American Skandia is cutting 13 percent of its workforce and instituting other cost-cutting measures. The move represents about 150 jobs, primarily at the firm's Shelton, Connecticut offices. American Skandia anticipates annual savings in excess of $35 million.

The layoffs will come in a broad-based cut which spares certain areas of the business.

"We're cutting equally across the board, but we kept off the table the external sales force, new product development, and technology departments," said Timothy J. Klahs, vice president of investor relations.

American Skandia will be able to clear out office space resulting from the reduced staffing levels.

In addition, the firm is instituting wage reduction. Klahs was unable to specify to what extent paychecks will shrink but did say it the move will affect employees at all levels.

"We've really done across-the-board reductions in terms of compensation levels," said Klahs. "We have weighted them more heavily towards upper-level management, especially variable compensation."

American Skandia is also cutting travel and communications budgets but has not frozen expense accounts.

Given that the customer support area is subject to the cuts, how will this affect customer service?

"We've made great strides in automated customer service," explained Klahs. "We've spent quite a bit of money bringing in outside consultants and really performing well as far as benchmarks. We've really made the process much more efficient."

In the absence of layoffs, said Klahs, the customer service area may have been allowed to shrink naturally through attrition. The technology department, which has fostered the streamlining of customer service, is immune to staffing reductions.

The cost and effects of the measures will come to light over the next few months as American Skandia makes strategic decisions about how to institute layoffs. 

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