Hiring freeze, not job cuts, preferred by Qld employers

By: Chris Smith

Freezing new hires is the preferred alternative to job cuts among Queensland’s leading employers, according to a recent poll conducted

Freezing new hires is the preferred alternative to job cuts among Queensland’s leading employers, according to a recent poll conducted by business and corporate advisory group BDO Kendalls.

The qualitative poll of 40 Queensland businesses with a collective labour force of around 4,000 found 60 percent had already implemented or were planning hiring freezes for the financial year to June 30, 2009, in response to deteriorating economic conditions and as their main alternative to layoffs.

Temporary staff were already feeling the chill of the global financial storm, however, with 43 percent of respondents reporting cuts to their temporary workforces. The other top alternatives to layoffs included reducing or eliminating perks, freezing salaries and ending overtime.

The global economic meltdown has hit Queensland businesses hard, with more than 60 percent of those polled reporting a very significant or significantly negative impact on their organisations, and over half expecting profits to decline.

Yet only a third forecast a reduction in the size of their workforce, with 44 percent planning no change and 15 percent actually set to increase hiring.

BDO Kendalls Performance Improvement Partner Karina Collins says the results show that Queensland businesses are cautious about laying off workers after years of skilled labour shortages.

"It’s important for businesses to plan for the future recovery and maintain client service levels despite the current economic slowdown. Companies that shed staff in the previous recession of the early 1990s suffered in the subsequent boom period, when skilled staff became a highly valuable and precious commodity," she says.

"Now is the time to invest in staff to boost productivity and customer satisfaction, thereby building market share and brand value."

According to Queensland Government forecasts, the state’s economic growth rate will slow to 2.5 percent in fiscal 2009, with the jobless rate seen reaching 6.25 percent next financial year.

BDO Kendalls’ poll found Queensland businesses are already cutting operating costs, reviewing business plans and seeking to increase productivity in response to the global financial crisis.

But the response has not been entirely reactive as firms seek to capitalise on the conditions and emerge stronger when the economy improves.

According to the poll, Queensland businesses are planning new products and services to meet changing customer needs, along with up-skilling or cross-training staff and even hiring new and cheaper talent as it becomes available.

Merger and acquisition activity may also be set for a boost, with respondents showing a desire to acquire or merge with weakened competitors less able to respond to the current financial climate.

Asked when conditions may improve, around a third of respondents expected to see an improvement in the first half of 2010, while 20 percent forecast an upturn by 2011 or later.

Collins says while businesses face challenges in dealing with current turbulent conditions, they are not insurmountable for well-managed businesses with clear goals, market knowledge and strategy.

"Companies with the right business models and strategies will emerge stronger from the current downturn. We continue to see demand for our advisory services in improving business performance, and are confident that Queensland companies are in better shape than many others to ride out the storm," she says.

The poll was conducted on attendees of BDO Kendalls’ Pulsevo seminars held on February 26 and March 3, with respondents including directors, executives and managers from finance, administration and human resources functions.

The respondents worked in organisations in the healthcare, construction, recruitment, motor vehicle, advertising, professional services, financial and insurance services, and retail industries, with annual turnover ranging from under $2 million to more than $250 million. The majority worked in firms employing 20 to 100 staff.

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