Staffing Cuts Hit ARM Industry According to Survey
According to the latest quarterly confidence survey from insideARM, the ARM industry began to lay off workers at a pretty high rate in the fourth quarter, mirroring moves in most other industries.
More than 37 percent of respondents to insideARM’s most recent Credit and Debt Collection Industry Quarterly Confidence Survey reported that they laid off workers in the fourth quarter of 2008. Another 27 percent noted that they were planning to cut jobs in the first quarter of this year.
The confidence survey, conducted in January 2009 and focusing on the fourth quarter of 2008, is the latest in a series of quarterly surveys designed to gauge the operational and performance confidence of the accounts receivable management and credit industry. Launched last summer, the survey has shown a steady deterioration throughout the economic downturn.
The most recent survey, completed by 500 industry players, revealed that the industry has started to join the broader economy in reducing staff size to cut costs. When asked “Did you eliminate any positions or lay off workers in your company in the 4th Quarter of 2008?” 37.8 percent of ARM industry respondents answered “Yes.” Another 27.4 percent of respondents indicated that they planned on reducing staff in the first quarter of this year.
In a free open response section attached to the question of job cuts, many survey participants noted that their company is taking a careful, surgical approach to cutting staff, rather than eliminating jobs with a hatchet:
“Optimize staffing by eliminating poor performers.”
“Fewer collectors make their goal and have to be let go.”
“We have allowed attrition to lower of staffing by about 20% over the past 6 months.”
“Employ what you need to continue maximizing recovery levels, diversify sales into new industries.”
The survey for the fourth quarter was the first to ask direct questions about job cuts. But a running question throughout the previous quarters’ surveys revealed that collection agencies, debt buyers and collection law firms are anticipating less crowded offices looking forward.
When asked directly “Do you expect the size of your staff to be smaller, greater or about the same six months from now?” only 35.6 percent ARM respondents said “Larger”, a sharp decrease from the 46.8 percent that answered the same way in the third quarter’s survey. Further, 16.6 percent of ARM firms expect their staffs to be smaller in six months, as opposed to 11.4 percent that held the same sentiment a quarter ago.
For full survey results, please visit http://www.insidearm.com/go/4th-quarter-credit-debt-collection-confidence-survey-free-report.
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Comments
Comment from MJ on February 12, 2009 at 2:28PM EST
Chopping unproductive collectors - if you are worth your salt, you've been doing that every day regardless of the economy. Reducing staff to simply reduce cost is shooting yourself in the foot. The answer is not a reduction in payroll, rather an increase in performance. The only way to increase performance is by methodically measuring it versus a valid goal, giving the collectors the tools and training they need in order to succeed, and by applying sound strategies to the work being performed. Reducing payroll is just a way to ensure you reduce revenue; the answer is the other way around. Increased revenue means an increased payroll, but a deeper margin.
Comment from DA - Cherry Hill NJ on February 12, 2009 at 3:05PM EST
A "quick fix" maybe easy and simple, applying solid management practices to effectively run "lean and mean" is the right answer. There are many resources available to us but not utilzed properly do to lack of management training. Contact your current vendors to make sure you are utlizing their software effectively and build practices in your daily operatons to create benchmarks to measure productive employees. If properly managed, client performance will coincide with required staff.
Comment from buckblog on February 13, 2009 at 6:52AM EST
While cutting unproductive collectors is essential it's too bad many of those cuts will be made by unproductive managers.
Too many places have bloated and ineffective management that sucks the life out of their collectors.
Comment from Jim S on February 13, 2009 at 9:18AM EST
Couldn't agree more about the "unproductive managers." Because of the work I do coaching in the ARM industry I get to see where many of the supervisors/ managers are. The lack of talent and skill building in this area is really hurting a number of agencies. This is the very time to invest more in making leaders more productive so they in turn can drive greater production from staff.
Comment from Iain on February 13, 2009 at 2:11AM EST
How long before we see similar cuts here in the UK? Already there are job losses with Norwegian owned Aktiv Kapital. It's all very well calling for increased productivity in collections, but that falls down somewhat when the majority of targets become "can't pays" rather than "won't pays" in this crisis.