US - Mercer Incorporated and Putnam Investments are set to suffer about 750 job cuts as parent company Marsh & McLennan Companies Inc. (MMC) slashes 3000 positions globally in an attempt to reduce its costs.
MMC today announced its decision to reduce staff by 5% on a global basis – approximately 3000 jobs – with three quarters coming from risk and insurance services, in conjunction with the release of its financial results for the third quarter ended September 30, 2004.
An MMC spokesperson confirmed the balance – approximately 750 jobs – would come from Mercer and Putnam.
“We are examining all parts of the company’s cost structure to identify areas where expenses can be reduced appropriately,” said recently appointed president and CEO of MMC Michael G. Cherkasky.
“Discretionary expenses are under review as are ways to increase efficiencies through technology and other methods such as consolidating facilities. Unfortunately, we must also adjust staff levels based on the realities of the marketplace and our current situation.”
Cherkasky described the step as “difficult but necessary”, adding that MMC was committed to carrying out the reductions fairly.
“This includes staff reductions associated with the previously announced combination of the defined contribution administration business of Putnam with Mercer’s human resources outsourcing operations as well as the integration of Kroll,” he said.
The measure is expected to save US$400m annually once fully implemented.
According to MMC’s third quarter results, Mercer saw revenues increase 11% to US$766m, up from US$690m, and operating income also rose 11% to US$106m from US$96m.
Underlying revenue growth was 3%, reflecting growth of 17% in management and organisational change consulting, 6% in human capital consulting and 7% in economic consulting, MMC noted. Retirement services revenues were essentially flat.
Alternatively, Putnam’s revenues declined 16% in the third quarter to US$429m. Average assets under management during the third quarter were US$209bn, a decline of 23% from the third quarter of 2003, MMC said.
Putnam reached a US$40m settlement agreement in principle with the Securities and Exchange Commission concerning its disclosure of brokerage allocation practices prior to 2004, with the entire amount to be distributed to Putnam’s mutual funds. Including the effect of the settlement, operating income declined 60% to US$55m, MMC said.
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