During the past few years, the global market slowdown has resulted in reduced fee growth and profitability. Under adverse market conditions the primary focus of management has quite properly been on short-term actions to protect profits, by appropriate reshaping of resource capacity, streamlining the organisation to enhance value and cut waste and delaying investments in all but the most critical areas. Too often, however, they are one-off initiatives, necessary moves but with limited impact on boosting firm position and performance over the longer term.
Such initiatives are important given that economic downturns present an opportunity to ‘clean house’ for both the short and long-term benefit of the firm. Those firms that took the right actions in the downturn will benefit more than those that failed to do so. Naturally, striking the right balance in cutting costs but not undermining competitiveness in strategically important areas is key to building the leaner and stronger platforms from which to grow has been the challenge.
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