Business Trends

Archive for September, 2009|Monthly archive page

Economic Recovery Spending Could Flow to Information Technology

In Uncategorized on September 22, 2009 at 7:15 pm

As the economy improves, chief financial officers (CFOs) will look to bolster their information technology (IT) systems, a new survey suggests. When asked where they are most likely to place their investment dollars when a recovery occurs, 40 percent of CFOs interviewed cited IT.

The survey was developed by Robert Half Management Resources, the world’s premier provider of senior-level accounting and finance professionals on a project and interim basis. It was conducted by an independent research firm and includes responses from 1,400 CFOs from a stratified random sample of U.S. companies with 20 or more employees.

CFOs were asked, “In which one of the following areas are you most likely to invest once the economy improves?”  Their responses:

New or upgraded IT systems ………………….. 40%
New products or service lines ……………….. .18%
New locations or real estate ………………… …14%
Mergers or acquisitions …………………………..6%
None, will not invest ………………………………19%
Other ……………………………………………………2%
Don’t know …………………………………………….1%
                                  
“As companies emerge from the recession and become more profitable, they will begin to focus on shoring up critical business applications and technology infrastructure,” said Paul McDonald, executive director of Robert Half Management Resources. “While finance executives may remain cautious about making bold new expenditures, they understand that updating their IT systems can help improve risk management, increase operational efficiency and ensure regulatory compliance.”

McDonald noted the survey showed that the largest companies (1,000 or more employees) are most likely to invest in new or upgraded IT systems (48 percent) because of the economies of scale that come from making systemwide improvements.

He added, “IT investments encompass not only hardware and software but also reflect the human resources necessary to manage these initiatives.”

U.S. Regulators Slow To Adopt Global Accounting Standards

In Uncategorized on September 22, 2009 at 6:45 pm

According to a survey conducted by the American Accounting Association (AAA) and KPMG LLP, accounting faculty at universities throughout the United States believe their students and the U.S. economy will be at a disadvantage if U.S. regulators do not adopt a set of globally accepted accounting standards, and if universities do not take immediate steps to incorporate International Financial Reporting Standards (IFRS) into U.S. accounting curricula.

The second annual KPMG-AAA Faculty Survey, conducted during July and August 2009, showed that nearly half of the 500 professors who responded believe the United States should transition to IFRS to remain competitive, and three-quarters think IFRS needs to be immediately incorporated into their school’s curricula.

Half of the professors responding to the survey said they thought a low sense of urgency exists among U.S. regulators to adopt IFRS by a “date certain,” while only 16 percent thought regulators had a high sense of urgency.

Seventy-four percent of respondents said that U.S. adoption of IFRS will occur through convergence of U.S. GAAP (Generally Accepted Accounting Principles) with IFRS by 2015 or later. Meanwhile, 17 percent think U.S. public companies will be required to adopt IFRS outright by 2015 or earlier; while nine percent think IFRS will not be adopted by U.S. companies.

Most Significant Challenges

The KPMG-AAA Faculty Survey found that seven in ten professors said their most significant challenge to teaching IFRS is making room for it in the curriculum (This is in contrast to last year’s survey where respondents cited developing curriculum materials as the top challenge). Despite this challenge, 70 percent said they have taken significant steps to incorporate IFRS into the curriculum. Further, 83 percent believe IFRS needs to be incorporated into their curricula by 2011.

“University professors throughout the United States recognize that teaching IFRS is critical in preparing our accounting students to excel in the global marketplace and finding space to fit IFRS in the curriculum is the challenge,” said Manny Fernandez, KPMG’s National Managing Partner, University Relations and Recruiting. “Not surprisingly, nine out of ten professors surveyed by KPMG and the AAA believe it is very important to teach IFRS to U.S. students.”

When asked to assess their university’s preparedness to teach IFRS, only a small fraction (eight percent) thought at least half of their school’s accounting faculty were qualified to teach it. Slightly more than half of the professors (55 percent) were also concerned that administrators do not understand the magnitude of the curriculum change required to respond to IFRS adoption in the United States.

