The future has already landed at Skyservice Airlines Inc., which has cancelled snacks at internal meetings, restricted BlackBerry use, lowered office thermostats and scrapped company-paid parties in favour of potlucks.
In an internal memo, Canada's second-largest charter airline has told employees that after recently issuing layoff notices, it must also institute a hiring freeze and reduce some salaries, but insists those traditional cost-cutting measures don't go far enough.
Nothing is sacred. Restrictions have been placed on printing, photocopying and long-distance calls. The coffee machine is no longer free. Even the company-sponsored golf tournament is toast.
Skyservice's plight foreshadows a cost-cutting future at other companies starting to tighten their belts amid a deteriorating economy and deepening global financial crisis.
These cuts come in sharp contrast to wide-ranging perks during years of good times.
Louis Vuitton, owned by fashion powerhouse LVMH, is snipping its travel and office supply expenses. Some 2009 store openings may be postponed because developers are having second thoughts.
The company is also scaling back on marketing event costs. That means that launch parties for its upcoming U.S. store openings will consist of cocktails only (LVMH's Moët Hennessy champagne, of course). In the past, the fashion house would host a lavish dinner at a chic restaurant with live entertainment.
“It's not just the cost,” said Daniel Lalonde, who heads Louis Vuitton's North American division in New York. “It's tough out there. We don't want to project an image of ‘huge grandiose' in a tough environment.”
Some companies are directly appealing to employees to curb costs. Montreal-based Kangaroo Media Inc., for example, is asking staff to “please apply, at every step of your job, an element of judgment,” said president Robert Mimeault. “Our staff knows best about the day-to-day. So we're asking them to come up with ways together to optimize expenses.”
Employees at Kangaroo Media, which supplies hand-held video devices for sporting events, have figured out how to send one person on a business trip instead of two. They are also planning a Christmas party that may involve a potluck meal or decorating a warehouse instead of using a fancy hotel.
Among financial services firms, Canaccord Capital Inc. is slashing discretionary spending on travel, entertainment, hiring and salaries. It's also slowing spending on new upgrades for computers, BlackBerrys and other technology. AGF Management Ltd. has cut compensation costs on performance-based payouts, while DundeeWealth Inc. has been reducing staff expenses.
The effects of the global financial crisis are trickling across Toronto's financial district. At restaurants Canoe and Jump, two hot spots for Bay Street deal makers, sentiment has shifted to caution in recent weeks.
Cancellations are more common and meals are shorter, said Jerrett Young, manager of operations for both restaurants. “On the wine and beverage side of things, people are definitely more cost conscious, for sure,” he said. “There's an air of, ‘Yes, we're out for lunch, but we also need to be in and out in a timely manner so we can get back to our desks.' ”
Aon Consulting is seeing companies delay plans ranging from new hiring to investments in technology, said Susan Hunter, an adviser in Aon's human capital consulting practice.
Back at Skyservice, the Toronto-based carrier is going through every page in its playbook to battle high jet fuel prices and the economic turmoil that has dampened travel demand.
“The company is not in a position to fund the annual Christmas/Holiday parties,” Skyservice president Robert Giguere and other executives said in an internal memo encouraging employees to organize their own potluck meals, golf tournaments, barbecues and other social gatherings formerly sponsored by the company.
On Oct. 31, employee wages will be frozen and some salaries reduced. And effective immediately, only authorized workers are allowed to adjust thermostats, computer printers are reconfigured for double-sided printing and photocopiers require user codes. As well, user-pay coffee is in and the office supplies room is closed.
The four-page Skyservice memo did deliver a bit of good news, confirming that “Jeans Fridays are here to stay.”
© The Globe and Mail
