eFinancialCareers

It’s unlikely to make much of a difference, but banks thinking of making job cuts in the coming months could try and dissuade themselves with the CIPD’s overly complicated new calculation showing that the average redundancy costs more than £16k. The CIPD's formula is shown here on the BBC website.

We’ve had a go at running the calculation for Morgan Stanley, which according to our previous estimates made 5,000 people redundant last year, but appeared to hire 3,218 further people nevertheless (given headcount was down by a mere 1,782 at the end of the year).

Based on the assumption that it costs $15k to hire a Morgan Stanley banker, $5k to train them and the fact that MS had 48,746 people at the end of 2007, the CIPD’s formula suggests Morgan Stanley's redundancies have cost $159m, or $31k per head. Will this dissuade MS from cutting other people in businesses where revenues no longer exist? We think not.

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