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Don’t blame the city for job cuts
It is common to hear the City being blamed for pushing companies into cost cutting strategies. I never really believed this, and now comes some solid evidence that Wall Street does not like job cuts. The City is not likely to be different.
This article (found via Economist’s View), quotes a survey that showed job cuts lead to falls in share prices in the US. It goes on to attribute this to a problem I have complained about before: the short term outlook, not of investors, but of managers.
The problem is perfectly soluble. Give managers more sensible incentives. Even better, simply pay them a fixed salary like everyone else. I have previously pointed out the inconsistency in the means used to motivate senior management compared to everyone else.
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