The recent announcement that State Street is going to lay-off 400 employees prompted Ignites (A Financial Times Service) to seek my opinion on whether or not this signaled the beginning of a trend in the industry. I do not believe that it does.
Layoffs are a natural course of business, especially as companies increase their technological capabilities. And emotions aside, this layoff number is relatively small, less than 1% of the firm’s total workforce. Layoffs are also natural after mergers and as a way to reduce duplication. While layoffs will always be an unfortunate part of any business, I don’t think too much should be read into this announcement.
The industry has done a much better job since the financial crisis of restraining itself when hiring during good times. To quote from the article:”“Before the crisis, the industry was known historically for hiring a lot during the good times and laying a lot of people off during the bad times,” says Andy Klausner, founder and principal of AK Advisory Partners. “But since 2008, the industry has gotten better. It hasn’t overhired during the good times, so the overall level of layoffs has probably declined.”
The dismissals from State Street are not part of a trend toward more layoffs industrywide, but rather a move toward leaner back-office operations and support staff workforces, according to Klausner.
“You’re not hearing about massive layoffs anymore,” he says. “You’re hearing about rationalization in servicing clients and replacing the human factor with technology.”
Indeed, industry layoffs have grown less frequent. Experts say operational employees are the ones receiving pink slips, particularly those made redundant due to technological advances and structural changes at the firm.”
What do you think?
