Betting on the bottom

Published: Apr 27, 2009


Despite some setbacks in the market today due to the unfortunate spread of swine flu, there was some indication that companies have bottomed out in a recent Watson Wyatt study. Based on 141 employers surveyed in April 2009, Watson Wyatt deduced that cost-cutting actions at companies, including layoffs, hiring and salary freezes, and organizational restructuring may have finally peaked. Some will find solace in the fact that only 26 percent of companies foresees an increase in cost-cutting measures in the next 12 months.

"Companies have started to move into the next stage of their cost-cutting actions, but are also looking ahead to an eventual recovery," said Laura Sejen, global director of strategic rewards consulting at Watson Wyatt. "There is a recognition that employers will need to be poised for a turnaround, and that continuing some cost-cutting measures such as reductions in force can put them at a disadvantage once the economy improves."

Still, as the recession wears on, there's no doubt companies will need to continue cutting corners—but if the WW survey is any indication, personnel will no longer bear the brunt of future cost reductions. Instead, companies are looking to minimize travel requirements and cut back on training (well, personnel may feel that one, but many would argue that it's better than a pay cut)—and, no doubt, many will look to cut back on some freebies around the office.

In another streamlining initiative, Booz & Co. announced last week that it would be acquiring ( New York-based strategy firm Katzenbach Partners, pending the outcome of due diligence—likely in June. The two will combine under the Booz brand. Also noteworthy about the transaction is that it's Booz's first since it split from its corporate sibling, Booz Allen Hamilton.