Citigroup Inc. first-quarter earnings dropped 11 percent because of a charge to eliminate 5 percent of its workforce and bring costs in line with competitors. The plan to cut jobs and shift workers to lower-cost locations is part of a response to shareholders who said it spent too much building branches and making other investments. The bank opened 99 new branches in the quarter. Expenses for expansion pushed up costs at twice the rate of sales growth. Citibank’s plan to reduce expenses probably won't affect earnings this year because severance and other charges will balance the benefits. By the end of 2008, savings probably will boost earnings per share by 6 percent.
The point is why doesn’t staffing flab get noticed in the ordinary course of business on a regular, say quarterly, basis? Why does it have to be pointed out by say shareholders after it requires drastic action? Could not number crunchers point out clogging in the company’s arteries on a realtime basis and ring the bell to stop regular recruitments to reassign the newly superfluous staff appropriately?
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