Recent global financial challenges prompted financial executives around the world to take an aggressive approach to managing costs. Although markets have shown promising gains in recent quarters, efforts to spur growth remain a top concern in the financial sector – and managing costs remains one of the key tools in the financial executive’s toolbox.
A survey of over 100 American banking executives found that, during the recent economic downturn, companies responded by:
- Reducing overall expenses. Nearly all the respondents surveyed had attempted to reduce overall expenses, with actual cost reductions ranging from 6 to 30 percent. Executives in capital markets and insurance also tried this approach, but averaged lower reduction percentages.
- Used multiple waves of cost-cutting. Banks, capital markets, and insurers in the U.S. averaged 3.34 separate “waves” of cost-management initiatives, exceeding the average of 2.7 rounds for several international markets, including Canada.
- Addressed staff-related expenses. Making layoffs, eliminating or merging positions, and reducing compensation and benefits were high on the list of cost-management measures implemented during the last recession.
Sustaining Cost Management in the Long Term
Although many of the cost-cutting measures listed above were necessary responses to a sudden crisis, most financial executives surveyed admitted fears that the measures were not sustainable in the long term or that they were not ideal for generating growth.
Future plans for cost management aimed at sustaining growth in the long term and included methods like:
- Fostering a cost-management culture. Nearly a third of respondents surveyed planned to develop a cost-management culture throughout the organization by training employees at all levels to be aware of costs and find ways to keep them in check. Nearly one-third of companies surveyed planned to extend this training even to departments not normally associated with cost management, such as human resources.
- Hiring smarter. Strategic hiring plans, often created and implemented with the help of an experienced staffing partner, aimed at controlling costs and generating growth by focusing on candidates with proven track records and improving retention, thus reducing the high costs of replacing top earners.
At Daley and Associates, our Boston-based executive recruiters combine expertise in the financial industry with a cultivated pool of candidates to place top candidates in financial positions throughout the Northeast. Contact us today to learn more. If you are looking for financial executive recruiters in Boston, contact Daley and Associates today.