JP Morgan Chase Jumps Into The Layoff Bandwagon
In the “Big Apple” as New York is often affectionately called by people all around the world – just across Hudson River downtown lies a poster for the great American dream – Manhattan. In almost the heartland of Manhattan – lies the most important finance district of the world – the Wall Street or ‘ the Street “ as the suit clad corporate hotshots like to call it.
Layoff in Banking
The Holy Trinity of the street – is undoubtedly the trio of Goldman Sachs , JP Morgan Chase and Morgan Stanley – the Mecca for anything related to finance and banking. Layoffs in the banking sector have been common in the last quarter as revenues dropped in terms of annual and quarterly turnover – however JP Morgan Chase surprisingly didn’t layoff any of their almost 23k strong workforce. This however , was soon jinxed as the company laid off almost 500 mortgage employees from its payroll just after an hiring announcement for about 200 bankers for small scale banking operational roles.
Jamie Dimon – the CEO of JPMC , explained the seemingly contradictory move in a statement. “ The company works on the basis of flexible hiring and adjustments – the team analyses the data and stresses out the area where the most manpower is needed and we hire or readjust the work force accordingly. “
Layoffs being in the news with tech , entertainment and banking sector adopting the policy unanimously – lets dive deep behind the causes and examples that can be used to understand the problem in deep.
Why Does a Company Lay Off?
Main incentives behind a company to lay off its workforce is to reduce operational costs , cost cutting , workforce reduction and filter and keep only skilled workers to increase productivity of the company or organization.
COVID Aspect of Layoff
Mass layoffs are obviously a consequence of excessive hiring during the 2020-21 fiscal year. Marred by COVID – the companies had to shut down branched and in order for the companies to function effectively they had to hire new individuals – creating a huge surge of employment – mainly in the IT and logistics sector – and the remote working culture seemed sustainable back then – since the operational cost of the companies decreased significantly.
Fiscal year 22-23 however – saw the companies going operational in situ once again – increasing operational costs and the increased workforce meant loss in company’s profit margin. Soon , filtering of employees on the basis of skills and the value they bring to the table started and it triggered layoffs.
Investor Aspect of Layoffs
The reality however is that its not always about the performance – with impending recession threat and the predicted bearish markets that indicate a sluggish economic growth in the recent years – the investor mentality has shifted more on the defensive side – creating funding bottleneck for various firms and companies – who are forced to cut their workforce. It’s unfortunate and and tough to swallow – but this is the harsh reality “ heard on the street” .
Meta , Alphabet , Microsoft and Apple announced layoffs. Twitter however adopted a different path , demanding rigorous working hours from the employees and focusing only on the skilled individuals to stay on the boat – swiftly shifting the blame of laying off almost 2/3rd of its workforce – as a mass resignation and not a mass layoff.
Spotify laid off it’s podcast team to reduce operational costs and maintain a healthy profit margin. Disney laid off almost 7000 employees as it saw a sharp drop in online streaming subscription figures of its services.
There have been mixed opinions about the layoffs – experts often criticizing the move as extreme and inhuman – but they haven’t been able to propose an alternative either. Love it or hate it , the reality is that recession is here to stay for a while , if not persist – fingers crossed , into a recession feedback loop.