FDs ignore warning on cost cutting

Most of the finance directors and equivalent senior executives polled said they were conducting spend analyses, with 88% stating that businesses should be willing to invest to add long-term value – even in times of uncertainty, survey of 600 FDs by PricewaterhouseCoopers found.

However, these same FDs appear to be carrying out various short-term and reactive cost-cuts – 58% are cutting staff, 58% are cutting investment, 71% are reducing inventory and 61% have stopped recruiting, while nearly three-quarters of respondents admit that a ‘survival instinct culture’ is threatening their business.

The research, which looks across a range of turnover bands, suggests that most of their companies are dangerously reactive, which undermines staff morale.

Kevin Delaney, partner at PwC, said ‘First the businesses cut costs, then they need to put things right, then they rebuild for the future.

‘This ambiguity and lack of direction has a severely negative impact on any staff loyalty and the best people will often be tempted away to more forward-thinking competitors.’

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