Although many companies and individuals still struggle with recession-related challenges, a majority of executives believe the downturn will reverse its course within the year, according to a recent survey conducted by Accountants International (AI), a Burlingame, CA-based provider of accounting and finance staffing and recruitment.
A small number, 12 percent, of the 3,500 accounting, finance, and human resources executives surveyed said that economic recovery already has started, and 62 percent believe recovery will occur by the end of 2010. More than two-thirds either have begun to hire or anticipate hiring in 2010.
The economic downturn hit small to mid-sized companies much harder than expected, according to AI’s annual report, “2010 Compensation, Benefits and Workplace Trends Guide.” One year ago, only 23 percent of respondents said they expected revenues to remain flat in 2009 but, by the end of 2009, a “staggering 61 percent” reported no growth for the year. Overall, nearly 85 percent reported that their company had been impacted by the economic downturn.
Nearly half of the respondents said they anticipate hiring employees in accounting and finance this year, with the largest number of hires likely to be at the staff level, followed by support and management level positions.
The AI survey was conducted in the fourth quarter of 2009 with executives in positions ranging from chief financial officer to human resources manager in predominantly small to mid-sized public, private, and nonprofit organizations. Approximately 31 percent of the organizations had revenues of less than $25 million, 39 percent had revenues of between $26 and $250 million, and 20 percent reported greater than $500 million in revenue. More than half of the organizations surveyed are privately owned.
Impact of recession on employment
Nearly 40 percent of executives said they had instituted hiring freezes in 2009 and 57 percent laid-off workers. Of those organizations experiencing layoffs, the top two departments affected were operations, 42 percent, and accounting and finance, 36 percent.
Some of the respondents reported that their companies also had imposed compensation cuts or freezes (52 percent) and discretionary and non-discretionary budget cuts. Only a few (17 percent) reduced benefits or furloughed employees (11 percent).
Ninety-seven percent of the organizations responding had a severance package, with 55 percent based on tenure and level of position, and 35 percent based on tenure only.
Impact on workload and employee loyalty
When asked, “Given increased workplace tension and heavier employee workloads compared to a year ago, would you consider your team to be engaged in its work?” nearly all the respondents replied that their employees were engaged. Two-thirds of the respondents (65 percent) said their team was engaged most of the time, and 27 percent of the respondents said their team was engaged all of the time.
Almost two-thirds (61 percent) of respondents said that economic conditions have had a moderate to high impact on their workload.
Some executives surveyed felt that “recession-related changes their company implemented directly impacted employees’ loyalty to the company.” Yet during the recession, the guide reports, “surveyed companies worked hard to retain company loyalty and employee engagement. Their efforts are reflected in the fact that a solid majority (87 percent) reported no increase in absenteeism during the economic tumult that marked this past year.”
In order to alleviate workload and other workplace stress, the executives reported that they made an effort to:
- Develop and maintain a strong workplace environment
- Provide personal support
- Increase formal communication between managers and employees
- Offer employee assistance programs
- Utilize recognition and rewards programs
Recession-related business trends, opportunities
Many organizations reporting that they had used the recession to make changes in their business relationships and products. Nearly half of these companies (46 percent) were successful in negotiating better terms with suppliers. Others reported that they had used the recession as an opportunity to restructure, encourage employees to think differently, target new customers, create improved products and services, and optimize/reengineer/rethink technology.
Only half of the respondents (52 percent) said that they had maintained market share in 2009, and 61 percent reported that there was no growth in sales volume. In 2008, a much lower number, 37 percent, had reported no growth in sales.
Impact on corporate social responsibility, sustainability initiatives
Last year, AI data showed a significant increase in the number of organizations that had corporate social responsibility (CSR) policies in place. "CSR is generally defined as voluntary steps an organization takes to improve the lives of its employees and the community at large, while sustainability focuses on the steps taken to maintain natural resources," the guide states.
This year's survey focused how the economy impacted CSR and sustainability. "Surprisingly, of those companies that participate in such programs, only 16 percent stated that their CSR initiatives had been affected, and only 10 percent said their sustainability efforts had been impacted."
Executives reported that "their CSR programs help create a stronger public image, improve employee morale, and increase brand recognition. With the recession, organizations are finding their CSR and sustainability efforts are instrumental for business beyond economic recovery."
Outlook for 2010
More than half of the respondents who think that their company will experience growth in 2010 (60 percent of the total) expects that growth to occur in the second half of 2010. A smaller number (54 percent) of executives anticipate an increase in demand for products or services by the end of 2010.
Potential IFRS implementation
Just over half (57 percent) of surveyed respondents were aware of the International Accounting Standards Board (IASB) modified version of International Financial Reporting Standards (IFRS) for private companies.
More than half of the executives surveyed said that there was no in-house IFRS expertise in their companies or they were unsure of their accounting and finance department's knowledge of IFRS, "exposing an area of opportunity to gain more experience before possible U.S. adoption in 2014."