Layoff threat hurts morale at USF&G

December 17, 1992|By David Conn | David Conn,Staff Writer

More than a year after announcing a sweeping round of cost-cutting, the layoffs continue at USF&G Corp., with more than 100 employees let go in the past few months and more expected after the start of the year.

The giant Baltimore-based insurer's information systems division, with more than 700 employees, is expected to bear the brunt of a substantial staff reduction whose exact size has not been determined.

"It's not massive," Norman P. Blake Jr., the company's chairman and chief executive, said in an interview yesterday, adding: "We honestly don't know what the number is."

Whatever the final tally, the news of still more layoffs has delivered a savage blow to morale in the division and in other sections of the company, according to several employees, who had been hearing the number would be in the hundreds.

These employees, who spoke on condition of anonymity for fear of losing their jobs, said management has left them with little idea of the criteria used to decide who stays and who goes. And after hearing last year that the layoffs were over, this year's news has come as a double shock, according to those employees.

"We've been through so many cuts, and they keep saying 'This is it,' and 'We're getting our strategy in place,' and 'This is really it,' " said one woman who just bought a house.

"This is after people worked for two years, 14- and 16-hour days," said one of her colleagues. "There is no morale," he added.

The company has earned about $15 million in the first three quarters this year, before paying preferred stock dividends. USF&G lost $213 million last year and $585 million in 1990.

Mr. Blake explained that the massive layoffs announced last year that cut about 40 percent of the 12,400 employees were done almost exclusively for cost-cutting at a time when the company was nearly bankrupt.

"None of that, per se, was what I would call strategic-driven," he said. Many of the layoffs resulted from USF&G's decision to leave certain lines of business, such as asset management, and some states, including Texas and Louisiana.

By contrast, the recent and pending personnel cuts result from a nearly yearlong process of finding the most efficient ways to conduct the remaining businesses, Mr. Blake said, namely how to get the most value and quality out of the existing work force. The company has also run "make vs. buy" analyses, he said, that have led to agreements to contract with other companies for various functions that had been run in-house, such as security guards.

Likewise, the 15-member printing department will be outsourced at the end of the year, with interviews being conducted to determine who will be retained by the outsourcing company, Mr. Blake said.

With 40 percent less staff companywide, about 10 people were let go from the human resources department a few weeks ago, he added, and in August about 100 people were laid off -- in the 36 branches and at downtown headquarters -- from a division that does risk management for clients and potential clients.

Mr. Blake acknowledged that credibility is low for the managers who last year said the layoffs were over. But when he came aboard two years ago, he was merely responding to the crisis the company faced.

Now, he said, the need to make the company more efficient and competitive has led to the recent layoffs and threat of more.

The information systems division, in particular, is under the gun because it is due to be almost entirely reorganized.

For now, employees are facing the holiday season with the task of filling out an extensive skills assessment survey, provided by a New York consulting firm, and wondering who will be next to go.

"It's just like sitting here in the dark waiting for the ax to fall," said an employee, who said the company had not given workers adequate opportunity to retrain in the last few years. "They haven't even told us what we can do in the meantime to save our jobs."

Mr. Blake said that will depend on the skills assessments, as well as employees' past performance and evaluations from managers. He said the decision to retool the information systems division was only made in mid-November, and employees were notified as soon as possible.

As for retraining, "we're going to give people a chance to develop skills, but we have a very short time frame," said Dan Hale, an executive vice president who oversees information systems, among other areas.

Mr. Blake added that not all the skills of his employees are interchangeable with what's needed for the future. "That doesn't mean they can't make the transition. Some can and some can't," he said.

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