Wall Street is suddenly emptier as many major firms announce layoffs from the top to the bottom. Over 7% of Wall Street jobs will be gone by mid 2009 due to the sub-prime mortgage collapse, high oil prices, and a weak economy. The skills for growing a company are no longer necessary in the changing contours of Wall Street. The new Wall Street executive needs a different set of skills to be hired.
This trend toward cost cutting and creating a lean machine isn’t new. It’s part of a normal cycle that occurs when the cost of the growth period crosses with bad decisions and poor economic conditions. It demonstrates loudly that there are several types of leadership and each one has its place in the sun.
Some of the parting of ways comes from change in direction and some comes from the corporate answer to the stockholder. Many times, terminating positions and shaking up the corporate environment is the companies way of addressing past failures. While it isn’t always the most efficient it tells the stockholders that they’ve got the problem under control.
According to Crain’s, over 22,000 Wall Street workers lost their jobs — and it isn’t just the rank and file. It transfers to the top players in the field. Men and women that built the business and watched it grow now need to step down and allow another to thin it out and cut the costs. The Independent Budget Office that monitors New York City’s finances says that about 33,300 finance jobs (over 7%) will be gone by June of 2009. One financial recruiter called it the worst and most chaotic state that he’d ever seen, when referring to the job market in fixed income.
As weaker companies try to right themselves or sell themselves, the potential of a buyout threatens the c-level executive as the purchasing company replaces the top jobs with their own people. After JP Morgan Chase acquired Bear Stearns, more than half of the employees at Bear Stearns’ lost their positions.
No matter how entrenched the c-level executive is, it doesn’t mean safety. You have to wonder if Diane Schuneman’s felt change in the wind when she retired after 36 years with Merrill Lynch. A look at former CEO Kennedy Thompson of Wachovia says that, even after 32 years with a company, there’s no guarantee that walking papers aren’t right around the corner with this type of shake up.
Not Just a Change in Faces, But a Change in Skills
The bean counters are king and the budget comes first. This could be the slogan for the next few years on Wall Street. Since new technology comes as a cost, the cuts start there. Any c-level executive that prides themselves on skills in that area is no longer the hot commodity that that they were in the growing phase several years ago. During times of economic downturn expendable non-profit making positions are the first to go. New upgrades in technology aren’t necessary and neither are the men who run the machines.
The c-level executive of today needs to have the ability to make difficult decisions and find those that aren’t earning their keep. They also need to make sure that each department shows justification for its existence in the form of the bottom line. They basically need the skills of an accountant and the wisdom to know which costs to eliminate and which ones help create a profit.
A Change in Income
The biggest hit to most of the Wall Street Employees is right in the pocketbook. Those that choose to leave Wall Street find that the average pay for the rest of the world is a lot smaller. Those that stay also need to know that their pocketbook takes a hit, even if they still have a substantial paycheck. The days of the huge bonuses are gone and may not be back for a while. Today, the bonus is the opportunity to remain on the job.
Last year Wall Street employees felt the first push when bonuses dropped an average of 5%. The year 2008 holds even worse expectations for workers according to Bremen, the New York state’s comptroller.
A Change in Hiring from Bottom to Top
According to Joyce L Watts, Northwestern University’s Kellogg Graduate School placement director, “We estimate that hiring by investment banks at business schools could drop as much as 60% this year.” The slow down in hiring starts at the bottom and works it’s way up.
The higher c-level executive positions, however, have fewer qualified applicants. The air is rare at the top but the positions are also fewer. With several companies downsizing and major company buyouts and mergers, the reduction in the number of positions occur at every level.
In all areas but Wall Street or the financial sector, life is rosy in the executive area. Of course, jobs in the New York area are more limited due to the surplus created by the recent unemployed financial executives.
Conclusion
The c-level executive looking for a job on Wall Street has to work a little harder and crack out a different type of skill to present on both resumes and in person. They have to be cost conscious and tough. Building is no longer the watchword: saving is now the key.
