.S. CEOs

But Only An Afterthought For CEOs In Asia, Says New Study From The Conference Board - The Views of 658 CEOs Worldwide

The Conference Board CEOs in the U.S. are expressing major concerns about the rising cost of employee healthcare, an issue that has low priority for CEOs in Europe and Asia, according to a global survey of chief executives released today by The Conference Board.

The survey of 658 global CEOs from 40 countries is from The Conference Board report, CEO Challenge 2006: Top 10 Challenges.

Healthcare costs rank seventh on the list of U.S. CEOs' top 10 challenges, but only 52nd globally. The top worry for CEOs worldwide is sustained and steady top-line growth, with 37.5% of those surveyed naming it their top challenge.

'Corporate America clearly feels the healthcare pinch,' says Richard E. Cavanagh, President and CEO of The Conference Board. 'As in the past, CEOs outside the U.S. don't view healthcare as a competitive challenge.'

The annual CEO Challenge Top 10 report from The Conference Board details specific challenges that CEOs face across regions, as well as by the company's size, industry, and level of success - all factors affecting the concerns of CEOs.

CEOs in Asia rank profit growth as their top concern (42.2%), followed closely by sustained and steady top-line growth (41.3%); speed, flexibility, and adaptability to change (41.3%); customer loyalty/retention (35.6%); speed to market (33.3%); and corporate reputation (33.3%).

CEOs based in Europe are most concerned with speed, flexibility, and adaptability to change (39.4%); followed by profit growth (38.4%); and sustained and steady top-line growth (37.0%).

In the U.S., the top four challenges are sustained and steady top-line growth (39.4%); consistent execution of strategy by top management (38.4%); customer loyalty/retention (37.0%); and profit growth (27.2%).

Across the globe, CEOs in a group of 'more successful' companies were more likely to consider customer loyalty/retention as a chief concern. The report classifies 189 of the 658 companies as more or less successful based on their average return on assets. CEOs of 'less successful' companies rank speed to market notably higher as a major challenge than the 'more successful' firms and ahead of customer loyalty/retention. While lack of pricing power appears on the Top 10 list of CEOs' concerns in the 'less successful' firms, it doesn't rank in the Top 10 concerns of 'more successful' companies.

'Less successful companies are likely more concerned with speed to market because of their more pressing need to improve their business growth,' says Linda Barrington, Research Director and Labor Economist at The Conference Board.

The Conference Board survey reveals a rising emphasis on challenges linked to increasing competitive pressure.

More CEOs than last year have increased the importance of faster speed to market, keeping up with new technologies, industry consolidation, seizing opportunities for expansion/growth in North and South America, outsourcing and facing non-traditional competitors in their business. Security of/safeguarding plant/operations/employees also rose in the relative rankings, driven in part by the proximity of the survey to the July 7 London bombings.

Among those challenges falling in relative ranking over the past year are realizing gains from mergers/acquisitions/alliances, and vigilance on ethics. Cash management, short-term performance pressure, cost of capital, debt burden, and transnational regulation issues also fell.

Among the survey's other key findings:

• While product innovation is sixth in the Top 10 rankings of CEOs in both Europe and the U.S., it is only 25th among CEOs in Asia.

• Sustained and steady top-line growth and consistent execution of strategy by top management were the top concerns of CEOs across all sizes of business.

• Among the higher ranked challenges of CEOs of companies with more than $5 billion in worldwide sales are stimulating innovation/creativity/enabling entrepreneurship, and speed, flexibility, adaptability to change.

The Conference Board's CEO Challenge Survey 2006 was conducted during July and August 2005. All findings and data in this report represent the accumulated experience of the senior executives surveyed. A subsequent report will explore the implications of this year's survey findings as articulated by chairmen and CEOs of leading companies from a range of industries around the globe. Their perspectives were gathered through a series of in-depth interviews, in which the topics ranged from balancing short-term and long-term goals under the relentless pressure for speed, addressing uncertainty and risk, succession planning and the availability of skilled labor, to the backlash against global outsourcing, the impact of rising energy costs, and what we are likely to see in the next wave of mergers and acquisitions.

About The Conference Board
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