For those firms who derive revenue from assets under management (AUM), revenues are down anywhere from 20 to 40 percent year over year. In response, financial advisers are evaluating all available options to trim operating costs. Undoubtedly, salary cost is the biggest line item expense for independent advisory firms.
That said, layoffs are often the method of choice to reduce this significant expense. However, there are other, more cost-effective ways to reduce labor costs.
I want to highlight an article by Wharton’s Dr. Peter Cappelli on Flexible Downsizing on FastCompany.com.
Here are the major takeaways from the article:
- It costs less to retain employees at a 5% reduction in pay than a 5% staff reduction
- Human resources are “out to lunch” and behind the curve on cost-effective labor strategies
- Institutional memory is short, and lessons learned from flexible labor reduction have been forgotten
Credit goes to Pam Kassner for highlighting this link on Twitter.
Related Posts
