Galaxy looks for ways to cut costs

China Galaxy Securities Co., one of the country's largest brokerages, is looking at ways to cut costs and may lay off more employees even after shedding about 2,000 workers this year.

Only 122 companies went public in the first seven months of the year, about one-third fewer than the figure for the same period last year, data from the securities regulator shows. At the same time, the country's stock markets have been weak in general all year.

The bearish market has caused belt-tightening at Galaxy Securities. A client manager said that on December 4 its Beijing headquarters required employees to fill out a questionnaire about their expectations for compensation. Employees were asked whether they favor equal or merit-based payments, and whether they prefer a reduction in base salary or performance-based rewards.

The questionnaire was an attempt to research ways to adjust the firm's compensation structure, the client manager said.

The brokerage has been cutting staff since the beginning of the year, he said. "The downsizing is concentrated in the brokerage division, especially in the sales office."

About 2,000 employees have voluntarily left or been let go this year, he said. This is in sharp contrast to the firm's ambitious expansion during the latter half of 2010 and the early part of 2011, when it aimed to staff each sales office with up to 100 client managers.

The size of the workforce now was about 60 percent of the 2011 peak, the client manager said.

Sources at the company said it was likely to set a ceiling for each sales office's combined salaries and let the employees determine how to divide the money.

Several Galaxy's employees said there was little doubt that each office's payment ceiling would be cut significantly given the weak stock market.

Unless all sales agents accepted an across-the-board pay cut or some quit, the firm would need to lay off some workers to sustain reasonable salary levels for the others, a mid-level manager said. Layoff decisions would be made based on rank and performance, he said.