'Let me start by saying that I've not got it in for my firm, Merrill Lynch. Despite the terrible securities losses that have engulfed our firm these last 12 months, and the resulting job cuts and pressures which have come with this period of turmoil, I still believe in this firm. I believe that, despite a couple of missteps, CEO John Thain is the right man to lead us, and I remain confident that we will emerge from our troubles a better, more focused business.

I have to say, however, that the fact that Merrill imposed an (almost) across-the-board hiring freeze last week has got me worried. Whilst most of my colleagues are taking this initiative at face value, I wonder what the implications really are, and am concerned that the freeze itself is just a marker which firm executives are putting down to signal that there are much tougher times ahead.

By its own admission, our firm probably won't save much money by the imposition of a hiring freeze for the next 20 weeks (in a memo to staff last week Merrill acknowledged that 'the majority of the firm's hiring occurs during the first and second quarters of the year with the third and fourth quarters progressively tapering off'). So why, given that the cost savings will be relatively insignificant, has Merrill come out and imposed an official freeze now, especially when rivals like Morgan Stanley are signalling a very different message ? And why, given that Thain has said that he wishes to attract the very best to come to our firm (at all levels) so that we can be well positioned for the upturn, have we made it clear that we are closed for business on the hiring front ?

And how will this move affect our existing staff's morale ? Although we will still be able to make a case for strategic hires (if we are can bag an 'executive sponsor' and are prepared to trouble the firm's Management Committee), only the very brave and the very stupid will. The rest of us will simply get with the program and knuckle under. But this will undoubtedly put more staff under pressure - in my own relatively small department, for example, two staff were laid-off three months ago, and two more have recently left for rival firms. Our efforts to recruit replacements for the two who left under their own steam are now in tatters. All over the firm (expecting the retail brokerage unit), staff will now be expected to take on additional workloads. This, when added to the fact the many staff remain worried that they could still lose their jobs unless things pick up some time soon, and most feel that the likelihood of a decent bonus is receding by the day, understandably makes things tough on the morale front.

My own view is that things are probably a lot worse than they seem, and that this 20-week hiring freeze is just the tip of the iceberg. We are clearly in a situation where any form of cost-saving matters - recruitment costs, existing headcount costs, travel costs, salary raises, year-end bonus pay-outs, and maybe even a dividend cut. And the 20-week hiring freeze ? Somehow I doubt that it will stick at 20 weeks. I doubt that the floodgates will open come January 1st. My gut tells me that headcount levels will be reviewed again, and that it will remain difficult to obtain additional headcount throughout 2009 (except for strategic business areas, and unless there is a significant uptick in revenues).

I wanted to end this post on a positive note (as I intend to stick it out here and look forward to the time when we have resolved our problems and have returned to profitability), but I find that I can't close without having a moan. I don't begrudge the fact that John Thain, based on a formula used by Associated Press, came out the highest paid CEO among the S&P 500 companies last year ($83.1m - and he was only at the firm for some 19 working days last year). I'm also fairly relaxed that Thain has shelled out an estimated $50 - $80m to bring in his former Goldman colleague Thomas Montag as global head of sales and trading. But with every day that passes, I find it increasing difficult to live with the fact that former Merrill CEO Stan O'Neal walked off last October with an estimated exit package of $160m. We have written down some $51.8bn in assets in the last four quarters, posted cumulative losses of $17.47bn in the period, laid-off over 5,000 staff globally, and had to raise some $29.9bn in new capital. By any measure this is an unmitigated disaster, and yet O'Neal, the man then at the top who is ultimately responsible for these problems, is away playing golf, sitting on a fortune. Something is morally very wrong here'.

READER COMMENTS:

1. 'In my experience, when organisations resort to hiring freezes, it's usually much less about cost-savings and much more about senior management feeling that they are regaining control'.

2. 'A lot of people have pocketed a lot of money for getting it wrong. It's no wonder that firms are looking at bonus / incentive schemes to encourage staff to think about the organisation over the long-term'.

3. 'Shareholders should fire the lot of them. That sense of entitlement we gripe about in the poor is a thousand times worse with the wealthy'.

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