Aetna Announces Layoffs and Real Estate Reductions

Aetna today announced that it expects to incur a fourth-quarter 2009 charge of approximately $60 million to $65 million, after tax.¹ This charge is due to the previously announced and completed reduction of approximately 625 positions and real estate consolidation that together are expected to result in a charge of approximately $40 million, after tax, and a similarly sized workforce reduction to be completed by the end of the first quarter of 2010 that is expected to result in a charge of approximately $20 million to $25 million, after tax.

These actions relate to Aetna’s previously announced plan to reduce its workforce based upon the company’s membership outlook for 2010 and in preparation for the impact that health care reform and regulatory changes may have on Aetna’s business. Once the company completes the additional job reductions in the first quarter of 2010, Aetna will have approximately 34,300 employees. Employees affected by the first quarter 2010 job reductions will be notified at a future date to be determined. Eligible employees will receive severance benefits based on length of service as well as outplacement and other support programs. The company is not exiting any markets as a result of this announcement.

1 As Aetna believes this charge neither relates to the ordinary course of its business nor reflects underlying business performance, the company will reflect the charge as an “other item” and exclude it from 2009 operating earnings

Companies can save millions of dollars by managing their commercial real estate leases. Subleasing unused space is not the best solution and does not create a more positive cash position. Cambridge Consulting Group is an advocate for CFOs looking for creative real estate, financial, legal and tax advice. To learn how they are helping Fortune 500 companies please visit their website www.ccgiweb.com

Cost Savings on Office Space Has Some Drawbacks

By Sarah Needleman
Wall Street Journal

The office cubicle is shrinking, along with workers' sense of privacy.

Many employers are trimming the space allotted for each worker. The trend has accelerated during the recession as employers seek to cut costs and boost productivity.

"The majority of our clients are moving in the direction of reducing the amount of personal, or what we like to call 'me' space," says Tom Polucci, group vice president and director of interior design for HOK Group Inc., a global architecture and design firm.

He says new workstations designed by HOK average 48 square feet, down from 64 square feet about five years ago. Partitions between cubicles also are shrinking, to 4 feet high or less, from 5 feet high.

Rivals Stantec Inc., DEGW, Mancini Duffy and M. Arthur Gensler Jr. & Associates Inc. report similar findings. They say companies of varying sizes in multiple industries are reducing per-employee office space by as much as 50%, and their total footprint by as much as 25%.

Some companies are removing cubicle walls to create open floor plans. Others are eliminating assigned workspaces for employees who primarily work off campus or spend most of their time in meetings. At any given time, Gensler estimates that 60% of employees are away from their desks.

In September 2008, MetLife Inc. moved roughly 1,200 employees to a 300,000-square-foot office in Manhattan, 25% smaller than their previous 400,000-square-foot building in Long Island City, N.Y. Cubicles are 40 square feet, down from 64; offices are 100 square feet, down from 150. Common areas such as conference rooms and lounges increased by about 20%, and roughly 300 employees no longer have assigned desks. "We'll find them a place to work and get connected," says John Vazquez, the insurer's vice president of corporate services.

With help from Gensler, MetLife sought to make the smaller workspaces more useful. Mehmet Ozpay, a MetLife assistant vice president, says his new 100-square-foot office feels roomier than his old space because it offers more storage and has glass walls.

"It promotes more interaction," Mr. Ozpay says, adding that mostly solid panels had blocked views in or out of his old office. "If [co-workers] see that you're not immersed in a conference call, they can walk in or make a hand signal to ask if you're busy."

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CFO Best Practice Sponsor:Unused or under-utilized Real Estate can be a tremendous drain on cash positions and profits for comapnies and institutions. CFOs have options beyond subleasing. A Negotiated lease buyout has saved financial institutions millions of dollars. For more information please go to www.commercialleaseterminations.com