Another way of lowering labor costs coming out of this recession is to shift operations permanently to lower-cost countries. After facing big severance expenses to cut staff in Europe this year, for example, Actuant is now looking to hire more assembly workers in countries with less-generous labor laws when volume comes back. “What we don’t want to do is replace [the European] jobs in the exact same places when we see a rebound,” says Lampereur. Instead, the company is looking to hire in lower-cost countries, “places where you can get out with 60-to-90 days’ severance.”
Ironically, the finance department is one of the few areas of the company that may not change much, with only 12% of respondents seeing big shifts ahead. Many do say their departments are being pulled in new directions. Finance staffers at satellite-network provider Hughes Communications, for instance, are now being asked to help think through sales strategies and customer-financing options, and even make presentations on sales calls, says CFO Grant Barber.
In fact, retaining talent may only have gotten harder. “As we meet the current economic challenges, the workforce of the organization, including the finance team, is being stretched greatly,” says one survey respondent. “The biggest concern is retaining the best of the team as the economy recovers, as there is not much that can be done in the short term to reward these employees.” Several CFOs who have made hires during this time find the job market for finance and accounting talent as competitive as ever. Ajilon reports that demand remains almost unchanged, as accounting jobs were cut only 2% between June 2008 and June 2009.
At Hughes Communications, Barber has even instituted a new rotational program, moving three key people around to different business units, in part to try to retain them. “I have been fortunate I haven’t lost any of my direct reports for a year, but I know they are being recruited,” he says. “I wanted to increase their knowledge and growth and development,” in hopes that they will see a better career path at Hughes than elsewhere.
Finally, Don’t Be Too Cautious
One lesson CFOs should be learning from this recession is how to survive a short-term plunge in demand while laying the groundwork to grab future market share. At Johnson Controls, Bruce McDonald currently faces a 40% reduction in demand for the company’s automotive-interiors division, but believes that great opportunities lay ahead, as some major competitors have declared bankruptcy and others teeter. “The market is going to recover, but we don’t know when,” he says.
In the meantime, Johnson Controls leadership has tasked business-unit leaders with getting to a point where the company is not losing money on the division — but without “over-restructur[ing] so that when the market comes back we have to build new plants,” says McDonald. Getting to breakeven allows him “to be patient with that business” as he awaits the chance to grab market share. The same holds true in the company’s North American residential-air-conditioning business, which has been severely impacted by an 80% drop in home starts. “We continue to invest in the next generation of more-efficient products,” says McDonald, noting that the unit is expected to be profitable this quarter.