Strategic Options for a Slowing Economy
Companies are considering many strategies as they come to grips with the slowing economy. Towers Perrin recently surveyed human resources executives and staff asking what they’re likely to do now that the economy is clearly less rosy than it was. The survey was conducted from October 15 to 24 at more than U.S. 450 companies, seventy-nine percent of which have more than $1 billion in annual revenues.
| How Companies Are Likely to Respond to the Economic Crisis | ||||||||||
| Very likely |
Somewhat likely |
Somewhat unlikely |
Very unlikely |
Too soon to tell |
||||||
| Cut travel and entertainment spending | 41% | 33% | 12% | 6% | 8% | |||||
| Freeze or reduce hiring | 36% | 26% | 15% | 13% | 10% | |||||
| Scale back holiday parties and/or other employee events | 32% | 26% | 20% | 13% | 9% | |||||
| Reduce pay/merit increase budgets | 26% | 23% | 22% | 18% | 11% | |||||
| Reduce training budgets | 17% | 30% | 24% | 15% | 14% | |||||
| Targeted reduction in headcount (focus on less critical roles or lower performers) |
22% | 24% | 17% | 22% | 15% | |||||
| Reduce annual incentives/bonuses | 18% | 21% | 23% | 25% | 13% | |||||
| Cut back on perquisites | 12% | 17% | 23% | 32% | 16% | |||||
| Reduce number receiving long-term incentives | 5% | 13% | 26% | 41% | 15% | |||||
| Significant reduction in headcount (10% or more) | 8% | 8% | 22% | 44% | 18% | |||||
We have heard from many clients of M Squared Consulting that they are focused on cost-control and some have even instituted hiring freezes. However, one thing is clear: the wheels of commerce are still turning in the U.S. Across the board, companies continue to invest in their futures. Strategic initiatives, especially those which hold the promise of increasing revenue or reducing costs, are almost always funded.
An interesting dynamic about our business is that the value proposition to clients stays the same regardless of whether we are in an expanding or a contracting economy. Our ability to deliver targeted expertise, when and where it is needed, is very unique. Forward-looking companies often choose to bring in project professionals from the M Squared Consultant Network who can quickly and cost-effectively deliver results so that their corporate staff can focus on their day-to-day responsibilities.
