Until further notice, Australia’s financial services sector has slammed the brakes on recruitment.

Over half of Australia’s financial services professionals have put hiring freezes in place as a key weapon of defence against the economic downturn, according to research just released by specialist recruitment, talent management and managed services provider, Hudson.

The results, based on a survey of 301 financial services hir ing managers, show that 54.8 per cent will not be hiring until further notice. Further, 44.2 per cent have redeployed employ ees elsewhere within their businesses and 39.5 per cent will not be replacing employees as they leave.

“There is no doubt the global financial crisis has created an extreme level of uncertainty within the business community,” says director of Hudson Banking and Financial Services, Nik Ruparel. “The financial services profession has been particu larly hard-hit. The report revealed that only 17 per cent of hiring managers in this profession planned to increase employee numbers in the June 2009 quarter. That is a massive drop from the 43.7 per cent who planned to increase staff numbers at the same time last year.

“Hiring managers are looking at a range of steps they can take to effectively manage through this period – no one wants to make redundancies – but in many instances businesses have had to react rapidly to cut costs. It is creating a volatile work environment.”

Of the managers surveyed, well over a third (38.2 per cent) have already made some redundancies as a result of the wors ening economy. In an attempt to avoid this course of action, more than a quarter (27.6 per cent) have encouraged employees to take annual and long service leave.

However, one positive is that more than half of all surveyed (50.8 per cent) said they have increased their focus on people training and development. Another two-thirds (64.2 per cent) said that maintaining engagement, morale and focus among current employees was their main concern.

“Effective people management is even more vital in the cur rent market conditions,” Ruparel says. “Focusing on strategies to develop and engage employees is an excellent place to start.

“The key for managers is to take the long-term view. There is no escaping the fact that some very hard decisions may have to be made in the short-term, but those managers who fully engage their employees, communicate clearly with them, keep their drive to succeed up, will best position their organisation to pick back up when the economy rebounds.”

Needless to say, it is a delicate balancing act. Well over half (64.1 per cent) have increased their focus on employee produc tivity, suggesting many employees are having to work harder in order just to keep their jobs.

But ,according to Ruparel, productivity levels should be a focus for a manager with a long-term view.

“Low organisational productivity will only exacerbate the impact of a tough market,” he says. “Proactively, innovatively and bravely approaching the new set of circumstances they face and fully engaging their people along the way will form the strongest team foundation to make it through to more prosperous times.”