To employees, the scene may look like something out of a "Dilbert" comic strip managers taking away the free coffee and newspaper subscriptions or standing over the photocopier counting color copies. But a lot of companies are trying anything to save money so they can avoid layoffs.
Although the economy is starting to slow, the job market is still tight with the unemployment rate near its 30-year low. And with lower interest rates looking likely early next year, many companies are trying to hold on to their employees in hopes that the economy will improve by midyear.
NBC asked division heads to cut back newspaper subscriptions and delay holiday parties until after the start of the new year.
Hewlett-Packard has put off employee raises for at least three months and declared no bonuses for its top executives.
First Union has asked employees to limit the number of color copies they make and restricted first-class travel to redeye flights.
Charles Schwab will cut salaries for senior executives in January and February and told the rank-and-file that bonuses would be smaller for the first quarter. The brokerage firm also is rationing travel and entertainment dollars and reviewing advertising contracts.
"We want to do everything possible to produce reasonable business results in the face of adversity and maintain our talented work force to lead us forward when the cyclical recovery process begins," Schwab officials wrote in a memo to employees.
Of course, there are firms that are in a position in which they have no choice but to cut costs and lay off workers. And if the economy sinks into a recession next year, these penny-pinching efforts wont be enough for some companies to avoid layoffs.
But so far, drastic measures largely have been confined to troubled companies or specific industries such as the auto industry that are the first to feel the effects of a downturn in the business cycle.
"People have not yet, in many cases, responded to this fairly quick onset of the decline," said Martin Regalia, an economist for the U.S. Chamber of Commerce. "They are a little hesitant to trim the labor staff because if things pick up, as people are anticipating, around the middle of the year, they wont have the ability to hire these people back."
[back to top]