We've all heard the LIFO theory in finance when it comes to layoffs. Last in first out. Does this really have merit? Do you know what management looks for when considering cost cutting initiatives? What's the pecking order in terms of savings - back middle front office?
I'm writing from a IB front office product group
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back office tend to get trimmed later on. they don't cost as much (hell an entire team could be equal to one portfolio manager's salary) and generally run fairly lean as-is.
At my old firm, the first to go were underperforming fund managers and their teams. then middle office and then back office.
LIFO was the way they cut junior people. then they went to the mid-range people who clearly were stagnating and had salaries at the top of that designation (associates making 80-85k in my example) who were not in line for promotion.
Depends on the situation and reason for layoffs. It can be based on division, overall performance, etc. Just remember that as an analyst you are the cheapest, yet easily replaced, employees that the firm has.
Idk how upper level management thinks about it, but analysts, even first year analysts, certainly do get laid off, you aren't immune to job cuts. Think of it this way, if the order comes down that your group needs to reduce their head count, is your group head going to get rid of the MD who introduced him to his wife and goes golfing with him every weekend? You're an analyst. You're a galley slave, no one gives a shit about you. 2 years after you're gone no one will remember your name, if they even know it now. Not to mention the fact that as an analyst, you are just an expense, while at the senior level you are bringing in business. Until you can bring in enough business to cover your salary, be happy the bank pays you anything.
You're a little safer b/c you're in a product group though. I'm not sure if this is true across the street, but at least in my bank, the product groups tend to run a little leaner, and the time frame of your projects is more market based it's harder for other analysts to simply "pick up the slack." Just anecdotally, it seems to me like when people have been laid off, it's been from coverage, because the other analysts can simply pull more all nighters to make up for the lower head count, and coverage teams are generally bloated anyway. It's a lot easier to go to an Industrials Group with 20 analysts or something and tell them they need to pick one to lay off than it is to go to a hybrid securities group with 2 analysts and tell them to lay one off you know?
I'm a 2nd year associate turning 3rd year who just got hired. We're very lean in this group - in fact i'm the only associate supporting all senior bankers (MDs, Directors).
Appreciate your comments guys!
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