Careful Where You Cut, a Bonanza Awaits
— October 9, 2011
By Roy Smith, Kenneth Langone Professor of Entrepreneurship and Finance & Professor of Management Practice
It has truly been a rough third quarter for the big banks, with most reporting disappointing earnings and the usual plans for more layoffs.
Of course the past few years have also been difficult, so several thousand bankers have already been laid off.
But layoffs come at a cost, beyond the severance and related payments. Morale is destroyed as thousands of both junior and senior employees continue to wait for the axe – if the banks don’t make an effort to protect the jobs of loyal staff, why should the staff stay loyal?
But a greater cost is in letting go people who are fully acculturated to the firm and can handle transactions smoothly, and then urgently having to replace them once business picks up again. Rarely are the replacements as immediately useful and reliable as those let go.
This time banks need to be especially careful. They could be facing a business bonanza without enough staff to do the work.
Read full article as published in Financial News.