Following the 23,000 people he's already sliced off the staff rota this year, Pandit has just announced that a further 52,000 are going to get the chop worldwide. That's the equivalent of the entire population of Macclesfield (is it crude to say the Citi has lost a town?), or one in seven of Citi's employees. Merry Christmas. The news was announced in a town-hall style meeting at New York headquarters, where Pandit presented a 25-page PowerPoint presentation explaining his plans to a crowd of his employees.
In case you missed the news, the financial sector has been having a few minor cash flow problems recently. Citigroup has lost $20b (£13b) in the past year, with stock devaluing by a whopping 68%. Last week Citigroup shares dipped below $10 for the first time since the company was created by merger in 1998. Pandit is now looking to reduce overheads to around $50b by 2009 - a reduction of 16%-19%.
"What all of us have done - and perhaps injudiciously - we've added a lot of people over this very benign period," said Sir Win Bischoff, the Citigroup chairman. True, but you'd hope that the chief executive of the world's largest banking group would have a bit of a better idea of how to structure his company.
75,000 readily expendable employees seems a bit much of a surplus, even for a sector as typically excessive as financial. That said, although it certainly played its part in the global recession, Citigroup is by no means singularly responsible for what's happened worldwide and what has forced Pandit to make such severe cuts.
The crucial lesson here is don't spend money you don't have. Don't borrow against assets unless they're solid and you can afford to lose them. And don't, for heaven's sake, expect people to pay you money who clearly can't afford it.
Being selective and fair with your customers and what they can realistically afford is a much safer business plan in the long run. Avoid bulking up on staff just for the sake of it or because you can afford it - be scrupulous at all times, regardless of how much cash you think you've got to splash. Avoiding the sub-prime mortgage market is also advisable.
"I have to applaud Pandit," said Brad Hintz, Wall Street analyst at Sanford Bernstein, of the cuts. "Doing 20% is tough. I look at this and I say, wow, I haven't seen one this tough before." But does that mean Pandit is a great chief executive or a heartless bastard? It might seem excessively harsh, but making big cuts now could save the bank's future. So this could prove to be a necessary sacrifice, saving hundreds of thousands more jobs in the long run. But if I could predict that, I'd be taking Pandit's job rather than writing about it. Let's look instead at how he delivered the news.
Well done to the man for breaking it face-to-face with
employees, possibly risking a public lynching for the sake of the
personal touch. But entitling the section of the presentation
detailing the job cuts "Getting Fit - Fast!" is about as sensitive
as sending your granny a 20% discount voucher for her local
coffin-maker. On her birthday. And I can't help feeling
that part of the reason Pandit's been so sensational is to save his
own skin by shocking the Citigroup board into keeping him.
It wasn't the easiest job in the world, but it could've been handled with more tact...
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