Zurich Insurance' strategy to improve profitability by cutting costs will lead to more job cuts. Hundreds of employees in finance and controlling will lose their jobs, according to information obtained by finews.asia.
When Zurich Insurance CEO Mario Greco presented the first-half results, he announced that the company’s goal of shedding 8,000 jobs had been annulled – much to the relief of the insurers workforce. The all-clear wasn’t however as clear as some might have hoped it was.
The company still needs to save money and for that purpose it will cut more jobs. Zurich Insurance staff at the finance and controlling unit have been told as much at the end of last week. The management announced that 300 jobs had to go, information obtained by finews.asia showed. The consultation procedure has already been initiated. A spokesman for the company confirmed the information, without providing any guidance about the scale of the job cuts.
Cost Cut Target Remains in Place
The move doesn’t come as much of a surprise, because Greco plans to save $1.5 billion by 2019. Only a third of this has been achieved so far.
Savings of this scale inevitably lead to savings among the workforce. And what’s more, Greco has set himself the task of making the Zurich-based insurer more efficient. Under the guidance of Martin Senn, Greco’s predecessor on the job, Zurich became more complex and somewhat sluggish, with a large number of managers residing over their small fiefdoms.
The Italian top executive started his drive to turn the ship around through the elimination of management layers and by merging life and property units in country units, all in a bid to simplify the structures.
Making Zurich Fit
The latest round of job cuts is pointing in a similar direction: it is all about trimming the organization and acceleration of procedures.
Zurich has some 1,300 employees at the headquarters in Switzerland, with the global figure of 1,900 at group level. Of those, some 450 work in the finance department.
The cuts among staff in the finance unit can’t be that much of a surprise after the company had announced as much one-and-a-half years ago. At the time, Zurich refrained from naming numbers or divisions to be affected. Greco, who had joined in mid-2016, didn’t touch this way of handling the changes.
Piecemeal Tactics
The management's approach is traditional piecemeal. In August 2016, Greco had taken the laurels for a better-than-expected first half. Immediately afterwards, he told staff at group level about the impeding job cuts. The company however never specified how many position eventually had been eliminated.
In January of this year, Zurich said it would cancel 123 jobs in the Swiss business unit. In the U.K., some 240 employees were told to leave.
Step by Step
And Greco has remained true to the strategy of working his way through every single position of expenditure, setting goals to be reached. These goals in most cases cannot be attained without having to let staff go.
Greco has been clear about his intention to continue his job of reducing operating costs at Zurich. The $1.5 billion target has been retained and that’s what he needs to achieve. Greco said that only a slimmer company would be able to earn more and pay higher dividends. «Super Mario» has managed one third of his task so far. The coming two years at Zurich won’t make for a comfortable for those left, that’s for sure.
