Schwab's monthly market activity report for February shows total daily average trades by clients down 31 percent from February 2000, and down 13 percent from January 2001, to about 245,000. Other financial firms already have begun wielding the ax. Bear Stearns, a Wall Street brokerage, announced this month it was laying off 400 people. Like other Schwab employees, Gabel's first-quarter bonus will be paid in stock options, instead of the usual hard cash. Schwab has also cut back on nonessential projects, company expenses and company travel.
Schwab employees speak approvingly of management's reluctance to lay off employees.
Financial services firms have had a history of overreacting to short-term market slides, then being caught shorthanded when markets rebounded. Until now, Geraldo and Havers haven't worried they will get pink slips, they said. So Havers continues making changes to the mainframes, he said, and adding machines to Schwab's network in preparation for the rebound. In the past decade, it's become routine to lay off workers even when a company is profitable. As companies become more driven to perform to shareholder expectations of ever-higher quarterly earnings, the response to a sudden downturn is often shedding employees.