Surely those quirky, regional-accent-led adverts starring Paul Whitehouse would have been enough to avert the need for job cuts. No? But he’s so funny! Alas, one half of Harry and Paul hasn’t stopped Aviva from announcing that 2,000 people from the UK, Europe and Asia will lose their jobs in the next six months, with redundancy packages altered in favour of the firm, too.
The new packages, which will come into effect from May this year, will reduce the amount of redundancy pay from 104 weeks to just 78. Chief exec Mark Wilson said: ‘I know this is difficult news for our employees, but these changes are essential if we are to remain competitive. Aviva needs to become a more efficient and agile organisation to unlock its potential.’ Hardly soothing words, but how else do you get the ball rolling on plans to reduce costs by £400m?
The news comes after a period of turmoil for the firm. In March, it announced a post-tax loss of £3bn in its full-year results, and also revealed that shareholders would get 19p per share for their dividend, a drop of more than a quarter compared with 26p last year. Wilson says that the losses were caused by write-downs related to the sell-off of its US operation.
Still, whatever the reasons, both shareholder and employees have now been stung by the tough time the firm is going through. And the dividend news wasn’t the first time the shareholders have got shirty recently. Former CEO Andrew Moss (whom Wilson only recently succeeded) found himself the subject of a shareholder uprising last year – investors were miffed at his level of pay versus what they perceived to be poor performance.
On the upside however, Aviva has actually made £275m of the savings it has been trying to make, meaning that perhaps the worst is over as far as cost cutting is concerned. Whether or not this plan will revive the firm’s fortunes is simply a question of time…