Why should you look at other sectors and observe what’s happening? Because while sometimes the lessons do not apply, sometimes they do. This case is a “do.”
Roche announced that they have begun the process of rationalizing human capital at Genentech this week (SF Chronicle’s Tom Abate: Roche begins to trim staff at Genentech ).
As written elsewhere here , it’s the generally inevitable result of buying another business and figuring out how you’re going to make the economics of the deal work. Cutting costs, particularly when you have duplicate or apparently unnecessary staff, is one way.
Folks at Barclays Global Investors [Disclosure: I have worked with BGI] should pay attention to what their South San Francisco neighbors are going through since many of the same patterns are likely to apply as their purchaser, BlackRock figures out how to make its deal for BGI work.
Not unlike with Genentech, some easy targets for review in the BlackRock integration of BGI is any function that is duplicative: no need for two Chief Financial Officers, or two General Counsels, two Global Heads of Recruiting, two heads of Accounts Payable, etc. Having done consolidation and integration work before my work a as coach to execs and leadership teams, a good economic rule of thumb (though not necessarily a good organizational rule of thumb, is if you can consolidate functions, do it.
An employee or two, or ten may end up with BGI parent Barclays: it just may be in New York or London, and likely will be folks who are deemed expendable by BlackRock.
What’s a little trickier is staff further down in the organization. While lopping off duplicative Global Head of IT makes sense, do you consolidate server-side technology heads into one position or keep it at two? While you likely have one Chief Investment Officer, do you have Active Equity heads in two places or just one? Two chiefs of staff for Fixed Income or one? One client reporting head or two? Etc, etc, etc.
Similar to reporter Abate’s quote – “ employees in other divisions are nervous as Roche goes through the operation in a methodical fashion’ – nerves will likely ramp up as employees face possibility that: a) nothing much changes about their job except perhaps supervisor, b) they get an offer to stay, but it’s at BlackRock’s HQ in New York, c) there’s an option to stay but it’s in a different role, or d) their employment is terminated due to position elimination.
As a side note, former BGI CFO Frank Ryan, with whom I worked, think is a good guy and a good manager, must be smiling in his role as the CFO for global financial services firm Russell Investment. Frank moved on to Russell well before the sale of BGI to BlackRock. But for that move to Russell, Frank would be job hunting in a very interesting market.
Time, it would seem, to crack open a copy of Richard Nelson Bolles "What Color is Your Parachute" and thinking – if I’m a BGI employee – what I want to do next.
It’s always possible that nothing much could happen with BlackRock’s integration of BGI: it’s just not likely.