Great-West Life cuts 'a big hit for all at once' in Winnipeg

Great-West Lifeco plans to shed 450 jobs in Winnipeg as part of a company-wide restructuring that will reduce its workforce by 1,500 workers in Canada.

450 jobs to go as part of 1,500-worker restructuring by insurance conglomerate

The impact of Great-West's job reductions will be felt most intensely in Winnipeg, where its head office is located. (John Woods/Canadian Press)

Great-West Lifeco plans to shed 450 jobs in Winnipeg as part of a company-wide restructuring that will reduce its workforce by 1,500 workers in Canada.

The Winnipeg-based insurance conglomerate announced Tuesday its intention to trim its workforce by approximately 13 per cent and focus more on self-service options for its customers in order to adapt to changing technology.

"To better understand and respond to the changing needs and behaviours of our customers, we've created a new strategic customer marketing function to support our group customer and individual customer business units. This new function is tasked with delivering better customer outcomes through digital services, innovation and data analytics," CEO Paul Mahon told reporters during a morning conference call.

"We have already been investing more in these areas and are getting good traction with our customers. Not only are customers demanding greater digital and mobile access to financial services, they're becoming increasingly cost-sensitive. To continue to invest and remain competitive, we must be vigilant in managing our cost base."

Mahon said this move "comes with difficult decisions" that will include reducing Great-West's temporary workforce, voluntary retirements and eliminating positions.

"These are difficult but necessary decisions that we are not taking lightly," Mahon said. "We are committed to treating all those affected fairly and respectfully, consistent with our values." 

The changes will  take place over the next two years, Great-West later said in a tweet from its corporate account. "We anticipate most workforce reductions will occur by the fall of 2017," the company added.

Several workers approached outside Great-West's campus on Colony Street declined comment, other than to say staff meetings are being held today.

Competitive forces increasing

The cost-cutting measures are not a surprise because Great-West had divulged plans to transform its business, said Paul Holden, an analyst at CIBC World Markets in Toronto.

"It's certainly something we're seeing across the financial services spectrum with employment reductions coming at the same time as investments in new technology as companies look at streamlining processes and taking cost out of the system," Holden said in a telephone interview.

"I think the real message to me, this is again across the financial services spectrum — banking, insurance, wealth management — is that competitive forces are increasing on all of these businesses, so these companies, in order to maintain competitiveness, have to think about doing business in different ways, reducing expenses to be price-competitive and just being more customer-centric."

The impact of Great-West's reductions will be felt most intensely in Winnipeg, which has relatively few head offices and is also bracing for layoffs at Manitoba Hydro, another large employer with a skilled workforce.

Great-West is a major presence in Winnipeg, said University of Manitoba economics Prof. Fletcher Baragar. 

"Executives, senior management of GWL are very prominent in a lot of organizations within the city, within the province, and as a financial centre, its presence in Winnipeg does establish a financial centre, an insurance centre — that sector of the financial economy that has been increasingly important over the last 20 or 30 years," he said, calling a 450-job reduction "a big hit for all at once."

It's not like they're going to easily move to another corporation, because there are just not that many other head offices to have people coming and going at- Fletcher Baragar, economics professor

​Baragar said while Great-West employs a wide range of workers, the most highly skilled jobs may be difficult to replace.

"There would be a lot of senior management because its head office is here in Winnipeg, a lot of the upper-level jobs and research jobs or market analysis jobs, analytics jobs would be located here in Winnipeg. Those are highly skilled, highly trained and of course, highly paid jobs and fairly stable jobs," he said.

"As a result of corporate restructuring, if that restructuring involves economizing on the number of jobs there, it's not like they're going to easily move to another corporation, because there are just not that many other head offices to have people coming and going at, so those workers, if they don't' take early retirement, could consider leaving the city. It could be a real loss there."

Baragar also said while Manitoba's economy is stable, the optics of layoffs at Great-West and Hydro are negative.

The loss appears to have caught Winnipeg officials off guard. Mayor Brian Bowman's office declined to comment until the mayor speaks to Great-West. Officials with Economic Development Winnipeg declined requests for comment. Officials with the Winnipeg Chamber of Commerce were not immediately available for comment.

Manitoba Premier Brian Pallister said Great-West Life must do whatever it needs to in order to remain sustainable.

"It's not an easy thing to do, in the short term, for anyone to experience job loss. But you have to understand this is a company that has been employing tens of thousands of [Canadians] for a long time," the premier said following question period on Tuesday.

Great-West Life also announced plans to reduce its real-estate footprint. It's not clear if that will involve the sale of properties in Winnipeg.

Great-West Life cuts 'a big hit for all at once' in Winnipeg 2:10