Companies slash salaries instead of staff

Challenger, Gray and Christmas, Inc. – A new survey by Challenger, Gray and Christmas, Inc. reveals that cost-containment remains the primary objective for many companies. Over 86 percent of respondents surveyed in May initiated cost-cutting measures. The highest number of measures taken was 13. A very small percentage initiated only one. Most initiated an average of five.

The percentage of employers making permanent cuts fell from 56 percent in January to 43 percent in the new survey. According to the release, part of this decline may be attributed to the fact that companies have already cut to the bone, while other companies may be avoiding widespread layoffs knowing that a recovery means recruiting and training new workers.

“This may be why we have seen an increase in the number of companies cutting salaries and other perks. It is a lot easier to restore compensation and benefits than it is to re-hire and re-train workers when the economy improves,” said John A. Challenger, chief executive officer of Challenger, Gray & Christmas.

ECONOMIC SURVEY RESULTS

June 1, 2009

Has your company had to cut costs in light of the current economic situation?

January May
Yes 91.8% 85.7%
No 8.2% 14.3%

What measures has your company taken to reduce costs?

January May
Reduced Travel Expenses 66.7% 66.7%
Hiring Freeze/Reduction 57.8% 61.9%
Permanent Layoffs 55.6% 42.9%
Cancelled Employee Holiday Party 32.0% 9.5%
Other 31.0% 14.3%
Reduced Or Eliminated Other Perks 29.0% 38.1%
Salary Freeze/Reduction 27.2% 52.4%
Reduced Year-End Bonus 26.7% 14.3%
Cut Workers' Hours 24.4% 28.6%
Eliminated Year-End Bonus 22.2% 26.0%
Temporary Layoffs 15.6% 19.0%
Cancelled Customer Holiday Party 11.0% 0.0%
Cutback Tuition Reimbursement 10.8% 23.8%
Reduced Or Eliminated Matching Contributions To Employees 401(k) Plans 11.0% 19.0%
Forced Vacation 8.9% 9.5%
Four-Day Work Weeks 7.0% 4.8%
Instituted Furlough Program 6.7% 23.8%
Cut Office Space Through Increased Telecommuting 6.7% 4.8%

Source: Challenger, Gray & Christmas, Inc. ©

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