Pacific Century Financial Corp. is struggling to bolster employee morale during its companywide cost-cutting project, executives said.
Employees of the $15 billion-asset bank have been on an emotional roller coaster since 12 consultants arrived in February from Aston Associates, a Greenwich, Conn.-based corporate reengineering firm, said Richard J. Dahl, the president and chief operating officer of Pacific Century.
"Anxiety and uncertainty is unfortunately a part of this, and we're all feeling it," said Mr. Dahl, who is spearheading the redesign. "I'd be totally unrealistic if I said everything is fine."
The "New Era" program is expected to pare $25 million from annual expenses by 2000.
One Pacific Century manager, who asked to remain anonymous, said some parts of the bank had begun to rely on outsourcing to cut costs. In his department, he said, four people have retired and will not be replaced.
"My people are getting worried that they are going to lose their jobs," the manager said.
Experts said the challenges could be especially tough for Honolulu-based Pacific Century, whose employees have watched the bank grapple with seven years of sluggish local economic conditions.
"There's a good reason for bad morale," said Charles B. Wendel, the president of Financial Institutions Consulting in New York. "It's also a good time for competitors to focus on Pacific Century's customers, because the bank is so focused on internal things."
The anxiety and uncertainty has sparked several rumors, Mr. Dahl said. Word circulated that staff members and consultants working on the project had moved beds into their offices because they planned "to work round the clock and never go home," he said. Another rumor said the redesign teams papered over the windows of their offices for secrecy.
Both were false, Mr. Dahl said. "Speculation runs rampant at a time like this, and it can spoil things," he said.
Pacific Century has assigned 20 bank employees to work with the consultants from Aston, and this should curb some of the concern, Mr. Dahl said.
"This helps show that this is not Aston's redesign, it is ours," he said.
Keeping the lines of communication open is also important. Management plans frequent newsletters to update employees on the process. More important, the six members of the steering committee in charge of the redesign are "talking to everybody in the company face-to-face," Mr. Dahl said.
"The key is making sure everybody understands why we need to do this," Mr. Dahl said. "We think we can keep morale high, despite any anxiety."
Pacific Century, the parent company of Bank of Hawaii, began the cost- cutting campaign in February 1998. The banking company has closed 27 branches and cut 250 of the 400 positions slated for elimination.
"Our financial performance has been suboptimal for the past few years," Mr. Dahl said. "We can't rely on old processes because we'll just achieve the same results we did before."
