WASHINGTON -- Even as the recession cuts deeply into their revenue, some companies are opting to do the unconventional: They’re keeping all their employees and finding other ways to trim costs.
Their strategy isn’t about mercy. It’s built on the notion that layoffs bring high costs and hassles of their own.
Profits at Costco Wholesale Corp. are down 27 percent from a year ago, but the discount store has not laid anyone off. The only workers let go have been holiday seasonal hires.
To trim costs, Costco imposed a hiring freeze at its corporate offices. But the company says it recognizes that labor remains its most valuable — if costliest — resource.
“We’re certainly sharpening our pencil everywhere we can,” said Bob Nelson, Costco’s vice president of financial planning and investor relations. Nelson couldn’t recall any layoffs at Costco since the closing of some stores in the 1980s.
Clearly, companies that have avoided layoffs are the exception, not the rule. Employers have cut 5.1 million jobs since the recession began, including 663,000 last month alone. Economists say it’s a wise move for some companies to keep their workers and cut elsewhere.
“If you overshoot on the downside and lay off workers, it puts the company at a disadvantage when the economy comes back to life,” said Sean Snaith, economics professor at the University of Central Florida.
The other steps companies are taking are capping the number of hours employees can work, cutting or freezing pay and suspending matching 401(k) payments.