Companies in the Midlands must allow some all-important room to grow to improve their chances of emerging stronger from the recession, according to human resource experts at PricewaterhouseCoopers LLP (PwC).

While achieving 100% staff utilisation might be an indication that a company has right-sized successfully, it could hold the business back as order books start to improve. According to PwC, there is a real danger that some companies may discover that they lack the resource necessary to capitalise on growth opportunities.

Rupert Hutton, director and employee reward expert at PricewaterhouseCoopers, says: "Many Midlands companies responded to the downturn quite quickly by cutting overheads and reducing headcounts. This was the right response to very challenging economic conditions.

"However, as markets begin to show signs of recovery, companies need to ensure that they have the right people in the right jobs and that there is sufficient spare capacity to allow room to grow."

Companies need to be looking at least three years ahead when it comes to resourcing their business and be prepared to implement a people management strategy to achieve this. As a starting point, it is important to make sure that, following any restructuring of the business, employers know which people are most valuable to the business so they can be rewarded and incentivised accordingly. They also need to take steps to find out if the pay and benefits package offered to employees is competitive and will help to retain talent as the market recovery gets underway.

Continuing uncertainty about the pace of the economic recovery is giving employers some cause for concern, however, and many are looking for ways to reward and incentivise their staff, without necessarily increasing their pay. This has led to a revival in the popularity of 'cafeteria-style' salary sacrifice schemes, which offer employees a choice of tax-efficient benefits.

Rupert Hutton, director and employee reward expert at PricewaterhouseCoopers, concludes: "Many Midlands companies have had a freeze on pay in place for more than a year now and employers are acutely aware that as economic conditions begin to improve and new opportunities are created, they will need to reward staff appropriately. Companies may need to benchmark themselves against the competition, but in addition employers are embracing salary exchange schemes as a means of managing people-related costs, while extending more benefits to their workforce. While such schemes are nothing new, they include some valuable tax-efficient benefits, such as schemes linked to the making of pension contributions and tax efficient low emissions company cars."