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Well, the cat's out of the bag and the rumor is confirmed -- ol BEN has announced it will make the first large-scale job cuts in its history (about 7% of the workforce or 560 people, drawn mainly from "operations").

Franklin's annual report portrays the company as having initiated a "global cost reduction program" in September of 1998. Looks like the program has just been expanded! I'm concerned that it took a downturn in the company's assets under management (Asia crisis, followed by spooked investors withdrawing funds) to bring to the front the idea of controlling costs. Seems like something I'd like management to do ANYWAY!

I'm wondering out-loud where the BEN's job cuts will come. The press release specifically stated that the research depts wouldn't be touched, which makes sense, because they don't want to spook shareholders, and BEN is already renoun for paying relatively small salaries to its research folks (who don't make up a large proportion of the overall workforce anyway).

So what exactly does "operations" mean? Customer support? Doubtful, because one of BEN's big gripes recently is that the customer service rating agency, DALBAR, has dramatically lowered it's rating of Franklin over the last couple of years, so they definitely don't want to cut too much there. Besides, account reps don't typically make much money, and BEN is rumored to be cheap in that department as well...

I'm guessing the cuts are mostly in behind-the-lines data processing, supplies ordering, junior mgmt and staff in sales & marketing, and MAYBE some folks in the tech departments. Clearly, tech is where Franklin pays the largest non-management salaries. After all, the job market for tech skills in Silicon Valley is fierce--a financial company is going to have trouble luring skilled people away from companies whose primary focus is technology -- many programmers would assert that it labels them as "second tier" on their resumes if they spend an extended period of time in a staff role at a non-tech firm.

So if BEN does cut technical folks, could this mean that BEN has finished it's year 2000 conversions ahead of schedule and can afford to let people go? I doubt it -- does that sound like any financial institution you've heard of?! Something must be getting axed or postponed. Maybe we'll see in the near future that BEN delays it's proposed new corporate headquarters construction.

Anyway, this is all supposition, but it's an interesting excercise to second guess BEN as to which initiatives and programs it will choose to cancel or postpone in order to make personnel cuts. Or was the company so poorly managed that it managed to over-build its workforce by 7%?!! I hope not!

How's TROW doing?


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