Debate: MDs Most at Risk of Cutbacks?

To Michael--the MDs in IT add quite a lot of value to the organization. Try completing a major project on-time. Try making the technology decisions. Do you know how much of the Front-office business is dependent on technology?

Actually I know several people who switched from IT to business because the life on the business side was much easier. I studied the same stuff in B-school.

More to the topic. I believe the Investment Banks have taken the productivity improvements to the extreme. I spend over 16 hrs daily on work even when I am on toilet, I am reading my emails! This insanity has to stop. I have reduced my workforce by 10% of bottom-performers every year. I have had to let go some great people who have gone on to do great things in smaller companies. Everyone is overworked, I don't see people spending time on their hobbies. I have moved lot of work offshore and saved lot of money at the expense of staff here. I don't think for all the productivity gains, the firms have compensated people well.

We need to really see that workers are people. We need to reduce the work hours of people, hire more people and maybe pay less. But we need healthier organization!

Here's something to consider. According to our poll, eFC users believe the first to suffer will be:

MD level staff: - 23.6%
VP level staff: - 29.8%
Associates: - 19.2%
Analysts: - 21.3%
Cleaning Crew: - 6.1%

Any thoughts on that?

People will get canned irrespective of level, if they are under-performing. But banks will probably err on clearing out mid-level people. The problem with more senior people is that they are more expensive to sack - you have to pay them money to go.

I think that the industry in general has too many VP's which were very well paid in the last 5-7 years without making the 'real contribution' they are talking about. All banks have promoted too may people to the grade of the VP too easy and most of them have taken the grade during negotiations with the respective HR Departments when they changed Banks.

I don't think that the HR Departments are doing a 'good' job when they select the staff. Being in London for 6 years I have seen many incompetent people having the grade of VP earning a big salary and securing a quite impressive bonus without having done the necessary.

I believe anyway that all Banks are overstaffed (especially in London) and it's time now to take advantage of the situation (credit crunch) and fire some people.

There's no reason to cut vice presidents and analysts at this point - analysts are relatively inexpensive, the global economy has continued to boom and we don't have a recession yet. In specific businesses, like sub-prime loans and CDOs, we will have redundancies, but this is not a 2002 situation, where all areas of the brokerage industry have collapsed.

Where there are cuts, senior staff will bear the brunt of them - there's no loyalty to managing directors on The Street. A downturn offers an opportunity to a) thin the ranks and offer promotion to up and coming vice presidents and b) take the pressure off the compensation pool.