“The findings of the KPMG-AAA survey suggest that we have made progress, but there is still much work to be done in optimizing how IFRS is taught in our university classrooms,” said Philip M. J. Reckers, Ph.D., recent Chair of the American Accounting Association’s Education Committee and Professor of Accountancy at Arizona State University’s W. P. Carey School of Business. “Professors, university administrators, regulators and thought leaders in the accounting profession need to work together to make sure the curricula is timely and relevant.”

Other Key Findings

Given the dynamics of the current regulatory environment, 79 percent of faculty believe that U.S. GAAP should continue to be taught over the next 3 to 5 years, while progressively incorporating more IFRS concepts on a compare and contrast approach as the conversion date approaches.

The first graduating class of accounting students to enter the workforce with a substantial knowledge of IFRS education will be the class of 2015, according to 40 percent of professors – three years later than the date most often cited in the prior survey.

Fifty-nine percent of faculty believe that the CPA examination will include significant IFRS content by 2012/2013 and 54 percent expect comprehensive coverage of IFRS in intermediate accounting textbooks by 2011/ 2012.

Market: Slow to Recover, Slow To Adopt

But given current economic conditions and much slower-than-anticipated recovery, the delay in adopting these standards is understandable, according to industry research firm IBISWorld.  The present nature of work being undertaken by the industry is in a dramatic midst of change, with more emphasis now on bankruptcies, liquidations and workouts for clients. Far less emphasis is being undertaken on corporate advisory and capital raisings, constrained by the global banking crisis, credit squeeze, and stock exchange floats.

New Study Reveals Declines in the Health of American Workforce

In Uncategorized on September 22, 2009 at 5:30 pm

In the midst of the most vigorous national health care debate in 15 years, and at a time of heightened economic insecurity, new data on employers show that the health of employed American workers is trending downward in a number of important areas. The State of Health in the American Workforce, a report released today by the Families and Work Institute (FWI), finds that only 28% of employees today report that their overall health is “excellent,” down from 34% just six years ago. Perhaps surprisingly, men’s overall health has declined more rapidly than women’s. The report also sheds light on the relationship between an effective workplace and employee health, underlining the significant role that employers play beyond providing health insurance and wellness programs.

Among its many findings, the report reveals:

  • 41% of employees report experiencing three or more indicators of stress sometimes, often or very often;
  • One in three employees experiences one or more symptoms of clinical depression; and
  • One in five employees has trouble falling asleep very often or fairly often and 31% awaken too early and have trouble falling back to sleep, also very often or fairly often.
  • 21% are receiving treatment for high blood pressure and 14% are being treated for high cholesterol.

Furthermore, the report finds that nearly half of U.S. employees (49%) have not engaged in regular physical exercise in the last 30 days, including 22% not engaging in any rigorous physical exercise. And despite a push to stop smoking at the workplace, one in four smokes.

In terms of health care coverage, 24% of low-wage/low-income employees have no insurance from their employers or any other source, compared with only 5% of middle- and high-income employees. Low-wage/low-income employees are also much less likely to receive at least five paid sick days — only 46% do compared with 66% of middle- and high-wage and -income employees. According to industry research firm IBISWorld, around 162 million people, or 61% of the population under 65 years of age, receive health insurance coverage as part of employee benefit plans, and more than 80% of employees in these plans are from the private sector.

As to whether having an effective workplace makes a difference for employee health and well-being, the FWI data suggest that the answer is “yes” — and wage level and gender also influence in what way. For example, FWI finds that 38% of employees in workplaces that fall into the “high overall effectiveness” category (based on six measurable criteria that include economic security, autonomy, work-life fit) report “excellent overall health.” By contrast, only 19% of employees in workplaces that fall into the “low overall effectiveness” category report “excellent overall health.”
“Few would disagree that the health care path we are on represents an untenable route to increasing costs and diminishing returns,” said Ellen Galinsky, co-founder and president of FWI. “This new report is replete with evidence that several key measures of employee health are declining, and that employer policies fostering employee engagement and satisfaction are also associated with better employee health. The message is clear that beyond any reform measures on the table in Washington, it is urgent for employers and employees to pay attention to how they can promote better health, which ultimately will save money.”
The new report is based on data from FWI’s 2008 National Study of the Changing Workforce (NSCW), the only study of its kind to provide 30+ year comparisons (from 1977 to 2008) of life on and off the job.(1) The new State of Health in the American Workforce report focuses on 2002 and 2008 data.

