Mercuri Urval Founded in Sweden in 1967 1,000 staff in 25 countries Work with organisations to help them achieve sustainable business results Through identifying, selecting, developing and retaining the right people

The “GFC” Every sector has been impacted A massive and sudden change in the business environment Doom and gloom prophesies But ……. Change brings both challenges and opportunities Take a few moments to think about how your own business environment has changed in the past 18 months????

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Some Effects of Downturn on Professional Service Firms Clients taking more work ‘in-house’ Clients demanding greater returns for their fees – more output, better quality, lower prices Less activity for clients means less need for services Work that is available is less interesting – no big exciting projects Greater time and resources required to win new work and keep current clients Severe reductions in revenue across many (but no all) areas Pressure on firms profitability

Common Reactions Reducing overheads – administration staff, corporate office support, discretionary spending, travel, entertainment Cutting business investment – marketing, training and professional development, IT systems upgrades Reduced remuneration – bonus pools cut, dividend distributions cancelled, salary freezes and reductions, reduced hours, tighter control of ‘perks’ Reduced headcount – redundancies, stricter performance management, not replacing staff and partner turnover Structural changes to drive greater efficiency in delivery – doing more with less

And the ‘Hidden’ Costs …. Partners and employees working longer hours with less billable results Economic uncertainty leading to higher stress levels and lower productivity Survivor syndrome – staff remaining after a redundancy program feel shell shocked and insecure Lower bonus pools can lead to senior partners delaying retirement Glass ceiling as partnership promotion opportunities decline and ranks of associates begin to swell Less interesting work available – talented people feel bored and under valued

And the ‘Hidden’ Costs …. Short term focus by management – fewer discussions or planning for future due to focus on current revenue and challenges Employees at all levels can become disengaged, losing motivation and loyalty to the firm or the client Less client work can lead to less contact with clients impacting relationships

GCF Impacts (final) The GFC will be a (relatively) short term pause in global and Australian economic growth Changing clients expectations/demands, new organisational dynamics, and cultural impacts on employees and managers will result in significant and permanent structural changes for professional services firms For many firms, the impacts of the GFC – and how they manage the crisis – will have long term and lasting effects on their business capability

Some Thoughts on Development Individual development and motivation The Path to Partner Developing Organisation Capability

Individual Development Development is a key factor in employee retention, often cited as more important than financial rewards. If there is pressure on salaries and bonuses, development opportunities become even more important. Development is a continuous process, and must be constantly reinforced so that skills and experience retain their value. Development can be costly, and limited development budgets need to be targeted in good times and bad. Adults learn best through learning on the job or through practical application of knowledge to a real task or project

Development is a Continuous Process

Development is a multiplier Development is a multiplier. The value of new skills, knowledge and experiences applied in a work environment will far outweigh the upfront investment in time and money

Path to Partner Professional services firms still tend to display a hierarchical approach to organisation structure Steps toward Partnership are often linked to time in employment, qualifications attained, or skills demonstrated – these are lagging indicators of capability Recent research indicates that many talented employees are no longer motivated by a structured, controlled career path Development that broadens skills, creates interesting opportunities and supports individual motivation is often preferred

Align the team with strategy and processes Building Organisational Capability Developing capability is a long term process Multiple options and opportunities available Long Lasting Results Align the team with strategy and processes Gap Outcomes are long lasting Team Capabilities Strategy

Opportunities in a Downturn? …..and planning for the Upturn!

Opportunities Business restructuring to create improved efficiency Re-defining value in existing client relationships Opportunities to hire at realistic salary levels Developing new service offerings or entering new market segments Communicating and engaging with employees to build loyalty

Why Plan for the Future The market will improve Your clients are planning for the future Your competitors are planning for the future Your EMPLOYEES are planning for the future!

A Strategic Approach to Development Long Lasting Results Gap People Capabilities Strategy

1. Define future needs: Client new demands New business opportunities Future capabilities required

2. Identify Critical Top Talent: Who has ability & potential to deliver? Who owns the client relationships, the business IP? Identify flight risks, motivations, expectations What are the strategic capability gaps?

3. Targeted Development Communicate the new strategic direction Personal development planning based on business priorities and individual needs Fast track FUTURE Key Talent Strategic recruitment to fill gaps Develop leadership ability Keep promises

A Strategic Approach to Development Targeted development Communicate the new strategic direction Personal development planning based on business priorities and individual needs Fast track future key Talent Strategic recruitment to fill gaps Develop leadership ability Keep promises Define future needs: Client new demands New business opportunities Future capabilities required Long Lasting Results Identify Critical Top Talent: Who has ability & potential to deliver? Who owns the client relationships, the business IP? Identify flight risks, motivations, expectations What are the strategic capability gaps? Gap People Capabilities Strategy

Shane Herbert – Director + 61 2 9492 0200 Shane.herbert@mercuriurval.com