Leave it to J.C. to make bad news look downright good

Digging through the pile of papers on my desk, I came across an e-mail from my friends at Challenger, Gray & Christmas Inc. that falls into the grey area of “well, I guess it might be good economic news.”

Seems that the percentage of employers cutting or freezing wages and salaries has nearly doubled since January. Yep, CG&C says that 52.4 percent of human resource executives surveyed during May said their companies had instituted salary cuts or freezes in an effort to cut costs. (That was up from 27.2 percent during January).

So how is this good news? Well, the cuts in salaries and benefits appear to be reducing the need to make permanent job cuts.

According to the survey, the percentage of employers making permanent cuts fell from 56 during January to 43 during May.

And if that’s not enough good bad news for you, in addition to the increased use of salary cuts, last month’s survey showed increases in the percentage of companies cutting workers’ hours, reducing or eliminating tuition reimbursement, instituting furlough programs for forced vacations, and making temporary layoffs.

What’s it all mean? Thankfully my buddy John A. Challenger has the remarkable ability to sum up this type of stuff in a clear and precise sentence or two.

“There are some signs that the economy has hit the bottom, but we are still a long way from seeing the light at the end of the tunnel,” he said. “Increased consumer and business confidence notwithstanding, until there is significant improvement in spending by these two camps, companies will remain in cost-cutting mode.”

Another tasty tidbit from the survey: Employers announcing job cuts have initiated more cost-cutting measures than employers that have not cut payrolls.

Once again, I’m overjoyed that Johnny is here to shed a bit of light on this finding and bring me out of the darkness.

“There is a perception out there that some companies have not made sufficient efforts to avoid layoffs by making cutbacks in other areas,” he said. “This perception is fueled, in part, by a handful of examples of companies announcing job cuts while, at the same time, rewarding top executives with large salaries, bonuses and extravagant perks.”

I was just about ready to incite an employee rebellion, but thankfully J.C. talked me down.

“However,” he said, “these examples represent the exception.”

Good. Nice to see that not all of the big suits’ hearts are completely petrified. Of course, I might have typed a bit too fast there, considering Johnny has this knack for yanking the proverbial carpet out from under me when I jump the gun.

“It would also be a mistake to assume that companies avoiding layoffs are doing so out of kindness,” he said. “While forging good will is certainly part of the decision for some companies, many have simply cut to the bone already or never fully ramped up after the last downturn. Other companies may have more workers than they need for current business levels but are reluctant to enact widespread layoffs, knowing that the recovery will mean recruiting and training all new workers.”

Which takes us back to the original good bad news, right J.C.?

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

So, is that it, or is there maybe a bit more to explain the thought process of the folks who wear the expensive suits and ties, and the ultra-shiny leather shoes? (C’mon, you didn’t think Johnny was completely tapped out yet, did you?)

“There are other positive benefits to certain cost-cutting initiatives, besides the job-saving aspects,” he said. “Companies that can manage their budgets while maintaining employee morale and productivity will have a leg up when an expansion begins. They will see lower turnover among disgruntled workers and be in a good position to recruit new talent.”

And all this should happen … when?

“There is no telling how long this recession will last,” J.C. said. “However, when it ends, the hiring could be fast and furious.”

In the interest of proper decorum, I’ll skip the opportunity to hit that softball straight out of the park and finish up with some cheesy B-movie analogy. But next time Johnny, I might not be so reserved.

Mike Boyd is editor of the Colorado Springs Business Journal. He can be reached at Mike.Boyd@csbj.com or 329-5206.