Summer Break: A New Idea in Cost-Cutting

More companies are offering employees unpaid leave -- and some are even requiring them to take it

As the summer-vacation season gets under way, many employees in the U.S. are discovering an abundance of something that was scarce during the hyperspeed days of the recent boom: time off. Consider Adobe Systems in San Jose, Calif., where most members of the 3,000 person workforce will be goin' fishin' when the company closes shop the first week of July. Or Brady Corp. in Milwaukee, where 980 employees have an unexpected, if unpaid, nine days off this summer. Or Intel's Rio Rancho (N.M.) plant, where employees in some departments may elect to take two weeks of unpaid leave over the next few months.

It's no mystery why employees who until recently were putting in plenty of overtime are suddenly being encouraged to cut back. As the economy weakens, companies are looking for ways to pare costs. Shaving dollars off the payroll -- especially during the dog days of summer, when business slows anyway and employees might welcome a few extra days in the sun -- seems only logical.


  "It's easier for employees, especially those with children, to take time off" during those school's-out days of June, July, and August, says Chuck Mulloy, a spokesman for Intel. From now until October, several hundred employees in the company's sluggish flash-memory production unit outside Albuquerque are eligible to take up to 14 days' leave without pay. "We're getting some takers," Mulloy says.

At Brady Corp., a maker of bar-code and other labeling systems, the leave, for some at least, isn't voluntary. In April, the company, which has felt the effects of the slowdown in the telecommunications business, announced a "summer-hours program" that will require about 1,000 of its 3,200 employees to take nine days of unpaid time off by the end of August.

George Dampare, a Brady machine operator who typically worked 10 hours a week of overtime last summer, says the forced time off pinches him economically. "I saw my paycheck last week, and it was 'uh oh,'" he says. Still, Dampare feels lucky: He has a number of friends who are out of work. He also is looking forward to his furlough. An immigrant from Ghana, he is volunteering at a local Y to teach children about African culture.


  Veronica Gehl-Brugger, an executive assistant at Brady, didn't have to take days off but chose to. In fact, Gehl-Brugger is embarking on a three-month leave that will allow her to spend the summer tending to her nasturtiums, cheering on her grandchildren at their sports meets, and even having "supper on time for my husband and myself." Gehl-Brugger was one of about 550 Brady employees who took advantage of the company's offer of unpaid time off. "Maybe I'll can some tomatoes," Gehl-Brugger says. "Usually, I'm too tired."

Some companies are ushering the workforce out the door -- and then, like Adobe, locking it for a while. Network-computer maker Sun Microsystems will shut down most operations during the traditionally lazy week of the Fourth of July. At Sun, employees may use the time as paid or unpaid time off. At Adobe, the time must be taken as paid vacation. In addition to cutting energy and operations costs, companywide vacations give employers a "soft" savings in productivity, says Elaine Evans, a principal at management consultant Towers Perrin: Less time is lost to the problems that occur when a vacationing employee's work is handed over to someone unfamiliar with the job.

Other companies affected by the downturn have decided to maintain summertime policies they've had in place for years. At the New York office of Ogilvy Public Relations Worldwide, executives gave serious consideration to abandoning a summer-hours program that allows employees to "buy" six three-day weekends by working an extra hour for nine days. "What concerned us was the appearance that in difficult times, there was a portion of the workforce not here on Fridays," says Paul B. Hicks, managing director of the New York office. In the end, however, Ogilvy decided to stick with its policy, in part as a way to keep spirits high despite the gloomy economy.


  Not all companies are nudging their employees to bask in the summer sun. Indeed, some have responded to the downturn by asking for longer hours in the salt mines. At Relativity Technologies in Cary, N.C., there will be no early Friday closing for the company picnic this year (in fact, a date for the picnic hasn't even been scheduled). And unlike last year, the Friday before Memorial Day was a regular, not a shortened, workday. CEO Vivek Wadhwa is curtailing his staffers' leisure time in his determination to make the software startup profitable -- and IPO-worthy -- by September.

"It's going to be a tough summer," Wadhwa says. "We're going to be working an average of 50 to 60 hours a week." For his employees, at least, those nasturtiums will have to wait.

By Pamela Mendels in New York

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