A Merrill Lynch banker has written in to British financial news and gossip site Here is the City to vent about the firm’s financial troubles, hiring freeze and former CEO Stan O’Neal, “who is ultimately responsible for these problems, [and] is away playing golf, sitting on a fortune.”
Here is the City: ‘Let me start by saying that I’ve not got it in for my firm, Merrill Lynch. Despite the terrible securities losses that have engulfed our firm these last 12 months, and the resulting job cuts and pressures which have come with this period of turmoil, I still believe in this firm. I believe that, despite a couple of missteps, CEO John Thain is the right man to lead us, and I remain confident that we will emerge from our troubles a better, more focused business.
I have to say, however, that the fact that Merrill imposed an (almost) across-the-board hiring freeze last week has got me worried. Whilst most of my colleagues are taking this initiative at face value, I wonder what the implications really are, and am concerned that the freeze itself is just a marker which firm executives are putting down to signal that there are much tougher times ahead.
By its own admission, our firm probably won’t save much money by the imposition of a hiring freeze for the next 20 weeks (in a memo to staff last week Merrill acknowledged that ‘the majority of the firm’s hiring occurs during the first and second quarters of the year with the third and fourth quarters progressively tapering off’). So why, given that the cost savings will be relatively insignificant, has Merrill come out and imposed an official freeze now, especially when rivals like Morgan Stanley are signalling a very different message? And why, given that Thain has said that he wishes to attract the very best to come to our firm (at all levels) so that we can be well positioned for the upturn, have we made it clear that we are closed for business on the hiring front ?…
My own view is that things are probably a lot worse than they seem, and that this 20-week hiring freeze is just the tip of the iceberg. We are clearly in a situation where any form of cost-saving matters – recruitment costs, existing headcount costs, travel costs, salary raises, year-end bonus pay-outs, and maybe even a dividend cut. And the 20-week hiring freeze ? Somehow I doubt that it will stick at 20 weeks. I doubt that the floodgates will open come January 1st. My gut tells me that headcount levels will be reviewed again, and that it will remain difficult to obtain additional headcount throughout 2009 (except for strategic business areas, and unless there is a significant uptick in revenues).
The full letter is here.
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