Off the payroll, but still smiling

Arlene Hankins hasn't shown up for work this month. But she's still getting paid - and she's helping her employer save money. A 727 pilot with 10 years experience at Delta, Ms. Hankins is among 330 pilots participating in the airline's cost-cutting plan that pays them for 55 hours of work.

How does that save money? Normally, pilots who aren't scheduled to fly during a month are paid for 70 hours of work - but must be on call to fly on short notice. Under Delta's voluntary program, rolled out as a post-9/11 cost-cutting measure, pilots receive less than a normal reserve wage, but are totally free to do whatever they want. Delta saves money; participating pilots get, in essence, a reduced-pay vacation.

"I jumped at the chance," says Hankins, an Atlanta-based mother of three young children who is using the time to spend with her family, and who is saving money by not having a baby-sitter on call as she normally does during a reserve month.

In one form or another, what's happening at Delta is playing out at workplaces across the country as employers search for creative ways to try to make cost-cutting less painful during rough economic times.

One of the most popular ways of doing that has been to reduce employees' work hours, often by asking them to take a vacation - either paid or unpaid, depending on a company's financial circumstances.

"I'm advising companies that it's an excellent idea," says Bruce Katcher, president of The Discovery Group, a Boston-based consulting firm. "The advantage for the organization is that you still keep people around for when business turns around. And you're telling employees that you still want them to be a vital part of your organization, that you're committed to them."

The manufacturing industry is no stranger to work slowdowns and subsequent cuts in employees' workweeks. But experts say this recession marks the first time that a wide variety of businesses, both large and small, and from many different sectors of the economy, have used employees' time as a cost-cutting tool.

At the high-tech giant Hewlett Packard, for example, employees were asked last April to voluntarily take an additional six days of paid vacation time off before the end of the fiscal year in October. In June, they were asked to voluntarily forfeit some earned vacation time, take a small pay cut, or do a combination of the two through the end of the fiscal year. And in December, HP closed all of its offices for a week at Christmas, which included three days off with no pay.

"We looked at a number of ways of handling the circumstances we were in, which was a short-term situation," says Paul Jemison, HP's director of global compensation and benefits. "This is one of the most painless ways of [cutting costs]. Given what was going on in the economic environment, we thought it was a great solution."

Employees apparently agreed. According to HP, some 95 percent of its workforce joined in the June cost-cutting measure, saving the firm some $130 million. The other measures also saved an undisclosed sum of money on two fronts: Closing saved HP the cost of keeping offices open. And asking employees to take paid vacation time - instead of rolling it into another year - helped in accounting terms because paid vacation is a funded liability that carries over from year to year on the company's books.

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