Asian managers better prepared for a slowdown

Sep 03 2008 by Nic Paton Print This Article

Organisations in Asia Pacific are better prepared for a downturn than their counterparts in the U.S, despite the fact the emerging economies of the region look like they are going to be less severely affected by the global slowdown.

While U.S firms are focusing on job cuts and layoffs, Asian employers were taking a less blunt approach and drawing up contingency plans that focused more on freezing hiring and restructuring their businesses, according to research from consultancy Watson Wyatt.

More than eight out of 10 employers in Asia Pacific said they had contingency plans in place to be implemented in the event of a further economic decline, compared with two thirds of U.S firms polled.

The survey of more 1,300 employers, including 400 from Asia, also found European firms to be planning ahead effectively, with a similar eight out of 10 already having a contingency plan in place.

"It is interesting to note that while many will acknowledge at most some slowdown in the Asia Pacific region compared to the United States, it is the Asian employers that seemed to have braced themselves for what's ahead," said Rachelle Arcebal, Watson Wyatt director of strategic rewards for Asia Pacific.

Perhaps because they perceive the economic malaise to be that much deeper in the U.S, more than half of American employers said layoffs would be their top choice of action.

Asian companies, by comparison, preferred organisational restructuring and implementing a hiring freeze as their top two options Ė each cited by six out of 10 of those polled. The third most popular option was lower salary increases.

Fewer than four out of 10 U.S firms said they would go for a hiring freeze and 46 per cent said they would go for organisational restructuring.

"With attraction and retention challenges in Asia Pacific surpassing every other region covered in the survey, companies will naturally explore other options before letting go of their employees particularly their top performers and those possessing skills critical to their business," said Arcebal.

"We know from previous recessions and economic slowdowns that those companies that have contingency plans in place will be in a much better position to weather the storm and bounce back when the economy improves," added Laura Sejen, global director of strategic rewards consulting at Watson Wyatt.

"The economic slowdown is clearly having an effect on companies worldwide. If economic conditions continue to weaken, we would expect to see many companies begin to evaluate their staffing levels, pay programmes and overall organisational structures and to implement some of their contingency plans," she added.

Earlier this week, research by consultancy PricewaterhouseCoopers argued that making redundancies at the first whiff of a downturn can often be a mistake.

It said a light-touch, flexible approach to managing people would often be much more effective, as well as cheaper and less painful, when it came to responding to adverse market conditions.