Soundview Executive Book Summaries

Creative Cost Cutting
December 29, 2008, 11:09 PM
Filed under: Economics | Tags: ,

In a New York Times article titled “More Companies Are Cutting Labor Costs Without Layoffs” in the business section on Dec. 21, Matt Richtel wrote about a number of initiatives that companies are taking to stave off thinning their workforces while still staying afloat during the recession.


I applaud these efforts, many of which are true out of the box thinking. Richtel writes of four-day workweeks, flexible work schedules, furloughs (voluntary or enforced), wage freezes, unpaid vacations and pension cuts—though many of those options don’t sound grand, I’m sure all of you can agree that any of them sound like a walk in the park compared to a layoff. Specific company examples from the article are as follows: Cisco—four-day year-end shutdown; Dell—extended unpaid holiday; Honda—voluntary unpaid vacation time; Motorola—salary cuts; Nevada casinos—four-day workweek; and The Seattle Times—a week unpaid furlough.


Companies are trying to remain positive. Richtel writes, “At the Pretech Corporation, a concrete manufacturer in Kansas City, Kan., that has not had a layoff in 15 years, part of the rationale is pride. To keep the perfect track record, the company has cut overtime, traded a $5,000 holiday party for an employee-only barbecue lunch, and trimmed its pipe-making operation to four days from five, which allows it to save substantially on heating and electrical costs. ‘We’re optimistic about the future,’ [the company’s co-owner, Bob Bundschuh] said, adding that he thought things could turn around in six months.”


Here’s hoping it does turn around for all of us in six months.


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