Among the other noteworthy findings of the new FWI report:

  • Employees’ physical and mental health, stress levels, sleep quality and energy levels all significantly impact important work outcomes of interest to employers, such as engagement, turnover intent and job satisfaction. Thirty-five percent of employees who rate their current overall health as excellent are highly engaged in their jobs, compared with only 25%, 22% and 23% of employees who rate their overall health as good, fair or poor, respectively.
  • Despite the prevalence of employer health insurance programs, 8% of employees in fact have no health insurance. Nearly two-thirds (66%) of U.S employees are covered by health insurance offered by their employers. Of the balance, 26% choose to access health insurance from another source (e.g., a spouse’s employer), but 8% of employees have no health insurance from either their employer or from another source.
  • Income level makes a difference. Low-wage/low-income employees are less likely to have access to employer health insurance. They are also less likely to use it, if it is available, and they are less likely to be covered by another source. Sixty-six percent of low-wage/low-income employees have access to an employer health plan compared with 88% of middle- and high-wage and -income employees.
  • Employees who receive at least five paid days off per year for personal illness report significantly better work and health/well-being outcomes. Fifty-six percent of employees with at least five paid days off for personal illness report high job satisfaction compared to 49% with less than five days off. Within the five-plus day group, 71% report no signs of depression, versus 61% of those with less than five days off.
  • Having paid vacations bode well for personal health and well-being, as well as intent to stay in one’s job — and longer vacations offer greater benefits than shorter ones. Seventy-nine percent of employees have access to paid vacations with an average yearly time off of 16 days. However, 39% of employees don’t use all of their vacation time and 24% take five or fewer days for longest vacation. Eighty-two percent of employees with 13+ paid vacation days say they are “not at all likely to leave their jobs” compared to 68% with 6-12 vacation days. 

To view FWI’s study click here.

To view IBISWorld’s U.S. Health and Welfare Funds Report, click here.

Entrepreneurs Haute This Fashion Week

In Uncategorized on September 4, 2009 at 10:14 pm

Fashion week is approaching and despite the recession putting a damper on retail sales, industry research firm IBISWorld ranks fashion design as one of the top start-up opportunities for entrepreneurs in 2009. As fashionable clothing is becoming more affordable and consumers start to regain confidence, the Los Angeles-based firm forecasts industry-wide recovery to take place in the second-half of 2010, with an average annualized growth of roughly 6.3 percent in the coming five years.

“Consumer attitudes toward spending are changing, and it’s shaping the direction of fashion,” said George Van Horn, senior analyst at IBISWorld. “Being style-conscious doesn’t mean people aren’t being budget-conscious, and vice versa. Successful fashion houses are those delivering style and quality with affordability, and we can expect this trend to linger for the foreseeable future.”

As the saying goes, cheap is chic. With overall prices being driven down, retailers offering luxury apparel, like Saks Fifth Avenue and Neiman Marcus, have been the hardest hit, cutting costs and discounting stock in an effort to sustain profit margins.

Industry-wide, fashion design businesses have seen significant pressures on margins in recent years, with current levels approaching 6 percent versus 30 percent only a few years ago. The need to retain contracts and ensure ongoing cash flow is yet another factor behind prices going down. Even prestigious designers are bailing on displaying their latest collections on the runway or have declared bankruptcy, such as German fashion house Escada and couture designer Christian Lacroix.

“This has certainly been a make-or-break year for fashion,” said Van Horn, who advices new entrants to differentiate their services based on smart pricing strategies, quality and creative self-marketing, rather than through reliance on advertisement. “In recent years, smaller independent designers have been sprouting like never before, largely attributed to the growing popularity of online retail, as well as relatively low entry barriers and start-up costs. This has helped give the industry the ability to move forward, despite the retail sector taking a big hit.”

Additional links

Fashion Design Services: http://ibisworld.com/industry/default.aspx?indid=1413
Clothing Accessory Stores: http://ibisworld.com/industry/default.aspx?indid=1070
Women’s Clothing Stores: http://ibisworld.com/industry/default.aspx?indid=1067
Big Box Retail Stores: http://ibisworld.com/industry/default.aspx?indid=1092
Miscellaneous Retail Stores: http://ibisworld.com/industry/default.aspx?indid=1106

More Than Half of U.S. Workers Say Their Jobs are ‘In Limbo’

In economy on September 4, 2009 at 9:51 pm

More than half of employed workers surveyed (1,000 employed US workers across industries throughout the country) said their jobs are stagnant, according to Development Dimensions International’s 2009 Pulse of the Workforce survey.

