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Citigroup April 11, 2007

Posted by collage9 in Finances, Organizational Design, Public Interest.
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Citigroup, the nation’s biggest bank, just announced that it will be cutting 17,000 jobs.  About 7,300 of these job cuts will occur within the U.S.  The bank is doing this in an effort to dramatically decrease costs, which have been growing much faster than revenues recently.  Citigroup says that $10 billion will be saved through the domestic job cuts alone.  This is of course an enormous amount of money and seems as though it should help the company.  Especially due to the recent presuure they’ve been receiving from shareholders to improve their bottom line.

But, I wonder if this is indeed the best move for the company.  The article also went on to say that perhaps Citigroup should be more concerned with increasing revenues rather than decreasing costs.  It seems as though it is just sending a message to their investors that they are attempting to do something to fix the problem.  I think they should definitely be concentrating on increasing revenues as opposed to simply decreasing costs.  The cost cutting seems more like a temporary remedy to the problem, a problem that won’t go away until the bank makes other changes.  Citigroup claims that the job cuts will increase efficiency and eliminate overlapping jobs, but critics continue to be skeptical if this appraoch will actually work.

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Comments»

1. Lady - April 16, 2007

I have never really been a fan of job cuts unless there is an absolute need for it, or unless overlapping jobs obviously exist. Job cuts seem so impersonal and selfish when done only with the purpose of decreasing costs. It is a temporary fix and I think that Citigroup should choose job cuts as a last resort if they can’t make any other adjustments. I definitely think that they should be looking at other business problems such as maybe having interest rates that are too high or a lack of marketing the benefits of choosing Citigroup. Maybe they should make some changes in these areas first before choosing to cut jobs.

2. Kira - April 16, 2007

I agree- I do not think cutting thousands and thousands of jobs is the answer. I think major job cuts such as this is an easy way out. The decline in revenues has not been due to having employees, so what has the decline in revenues been caused by? This must mean that there are other problems going on that are responsible for decreasing revenues and that need to be solved before revenues will truly turn around. I understand minor job cuts, but with job cuts to this extent management should really focus their attention on more corporate structural issues. This makes me wonder, where has the company been that they didn’t do anything about this problem until it was so bad that 17,000 people had to be fired?

3. Elaine - April 17, 2007

I am wondering why Citigroup has decided to cut such an extravagant number of jobs. When I read about job cuts for other companies, it’s usually because their company is outsourcing jobs offshore. Since there is no mention of this for Citigroup, I am just assuming that their organizational strategy is not working well. Perhaps they need to revamp their entire company, or at least the way they are running their business. Maybe the internal workings are not as running as smoothly as they can be. The first step to approaching such a problem is for management of figure out where exactly the trouble lays. Cutting 17,000 jobs is extreme; they should find other ways to increase revenue besides cutting expenses.

4. Stacey Swift - April 17, 2007

I also agree that cutting jobs may not be the best answer for their company or for our country. The fact that sooo many jobs had to be eliminated makes me think there is a deepr problem. I am also concerned they will not be able to continue to operate efficiently without such a large group of their employees.


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