Remember that old canard, often heard after a couple of celebratory wines had been consumed, that compulsory super somehow made Australia’s financial services industry ‘recession proof’? Seems especially outrageous now, doesn’t it.
The money will keep rolling in for as long as unemployment keeps low. However the big drop in equity markets has revealed the extent to which the industry had factored in a big performance fee component, and taken for granted that clients would never flee en masse to cash, as they appear to have done. (Although in a heartening sign of industry resilience, it seems that many advisers are receiving trailing commissions for parking their clients in term deposits. Congratulations all.)
Funds managers’ reactions to the lean times have in some cases been predictable. BT Financial Group’s 100 redundancies, revealed in I&T News last month, have only received more publicity than downsizings at other firms because of heightened focus ahead of the Westpac-St.George merger, and curiosity about what further synergies are being cooked up by the integration taskforce (to which BT chief information officer Tony Forward is understood to have been seconded).
However, other groups are trying different approaches, to at least postpone cuts to headcount. There’s the classic ‘cut everything that’s not rent and wages’ strategy, which we’re told is in place at more than a couple of firms whose names aren’t in the paper every day. UBS – whose name is – has since late 2007 had a global directive that beleaguered staff cannot fly business-class for trips under five hours. Our software vendor readers would already be trying to capitalise on another common reaction to lean times – the outsourcing of more backoffice and admin services, as, for instance, deputy chief executive Andrew Laing recently revealed would be the case globally at Aberdeen Asset Management.
But the most interesting idea I’ve heard is one apparently being considered by one of the biggest Australian-owned wealth managers. It’s looking at offering all staff the option of going four days a week. The prospect of a 20 per cent pay cut may scare many of us, but recruiters tell me that a long weekend, every weekend, is actually an arrangement desired by a surprisingly high number of workers.
One presumes the staff who’d take up the offer are not primary breadwinners. But if enough of them do take it up, across a workforce of several thousand you might achieve the cost savings you need without any of the bad publicity, bad karma or corporate memory loss that goes with some of the approaches mentioned above. I