Charles Schwab Case Study

Summary

Wall Street brokerage firm Charles Schwab & Company has seen a growth rate

at over twenty percent each year. By 1998 the company had at least sixty five hundred

employees. Schwab has over six million investor accounts worldwide. Gomez Advisors,

a research firm, has ranked Schwab first in a number of key categories, including

customer confidence.

Analysis

Chief Executive, David Pottruck and Schwab are looking into ways to "trim fat"

off the firms bottom line. Both men have recognized that this is a priority. Both leaders

also understand that there are "high human costs" in downsizing. Both leaders know that

downsizing does make good economic sense. Schwab said that he will delay downsizing

the firm can adhere to five simple rules: long-term growth, Industry leadership, business

expansion, commitment to technology, commitment to change.

Recommendations

When a company such as Charles Schwab, becomes as large as it is, it is very

difficult to maintain long term growth without "cutting fat". Long term growth is one of

the five commitments Schwab is currently focused on. Those commitments are a priority

and goal to any Fortune Five Hundred Company. Striving to be the best is not as tough as

remaining the best in a corporate world of financial firms. An easy solution to cutting fat

without actually trimming would be to exercise a pay decrease without killing jobs. If

Schwab were to mandate pay decreases to all employees deemed non relevant or

employees who have seemed to get lost in the shuffle, Schwab would then be able to

keep good employees on staff and maintain what he has instead of possibly rehiring a

large workforce that he once laid off. The savings on the firm would be enormous and

morale would be at an all time high. Employees would seem to work harder if

management does not seem to overreact and start to layoff employees when the company

is still number one. The five certain criteria Schwab has laid out are the most