Citigroup (C) is still hemorraging cash, and the pressure is on CEO Vikram Pandit to reduce costs and get his house in order.
So how does Citi plan to offset the tens of billions of dollars in exposure to commercial real estate and mortgage-backed assets? Simple, cut down on colour copies and use both sides of the page when printing memos and presentations.
NYT has the full memo. Excerpts below:
From: Office of John Havens
Sent: Friday, August 15, 2008 4:41 PM
Subject: New Expense Policies and Procedures
Improving our cost structure and creating operating leverage in our business is an important part of our strategy for the Institutional Clients Group. The same effort and innovation that we apply toward building our business and growing our revenue must also be applied to creating a highly efficient and scalable cost structure.
As you know, we have spent considerable time looking at our headcount and related expense, and while we have made progress in that area, we still have more work to do. I recognise that the work around headcount has been challenging, and I appreciate all of your efforts.
It is equally important that we ensure that every dollar that we spend on third party goods and services is highly efficient. I ask each of you to carefully consider every expense that you incur and ensure that it is both necessary and in accordance with our policies.
To that end, I want to let you know about several new and important expense policies and pre-approval procedures which take effect immediately. These policies and procedures apply to all ICG employees and the functional support areas dedicated to ICG, in all regions.
Managing our expenses is not only a critical aspect of our strategy, it is also an important part of our jobs. Each of us must do our part to manage our expenses by challenging every dollar we spend to ensure that it is truly necessary and in compliance with our policies. The Management Committee and I expect everyone’s full support for this important effort.
- new purchases of hardware (e.g. PC’s, laptops, printers, peripherals, etc.), software or any technology services will require pre-approval, and only those purchases that can be demonstrated to be absolutely critical will be approved.
- Use market data to carefully review all the services you currently consume and cancel any services which are not absolutely necessary to perform your duties. Going forward, all new market data services will require pre-approval.
- Blackberry Usage – We will also be conducting a review of our blackberry usage. In the interim, all new blackberries will require pre-approval. For any employee who is approved to have blackberry messaging, only one device will be eligible for reimbursement (i.e. no additional pager). A separate pre-approval will also be required to have the blackberry phone enabled. For any employee who is approved for reimbursement of a blackberry phone, that phone will be the only device for which reimbursement is permitted, and only necessary business related calls will be reimbursed.
Office Space, Moves and Furniture – Real estate represents a significant share of the expenses of ICG. Going forward, all requests for new office space, office relocations and/or expansions and lease renewals will require pre-approval. Additionally, office and workstation moves and furniture purchases will be limited to only those which are truly essential and will also require pre-approval.
colour Copying and colour Printing – The use of colour copying and printing dramatically increases our copying and printing costs. colour presentations are unnecessary for internal purposes; therefore going forward colour copying and printing should only be used for client presentations. Also whenever possible, presentations should be printed double sided to reduce unnecessary paper usage. Over time, we will be removing colour copiers and printers from the locations where they are not essential for purposes of preparing client presentations.
Non-Client Travel and Entertainment:
Non- Client Travel – We previously asked that non-client travel be limited to trips which are truly essential. However, it seems that we are not consistently adhering to that policy. Going forward, all non-client travel will require pre-approval. As an alternative to non-client travel, I encourage you to make use of our audio and video conference capabilities.
Non-Client Offsite Meetings – We will no longer be holding “offsite” meetings for internal purposes. All internal meetings must be held in one of our conference facilities, in the location that has the greatest number of attendees or via audio or video conference.
Non-Client Corporate Events – In accordance with our existing policy, employees will not be reimbursed for non-client outings, summer parties or similar events. As we get closer to the winter holiday season, we will communicate with you regarding specific guidelines for holiday events.
Late Night Car Service and Meals – Each of our locations has specific policies regarding the use and reimbursement of car services and meals for employees who are required to work late. Here too it appears as though we are not fully following our policies. Going forward, it is our expectation that we will all strictly adhere to our car service and meal policies and only those expenses which are in compliance with policy will be reimbursed.
Non-Client Entertainment and Meals – Except with respect to employees who are travelling for business, we will no longer reimburse without pre approval any expenses for internal entertainment or meals with colleagues.
Training and Industry Conferences – The vast majority of training required to perform your job is available to you through our online training resources. As a result, external training will be limited to only that which is strictly necessary, such as that which is required for regulatory or compliance purposes. No travel expense should be incurred in connection with any external training. All external training and/or attendance at an industry conference will also now require pre-approval.
Client Events – We need to carefully evaluate our spending on client events and ensure that they are good investments of our limited resources. We will be working with the heads of each business to review all currently scheduled client events, including the list of proposed attendees (both client and employee) and total cost of the event (including any travel and client entertainment contemplated as part of the event). Going forward, all new client events will require pre-approval and any client event with an expected cost of $5,000 or more must be arranged through the Global Event Marketing department.
Temporary Employees, Contractors and Systems Consultants – We currently employ a very substantial temporary workforce. We will be conducting a detailed review of all of our temporary workforce engagements to understand more efficient ways to fulfil our needs. In the interim, all new temporary employees, contractors and systems consultants, as well as the replacement or extension of any such staff currently on board beyond the scheduled end of their current assignments will require pre-approval.
Management Consultants – Our current usage of management consultants is too high. Management consultants should only be engaged for those limited instances where a specific expertise which does not reside within our organisation is absolutely required. We will be reviewing our existing engagements of management consultants to determine if there are more efficient sources to fill our needs. Going forward, all new management consulting engagements will require pre-approval.
Recruiting – The use of external recruiters will now require pre-approval. I am confident that we can be successful in satisfying the vast majority of our hiring needs through the use of low and no fee sources (for example job boards, employee referrals, etc.).
Professional Memberships – Reimbursement for membership in professional associations is limited to one per employee and only for memberships that are required for the performance of your duties and which have been pre-approved.
Purchasing & Procurement Services – Citi Procurement Services has established specific procedures for the purchase of all of our third party supplies, materials and services. These procedures must be followed in all cases. In addition, I remind you that none of us is authorised to contract on our own for any third party goods or services. All such contracts must be entered into through Citi Procurement Services.
II. New Pre-Approval Procedures:
The written pre-approval of Mark Rufeh, our Chief Administrative Officer, will now be required for all:
Technology Equipment and Services (Hardware, Software, etc).
Market Data Services
Blackberries and Wireless Devices
Office Space, Moves and Furniture
Temporary Employees, Contractors, Systems Consultants
The written pre-approval of the respective ICG Management Committee Member for your business will be required for all:
Corporate Events Over $2,500 (or the local equivalent spend)
The approval of Bruce Cohen or Diane Arber, our Senior Human Resources Officers, will be required for all Contingent Searches.
The approval of Hamid Biglari, our Chief Operating Officer, will also be required for all Retained Searches and Corporate Events over $10,000 or the local equivalent spend.
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