What makes their jobs stagnant? When compared to those who don’t think their jobs are stagnant, those who answered “yes” to this question are twice as likely to say they:

-Had no room to advance (32% of those who said their jobs are stagnant vs. 18% who said they aren’t)
-Are less likely to be asked to do more (14% vs. 27%)
-Are given fewer exciting challenges (3% vs. 26%)

Companies trying to grow again will feel the impact of this dissatisfaction. “The economy has forced organizations to focus on profits and the bottom-line, but this data tells us they’ve forgotten about the importance of also focusing on their people–putting their organizations at risk for high turnover, poor performance and low engagement,” said Jim Davis, vice president of workforce development for DDI.

Flight risk


Workers who don’t feel they’re being used to their full potential and have no place to go are more likely to leave–the only thing stopping them now is the economy (26% of those who said their jobs are stagnant vs. 9% who said they aren’t). Half of those who said their jobs are stagnant plan to look for another job when the economy improves and are more than twice as likely to move to another company if given the opportunity (77% vs. 32%).

“Companies that have taken their eye off of the ball when it comes to their employees will lose good people to other organizations and even competitors,” Davis said. In fact, 10% of stagnant workers will only wait another month before they make a change and 1 in 4 said they’ll wait no more than 90 days.

In a slump

The slumping economy has resulted in labor lethargy. Forty-six percent of workers who said their jobs are stagnant were twice as likely to “just do their job and go home” (versus 20% of those who don’t feel stagnant). They’re also less interested in what they do, and one-third as likely to say they’re excited to go to work.

Many of today’s workers are mentally checked-out of their jobs–their workloads are increasing, but they aren’t getting interesting challenges or opportunities to learn new skills. “This mentality is putting stress on the organization now, but will be even worse as the economy improves and as companies start to bring new employees in through the front door, their current employees will be walking out of the back door,” Davis said.

A place to grow

More than half of workers did not feel stretched outside of their comfort zone with their development or job opportunities–two areas where companies could be providing their workforce with experiences to keep them engaged. This is proven by the fact that 24% of people who are being asked to take on new challenges that stretch them are also more excited to go to work.
People who said their career is stagnant also were half as likely to be recognized for their efforts (56% vs. 27%). “For most people, the paycheck isn’t enough. They need to feel valued and challenged,” Davis said.

Summer slacking

So what are people doing pass the time at the office? Workers were just as likely to check their Facebook page during work hours (15% everyday) as they were to help a co-worker meet a deadline (14% everyday) and more likely than they were to ask for or take on an extra assignment (9% everyday).
And many chose to skip the office trip altogether, as 1 out of every 5 workers played hooky (called in sick when they weren’t) up to 3 times this summer.
“Look at the people who sit around you in the office–one has probably called in sick, skipping the water cooler to go to the pool instead, another is more likely to update their Facebook status than take on a new assignment,” Davis said. “People are just trying to get by in their jobs and companies aren’t taking measures to re-engage their workers and improve productivity.”

One in Ten Americans Struggling With Mortgage Payments

In Uncategorized on September 1, 2009 at 10:01 pm

One in every ten Americans is struggling to make their mortgage payments, but only 58 percent of Americans said they would call their bank to ask for help if they missed a payment and 15 percent would say nothing and try to get back on track alone, according to a new survey from www.MortgageOutreach.org.


“More than 50 percent of Americans know someone who has been affected by the current mortgage crisis yet nearly half of our survey respondents would still choose ignoring the problem to calling their bank. Consumers are confused and think their banks don’t care but no one wins with foreclosure,” said Steve Ozonian, Executive Chairman of MortgageOutreach.org.

Mortgage brokers are also suffering as a result of foreclosurers, according to market research firm IBISWorld.

“Mortgage brokers are also facing much tighter regulation on the way they conduct their business. Regulatory compliance, consolidation and competition are likely to shape this industry in the future as it attempts to wheel itself out of the subprime pit”, said Toon Van Beeck, senior analyst at IBISWorld.