DBS Retrenchment

The current turmoil gave DBS an opportunity to fire expensive staffs that have been earning massive cash during the past 5 years. For a VP that may be earning approx$12000, they can actually replace them with fresh blood for half the cost at $6000. Even if the VP worked for 10 years and got a retrenchment package of $120,000, it would breakeven fast if you include bonus and further increments.

Before the crisis, financial institutions have been hiring without being really prudent about their pay package because getting the talent is more important. With SMU advertising that some graduates earning as much as a whooping $12000 a month, it shows that back then, things were already unrational. Does the monetary value really shows that the person's talent and work justify the EVA(Economic Value Add) that they bring to the business? I don't know. It is intangible. But I certainly think that a similar graduate that I can pay $6000 instead can do the job just as well.

I don't believe DBS is stupid just to use retrenchment because profits are falling. People have been critising their strategy. It just gave them an opportunity to rework their salary structure to a more decent pay range. Or is my reasoning wrong?