Leading asset management firm BlackRock is planning to lay off up to 300 of its “poorer performing” workers, equalling about 3% of its international workforce, in an attempt to improve agility. This follows board-level restructuring in late 2012, and a 3.4% staff cut in the fourth quarter of 2011.

In a staff memo on Monday 18th March, President Rob Kapito indicated that the changes were not simply a cost cutting measure, and that BlackRock’s head count will continue to rise this year as they hone their hiring strategies: “These moves will give high potential employees greater responsibility and additional career opportunities, and will make us a more agile organisation better positioned to respond to changing client and market needs.”

Speaking at the 2013 Credit Suisse Financial Services Forum in February, Kapito addressed the kinds of changes that will be necessary to fulfil on-going client satisfaction, particularly in BlackRock’s sales team. Of this new approach he said: “It has required me to upgrade the sales force because they have to be able to face the client and talk about their portfolio, not a product.”

Kapito’s memo to the company serves both as an indicator of the direction in which BlackRock is heading, and also as a warning to employees that the axe may be about to fall on those who are struggling to quantify the value-add that they bring to the organisation.

Jackie Noblett at The Financial Times likens BlackRock’s methods to “a Jack Welch approach to driving corporate growth in an asset management industry that has seen slowing revenue gains”, referring to the former CEO of General Electric who gained a reputation for streamlining teams in order to up both the pressure and competitive edge among his staff.

George Wilbanks at Wilbanks Partners believes that “every organisation is going through this process of identifying the bottom decile of employees”, while Jeffrey Hopson, an analyst at brokerage and investment banking firm Stifel Nicolaus, states that BlackRock “want to make sure that growth does not cover over areas of weakness or mediocrity.”

Victoria McLean, founder of City CV, London based company providing an executive CV writing service, adds that recent developments in technology have enabled firms to more easily monitor the overall effectiveness of their teams and strategies through analytics data, meaning pretty soon Rob Kapito will not be the only director implementing a “Jack Walch” approach. According to researcher Neil Bathon, this new outlook could become widespread in the investment banking industry: “it seems that managers are finally realising that the net effect of allowing poor-performing employees to stick around goes way beyond the shortfall in assets.”

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