By: Greg Coleman, Service Strategies
Since the start of the global financial downturn, economists have struggled to accurately predict what will unfold over the course of 2009. The outlook continues to be daunting for most sectors. Even with the US Government’s unprecedented moves to bailout the financial industry and the passage of the largest economic “stimulus” package in US history, it remains unclear if these actions will drive improvement in the economy over the next twelve months. While some economists predict continued contraction throughout the year, others see improvement by late 2009. The uncertainty that prevails in the market has created an extremely challenging environment for business executives.
In an effort to gauge how the economy will affect the service industry, we (Service Strategies) conducted a survey of more than 260 service executives from around the world. Respondents were asked, “Looking forward to 2009, what impact do you expect the economic downturn to have on your service organization?” Over 50% felt that the economic downturn would create a moderate impact to their business, while only 15% believe they will suffer a significant impact. The result is surprising given the severity of the situation as expressed by government officials and financial experts.
When asked to select the budget areas they anticipated to be affected, the majority, almost 80%, indicated that travel expenses would be affected. Not surprisingly staffing was the next highest area affected. Compensation in the form of merit increases and bonuses was the third most affected area. At the bottom end of the scale, management training and service improvement initiatives were the least cited areas to be affected by the downturn. Investments in management skills and service improvement initiatives were seen as key to successfully navigating through the downturn.
Figure 6 – Budget Areas Most Affected by Downturn (Source: Service Strategies Corp.)
Clearly, service executives recognize the fact that improving service efficiency and productivity and making sure their management teams have the skills and capabilities to manage in a challenging environment is critical to their success. The results of our research project highlights this fact. You can download the complete results of our research report here.
Unfortunately we did not conduct a similar survey prior to the downturn. I think the economy steamrolled everyone pretty good. While signs indicated a slowdown, it was much sharper and happened faster than anyone anticipated.
We may conduct a follow up later this year to get a revised perspective now that companies have adjusted and are working through it. Thanks for the comment.
Very informative Greg. Did you guys conduct a similar survey prior to the economic downturn? That would make a good side by side report.