A lesson in retrenchment

THE skills shortage taught companies about the perils of retrenching staff in an economic downturn. This time around many companies are taking a different approach to cost cutting.
A lesson in retrenchment A lesson in retrenchment A lesson in retrenchment A lesson in retrenchment A lesson in retrenchment


Staff Reporter

Difficulty in sourcing skilled workers in the past is making companies think twice about getting rid of them as a first resort in this volatile economy.

A recent KPMG survey of 152 mid-size businesses, with employees numbering from 50 to 400, revealed that 54% intended to maintain their current staff levels, while 33% were planning to employ fewer people.

National managing partner of KPMG’s Middle Market Advisory practice, Graeme Matthews, said it was essential for employers to be “nimble and adaptable” in this market.

“Employers are certainly taking this approach and are looking for alternatives to cutting jobs,” he said.

SkillsDMC chief executive Des Caulfield told MiningNews.net companies had invested a lot of money and effort in putting together a skilled workforce and were trying to do whatever they could to retain them.

“Organisations are looking at more effective and efficient ways of doing things,” he said.

Companies are putting in place cost-cutting measures such as reducing full-time employees to part time, asking staff to take leave without pay and minimising employee benefits.

KPMG’s Mood of the Market survey, showed 81% of companies are intending to keep salaries flat for the next six months.

Some 58% are asking employees to take leave and 38% are offering reduced work hours

But it is not just about cutting hours, wages and employee benefits, companies are also downsizing to focus on their core business as well as making cuts to advertising budgets.

KPMG Econtech senior manager David The said companies were shifting their focus back to things that were absolutely necessary for them to keep their core business running and their core client base happy.

“Another thing businesses are looking at cutting back on is their marketing, focusing on their existing clients that they have existing relationships with, and maintaining those relationships rather than being out there in the marketing sphere and trying to win over new business, which can be quite costly,” he said.

He said the recent skills shortage in Australia highlighted to employers just how difficult it could be to find and recruit skilled staff.

“That has made companies a lot more aware of the value of good staff and so what we’re finding is that companies are looking to make savings where they can and coming up with flexible working arrangements to try and keep on as many staff as possible,” The said.

Recent discussions between SkillsDMC and a number of companies in Perth and the Goldfields-Esperance region revealed that organisations were changing the way they reviewed their workforce.

Some miners were taking a long-term approach by maintaining staff numbers and in some cases even boosting them.

“Smart companies are finding a balance between managing the downturn and long-term planning. They are identifying opportunities to improve productivity or redeploy staff to strengthen their workforce for the future,” SkillsDMC WA regional manager Lee Jackson said.

“Another recent trend to come out of WA is organisations using the slowdown as an opportunity to recruit and secure critical skills from a growing talent pool.

“Retaining the most resilient and skilled employees will place businesses in a better position to survive the current economic downturn than their competitors.”

Some organisations are specifically advertising to people who have been laid off by competing companies.

Jackson said that while staff cutbacks had softened the tight skills market, enterprises needed to continue to build a pipeline of talent.

Caulfield told MiningNews.net a way to do this was to attract government funding for training and upskilling to the drilling, mining, quarrying and civil infrastructure sectors to build capacity and capability, so that companies were well placed when the economy picked up.

“With organisations that are downsizing or rightsizing or restructuring in front of this downturn, what we’re saying is that, it is possible that some of the government funding that’s been provided for training and upskilling people could be attracted to our industry sectors on the basis that, unlike other industries, we do a lot of the training ourselves,” he said.