SENIOR Finance executives in Mid West companies have identified reductions in capital expenditure and savings through energy efficiencies among the leading business survival strategies outside of labour costs.
The Business Attitude Survey undertaken by BDO Simpson Xavier’s Recruitment division established a new level of focus by management on employee performance while cost cutting measures have already been implemented by 70 per cent of companies surveyed. Companies in the Mid West are also predicting that the tougher economic conditions will last until the last quarter of 2010.
The survey of 60 Mid West companies drawn from a panel of Multi National and indigenous companies revealed companies are not planning to reduce salaries or pension contributions but have put recruitment freezes in place.
78 per cent are not considering a reduction in pension contributions while 70 per cent will not be reducing salaries as a cost cutting measure. An increasing number of businesses stated they are looking at innovative management options such as part time senior management contracts through interim management.
Commenting on the findings BDO Simpson Xavier’s Recruitment Director, Joe Delaney said ‘over the past number of years we have seen what was described as the war for talent. We are now witnessing a radical overhaul of attitudes among company executives. Recent reductions in headcount have seen companies now reacting to the economic downturn by placing major emphasis on employee performance.’ The survey highlighted that current performance management techniques were only considered effective by one in ten businesses.
Among the other findings of the Business Attitude Survey included a predication that the prevailing conditions will last until at least the second half of 2010 or longer. 35 per cent of businesses expect to see an improvement in the economy by the end of 2010 with 29.7 per cent suggesting it will take longer than 2010 to move out of the current economic conditions. 75.7 per cent of companies anticipate that they will have to reduce their margins in the next six months to continue trading at the same levels. The majority of companies (59.5 per cent) expect to drop their prices in the first half of 2009.
Five in 10 businesses in the Mid West felt the loss of the Shannon Heathrow connection has had an impact on their business. Reflecting the international nature of trade in the Mid West recent currency fluctuations are impacting on 81.1 per cent of businesses surveyed.
Delaney added ‘Over the past number of years, when business was booming, there was more leniency towards employees in terms of performance and reward. The landscape has changed considerably now with harder times demanding improved performance across all functions. We are also witnessing a higher level of uptake in Interim Management as a result of the need to manage the business in survival mode. The reality is that successful businesses will survive based on their ability to manage employee’s performances better. These companies need to recognise management skill deficiencies that are required to survive in tougher times’.
Joe Delaney concluded ‘the survey highlighted the emphasis on cost reduction and people management. Companies are clearly preparing themselves for 18 months or so of very difficult trading conditions. The focus among companies is now firmly on motivating and retaining the best people and employing more effective performance management systems and considering innovative options such as part time solutions through interim management.”