Recession Tactics: New CFO Strategies in Asia Pacific

by Lisa Vehrenkamp, American Express, 21 September 2009

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American Express cost cutting employee benefits Lisa Vehrenkamp performance metrics recovery

The world’s senior finance executives are focusing on aggressive new methods to reduce and control costs in the face of the worst economic downturn since the Great Depression. But at the same time, many businesses are continuing to invest in areas such as technology, marketing, and R&D to generate revenue and improve their operations in preparation for the recovery.

These trends were clearly resonant in the annual American Express/CFO Research Global Business & Spending Monitor, which surveyed 285 senior finance executives from the U.S., Europe, Canada, Mexico, Asia, and Australia.

Leaders in Optimism

While the CFOs surveyed across Asia and Australia are substantially less optimistic than they were in last year’s study, they do still lead their global counterparts in the optimism stakes. Thirty-nine percent of CFOs in this region are still expecting economic expansion in their country compared with only 18% of global respondents.

However, 45% are anticipating a contraction compared with 72% of global respondents. Almost 60% of respondents expect that the Asia and Australia region will see recovery begin sometime in 2010 or later.

When asked about the impact of the U.S. government stimulus and similar initiatives by their own government, respondents from Asia and Australia were most likely to say these efforts will help their business either directly or indirectly.

Eighty percent reported that they will benefit from the U.S. government stimulus compared with 70% of global respondents, and 96% expect to benefit from their own government’s stimulus initiatives compared with just 83% globally.

Layoffs and Cost-Cutting

When asked about changes in their workforce, half of respondents from Asia and Australia anticipate a decrease in headcount – with 35% expecting no change – over the coming six months.

Companies keen to avoid redundancies are increasingly investigating workforce flexibility initiatives. Thirty five percent are looking to reduce employee benefits and/or freeze salaries and bonuses, while 29% plan to cut salaries and bonuses.

Twenty-eight percent plan to reduce employee work hours or give furloughs and 20% plan temporary office or plant closures.

Cost control strategies also dominated finance executives’ sentiments from Asia and Australia as they continue to deal with the downturn:

86% are placing greater emphasis on measuring and monitoring company financial performance
83% are tightening controls over employee spending
83% are improving internal financial controls

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