Tightening the belt? Apply here.

A slew of job cuts across financial services have been announced over the course of the last few weeks and there is no doubt that these are the tip of the iceberg.  Some reports have even gone as far as suggesting that redundancies in the financial services sector will reach tens of thousands before the year is out.

The knee jerk reaction to tough market conditions is to cut costs, reduce headcount and generally tighten the belt to ride out the storm. Of course, making continuous improvements and eliminating inefficient processes is good practice irrespective of the economic environment. That said, many firms forget the business fundamentals that got them to their successful position in the first place.

Diversifying risk and planting seeds for the future, through new lines of business and products, may be difficult to launch in these times. But if financial services companies don't continue to spend on new ventures, as well as reinforcing and improving existing products, they may find that core revenue generators are bearing less fruit when the downturn comes to an end. The key to success is in responding fastest to, or in creating, client demand for new offerings, whilst continually striving to deliver greater value to clients from the existing array of services.  Arguably, staying close to clients' needs and providing good levels of service is of greater importance in adverse economic conditions than during buoyant times. Those companies that can help clients reach their goals will fare best.

What really matters is employees. Ultimately those that possess the right skills and knowledge, and apply the correct process with significant effort, will drive a  business forward. When the industry contracts and the inevitable redundancies kick in, it creates real opportunities to hire talent – people that may normally be out of reach. Investing in capable people that can bring with them relationships, domain knowledge, experience and new ideas may not be the first thought when tightening the belt, but striking a balance between short term financial demands, and investing for the future will separate the good from the average.

A recent survey by recruitment consultants, Korn/Ferry said that executives in the financial services industry that have lost their jobs during the economic downturn expect that it will take them at least four months to find new employment.   I hope that this turns out to be far too a pessimistic view.  Talented executives that own client relationships, have strong sector knowledge and a good work ethic, should be employed much sooner than they think by those companies that continue to invest in a downturn.