From copies to college, companies cut back
BOSTON (Reuters) - With the U.S. economy stumbling and credit harder to find, corporate America is pinching every penny it can -- from asking employees to cut back on copying documents to dropping education benefit programs.
Industries from financial services to airlines to automakers have cut tens of thousands of jobs this year as they struggle to return to profitability in the face of the sharpest economic slowdown in years. Concerns that the downturn could linger into next year has many top companies' managements digging around to save even more money.
Citigroup Inc (C.N), the largest U.S. bank, has cut 14,000 jobs so far this year as it reels from $58 billion in write-downs and credit losses. Now it is has started looking for more mundane ways to cut costs.
In a memo to the bank's institutional clients group dated August 15, the group's head, John Havens, asked employees to cut back their spending on everything from client entertainment to new BlackBerrys and ordered them to stop using color copies for internal presentations.
"Color presentations are unnecessary for internal purposes; therefore going forward color copying and printing should only be used for client presentations," Havens said in the memo. "Over time, we will be removing color copiers and printers from the locations where they are not essential for purposes of preparing client presentations."
Citigroup declined to comment further.
U.S. coffee shop chain Starbucks Corp (SBUX.O), which in July reported its first quarterly loss as a public company, has told U.S. executives at the vice president rank and higher that they will receive no raises next year, while lower-ranking workers will receive 2 percent or 3.5 percent pay hikes.
No. 3 U.S. automaker Chrysler LLC, controlled by private equity firm Cerberus Capital Management LP, in July suspended a program under which it helped non-union employees pay for college classes, as part of an effort to cut the cost of its white-collar staff. Larger rival Ford Motor Co (F.N) has mothballed a similar program.
GRIM RESIGNATION
While workers are clearly not going to be pleased by orders to curtail cab use or the closing of a company gym, the steady drumbeat of economic bad news -- including high energy prices, falling home values and rising corporate bankruptcies -- means many staffers will take cost-cutting with a sense of grim resignation, said a compensation expert.
"Most employees would rather their organizations cut those programs before they start letting people go," said Jason Kovac, practice leader for compensation at WorldatWork, a trade group for human resources professionals. "When you start to lose all the perks and you start to lose staff as well, that's when most employees go up in arms."
Companies that opt to cut back on more expensive benefits -- such as health club memberships and subsidized child care -- can also look for ways of offering less costly perks to soothe the sting, Kovac said.
For instance, a study by WorldatWork found that 42 percent of U.S. employers are now offering some workers the option of telecommuting, up from 30 percent last year. Given the surge in gasoline prices -- which now average $3.70 a gallon according to the Lundberg survey, off record highs but still 34 percent above last year's level -- the option of working from home even one day a week can help an employee with a long commute save hundreds of dollars a year.
Even solidly profitable companies are keeping a sharp eye on perks.
Web search giant Google Inc (GOOG.O), which often tops surveys on the best places to work thanks to its perks like "nap pods" and free meals, is keeping a sharp eye on the cost of its soft benefits.
"While we remain committed to providing Googlers with a great working environment, like any responsible company, we're going to do it as efficiently as possible," said Matt Furman, a Google spokesman.
(Additional reporting by Dan Wilchins and Ilaina Jonas in New York; Editing by Patrick Fitzgibbons, Dave Zimmerman)
