Less than three years ago, Morgan Stanley laid off more than 2,500 employees. The layoffs weren’t too shocking at the time considering the circumstances. We were on the cusp of the biggest financial crisis in years, along with an economy that was not doing well and was about to get worse.
In the latter half of 2009 Morgan Stanley announced that it would hire up to 400 traders and sales staff. While this couldn’t make up for the many jobs that were lost, it was a positive sign for the company, and gave hope to financial professionals who wanted Morgan Stanley to return to its former (thriving) state.
Unfortunately, the company’s hope is beginning to run out. According to the Wall Street Journal, Morgan Stanley is getting ready to reduce its workforce by 2.6%, which amounts to the loss of another 1,600 jobs. A spokesperson told the Journal that the layoffs would follow Morgan Stanley’s “year-end performance-management process” and its evaluation of the “right size of the franchise.”
The Journal also said that Morgan Stanley plans to spread the layoffs globally across all job levels. This could be good for those of you who feared the loss of 1,600 jobs in one particular region. But by spreading the layoffs globally, it also means that any employee could be affected.
This is anything but good news, though that hasn’t stopped the financial holding firm from trying to put a spin on the announcement. Morgan Stanley claims that the cutbacks “could help [the company] reduce compensation expense in coming periods at a time when revenue is under pressure,” the Journal said.
From a shareholder perspective, that’s a nice thought. It’s always nice to reduce expenses. I imagine that the corporate executives (whose jobs are not in jeopardy) would agree. According to the Journal, bonuses at Morgan Stanley account for a large portion of employee compensation. By eliminating employees, the company also eliminates the need to give out these bonuses. That’s a win-win, right?
Maybe it is for those who aren’t negatively affected. But there’s a good chance that the average Morgan Stanley employee – whose job could be in danger – will not see it that way.
Wells Fargo’s Chief Administrative Officer, Patricia Callahan, recently warned against a full-scale layoff. “This 10% across-the-board thing, it doesn’t stick,” Callahan told the Journal. “Companies can reduce [staff], but then the work piles up. An across-the-board cut is a short-term cost gain; it doesn’t fundamentally improve your economics.”
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