There is little doubt that the downturn is beginning to bite hard. As a consequence, we are seeing companies shifting their focus from far-sighted strategies to short-term tactics to deal with more difficult market conditions.
This approach, while understandable, carries with it a need for firms to refocus their people strategies when market conditions improve, which can cause uncertainty and demands constant change management. An ongoing strategic management process is clearly a better model - short termism results in over recruitment in buoyant times, with the risk of valuable staff being lost to competitors.
At Deloitte & Touche, we have not made any large-scale redundancies. Our business plans have recognised the potential volatility in our markets and in all our businesses we strive to avoid excessive resource build-up. As people are our business, the ability to retain, recruit and motivate the best talent is critical to business success at all times. We also realise that a tough climate can provide opportunities for future growth and the potential for gaining an edge on competitors. A motivated workforce will be best positioned to capitalise on these opportunities.
Over the last few years we have recruited directors and partners from the other 'Big 4' firms and financial institutions, bringing in talented specialists who innovate and add to our service range. We are continuing with this even in the current environment.
It is clear that whatever difficult decisions are taken, a business must keep long-term strategy in mind while ensuring costs are managed effectively in the short term. If this can be achieved while strengthening the business, then the business will be on a good platform for growth.
Sometimes it is not possible to perform this balancing act - redundancies can be inevitable. But, it is worth bearing in mind that redundancy programmes are costly in comparison with other available options, such as postponing investment programmes. Companies that make large-scale redundancies will need to deal not only with the costs of the programme, but with motivational issues for the remaining staff and the cost of employing new staff when there is an upturn in the economy. A more flexible reward programme tied to corporate and individual performance can provide an effective cost management tool.
This flexible approach is our favoured option. It works for our people an