Over the last year, this trend has been accelerated by firms “letting people go” in droves. In many cases, redundancies have been across the board and highly skilled and experienced people have been forced out of long-standing and necessary jobs. This is particularly true in the areas of sales and client servicing which, in many companies, have been left decimated. Unlike many other sectors of industry and commerce, one of the main assets within financial services companies is the skilled biped. It is these creatures which create and retain the other main asset – funds under management.
I find this distasteful British redundancy cult more than strange because as we come out of recession it is precisely those frontline staff that were let go that will be most impor-tant to financial services companies in the upturn.
I would go further and suggest that even before any recovery – in other words while still in this major and damaging equity/investment recession – investors and their advisers need as much help and support, if not more, than at any other time. And yet at the slightest whiff of a downturn, firms get the knives out and slash away at sales and client support teams.
Being at the helm of a company which is 12 years old, I would be loathe to lose a brilliant team that has taken more than a decade to put together and assimilate into our particular culture. I remember coming out of the 2000/2003 bear market with a full complement within sales and client servicing (the senior member of which we recruited in the middle of the down-turn). This allowed us to steal a march on most of our direct competition which emerged blinking into the sunlight in the spring of 2003 quite unprepared and without adequate resources to capit-alise on the ensuing recovery.
I am pleased to say that our shareholders remain committed to our long-term growth and sustainability – playing the long game – and are prepared to sit out the short-term vagaries that have plagued stockmarkets over the last decade.
This time I have been and remain of the opinion that the recession will be V-shaped rather than has often been the case – U-shaped. This is even more incentive to maintain optimal service levels and retain the talented staffing which is required to make the most of the prospective market recovery.
This attempt by slash and burn management to appease both existing shareholders and the stockmarket by trying to maintain profitability when revenues fall is, generally, at best ill-conceived and at worst downright dangerous. Unfortunately, almost regardless of these irrational and short-term measures and any impact they might have on their P&L, their share price will generally fall with the sector anyway.
Surely the better option is to plan for the long-term benefit of the company, the share-holders and the share price?
Volatility as a result of a fickle market should not distract management from their long-term goals and planning. We constantly warn investors to think in the long term and so should we.
Most highly successful and long-standing companies have not grown by adopting such short-term stop-go strategies.
Of course, we all try to cut unnecessary costs during a recession but we should not cause ourselves lasting damage by permanently removing vital assets – our best people.
One of the most challenging aspects of contemporary life is the constantly increasing rapidity with which everything happens. With everything occurring at increasingly rapid speed, there is little point in short-termism because the landscape will have changed by the time the short-term measure has taken effect.
Unfortunately, we seem to be caught up in this senseless pursuit of instant but superficial gains. One of the most recent examples is the Government’s movements on higher-rate income tax and the removal of the personal allowance for high earners.
This measure is destined to raise nothing for the country’s broken coffers in the short term but will cause immeasurable damage to the economy in the longer term by removing the desirability of the UK as a place to do and locate business.
Looking around at the behaviour of most of the major financial companies over the last year, I am at a loss to understand why they have put so many people through so much redundancy heartbreak when in very short shrift they will be recruiting once more as the markets take off.