No, just playing. Not only are those lucky enough to be keeping their jobs receiving but a nickel in their stockings this Christmas, they also have a freeze on promotions to look forward to in '09.
To: All State Street Employees
From: Ron Logue
Today we are announcing an important step we're taking to support our continued growth and to align our resources to meet the challenges and opportunities of this difficult market environment. I want to provide you with some more background on this action, which includes a reduction in force.
As you know, over the past two years, and particularly during the first nine months of 2008, we have achieved strong growth in operating revenues and operating earnings per share. This result has set us apart from our competitors and has been particularly noteworthy in the second half of the year given the significant headwinds we have faced from market conditions. But we cannot be complacent, particularly in the face of this unprecedented market environment. We need to be proactive about protecting and building our franchise. Although our strategy and focus remain unchanged, we must calibrate our organization to the realities of the current environment.
In addition to extending the hiring slowdown that we have had in place in some business areas, continuing to reduce our professional fees, technology spend, real estate and travel costs, we are also implementing a reduction in force amounting to approximately 6 percent of our global workforce, or 1,600 to 1,800 positions. We have already begun this process and expect it to be completed by the end of the first quarter of 2009. As I have said to you in previous Town Hall meetings, our goal with any reduction in force is to limit the impact as much as possible by targeting span of control and overlapping functions. With this goal in mind, the majority of reductions are occurring within senior and middle management and staff areas where we can consolidate positions and gain more efficiency without compromising our customer service and support.
To further limit the scale of these reductions, we will not provide promotion or merit salary increases across the company in 2009.
We are committed to supporting the employees who leave State Street as a result of this reduction in force including providing severance and career transition services. We expect to record total pre-tax charges associated with these costs of approximately $325 million to $350 million or $0.51 to $0.55 per share.
While 2009 will undoubtedly be a challenging year, I believe the action we are announcing today will ensure that State Street is both well positioned within the new landscape in which we are now operating and in a stronger position to take advantage of opportunities when market conditions improve. Why do I believe this? We have proven in other times of turmoil and uncertainty our ability to stay the course and continue to grow. Key to this ability is that we make choices that benefit the greater good of the organization. Today's announcement reflects one such choice.