Has any company ever successfully cut its way to long-term profitability? I know layoffs look good on paper for the first few months but when the lack of productivity of the laid off employees catches up, things start to look muddy. Considering that Wells Fargo specifically said it plans major costs cuts "to achieve long-term profitability," I have to wonder if that's even possible.
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Post ID: @nfw+19SZKACc
That’s the beauty of a 1990’s tech footprint from the standpoint of the current staff. You can’t save the money until you pay the hacks who never modernized it to begin with to bring it into the current era. They don’t possess the skills to do that and have no incentive to learn them.
But you can’t cut the subject matter experts until you train and cajole them to modernize. They have the bank by the b@lls and know it. Much better to sell of a business line and convert the data to the buyer.
as others have said, depends on what you consider cuts. just about any long living company has done so at one time or another - getting rid of a failed, unprofitable business, shrinking/rightsizing of business. even the silicon valley companies have done so. microsoft had gone through many years under balmer and while you could say that nadella really made it take off, it was balmer that gave him the room financially, to do so for the overall company.
banks? hell ya. what do you think happened in the financial crisis? what do you think happened in the internet bubble? what do you think happened in 1991 financial crisis. it IS a part of any business cycle - depends on what degree.
to the person who talked about overpaid ceo's - some would say all of them are overpaid. but even the successful companies, their ceo's are paid massively. Tim Cook - ~15MM, not including stock over the years. Want to talk about how some of them take $1 salary? Sure, but they have hundreds of millions in stock.
JCPenny. Lets face it, it is a broken company. They probably have to be more bold in their cuts - k–l the stores like Bed Bath Beyond and Sears. Of course, that's heartless. But, regardless of who the CEO is, they have to make the difficult decision to be more bold.
the real question is whether we will use these savings wisely and actually gain the new talent and skills - with or without the existing people - to modernize - technology perspective, of course.
Schwab? Tyco? GM? Pabst Blue Ribbon? Apple even. There’ll be a load of compromisin’ on the road to my horizon...
with the loser managers here, this place will never be a success; one of them is a compulsive liar, he is in Tech Department; what trash!
I’m not an expert in managing banks, obviously, but I don’t think it makes sense to always compare Wells to other banks. It’s not necessarily apples to apples.
For one thing, our technology has fallen far behind and it is a patchwork of multiple systems and vendor systems held together by a wing and a prayer. Just in our LOB alone, there are over 3000 system enhancement/needs/updates that have been backed up for years. There are basic technology needs that should be able to be automated, however each change affects multiple other out-dated systems and processes downstream, and no one wants to be accountable or spend the money. The problem being: it takes teams of people to deal with all the manual work-arounds. I don’t see a logical path to really fixing the outdated technology in a way that will set us on the right path for the future.
Additionally, the culture is different. It just is baked in to the bones of the operation. You can replace many of the top execs, but there are still a lot of executives and senior leaders here who have come up under Stumpf. And we still have a lot of WCHV Senior Execs who came up under WCHV’s old-time banking hierarchy. For those who say “Charlie came up under Jamie Dimon.”: these people mentored under Stumpf and Thomson. I’m not saying they are all bad, but they sure do seem to find a way to always survive.
And we have spent the last 4 years trying to dig out from our past, while the other banks have been moving forward.
Wells Fargo is a unique entity. At the surface, analysts want to evaluate comparisons between the top four banks. But it’s too easy to fall down that rabbit hole. We should be doing what is best for the long-term health of the organization, not trying to meet others’’ expectations and meet the expectations of outsiders. Trying to do what others do at a better price point could be a race to the bottom.
Post ID: @wwp+19SZKACc
Amen!
There is more to running a profitable thriving company than cutting costs, sending jobs overseas and laying off employees. See JC Penny, Pan Am, Blockbuster, etc. All run by overpaid out-of-touch aloof CEOs who demonstrate a lack of respect for others.
You have to have great technology, an innovative forward-thinking strategy, and services that people want and need.
JPMorgan Chase did it in the mid 2000's. The first few years under Jamie Dimon the bank only made money because it cut costs so deep. There was not any significant business growth from 2004 when it bought Bank One to 2007.
And guess who Charlie's mentor during those years....
Sad to say because I know folks work there, but the branch closures made sense, but not sure the other layoffs do because in tech I see a lot of negative impacts of a lot of these. We had four branches within a city block or two some places so that made sense. Most mergers do that when they happen but we dido not.
Bank of America.
Like it or not Charlie has to do it.
No other major US bank needs more than a quarter of million employees to operate. Why does Wells...
It depends on the cuts, I suppose. If you have 500 people doing something that can be automated and managed by 5 people, then there's no impact on profitability. Same thing with business units that aren't profitable. This is an over simplification, of course, but it really depends on a lot of factors. Wells is profitable even with the super low interest rates, which is essentially the most challenging position for a bank. As they rise, we should be making a ton of $, especially of we can get our costs under control.