HP trims costs with voluntary pay cuts and vacations

To cut costs, Hewlett-Packard Co. (HP) is asking its 88,500 employees worldwide to volunteer to take either eight-vacation days off without pay or a 10 per cent pay cut. Alternatively, employees may opt to take both four-vacation days without pay and a five per cent pay cut.

The company last week gave its employees the parameters for the voluntary measures, which were first announced in April along with an earnings warning for its second fiscal quarter. Employees have until Friday to decide what to do.

About 23,000 of HP’s employees have decided to take a pay cut or vacation time to date, said an HP spokeswoman, calling it a good response so far.

“If we don’t get a good response to the short-term measures, we may make them mandatory,” she said.

The voluntary program is part of a series of short-term measures HP is undertaking to stem the flow of costs while the company recovers from the market’s wounds inflicted by a faltering economy. Other cost-saving plans under consideration include restrictions on corporate travel, company cars and cell phone expenses, the spokeswoman said.

The company is considering further job cuts among longer-term plans, cuts to be based on performance measures and needed skill sets, the spokeswoman said. Future job cuts will not be tied to the success of voluntary pay cuts and vacations, she said. The company announced a cut of about 1,770 marketing positions in January and 3,000 more management jobs in April.

HP’s revenue of US$11.6 billion for the quarter ending April 30 was four per cent lower than the same quarter last year, and its $0.18 pro forma earnings per share was 58 percent lower than the second quarter of 2000.

HP, in Palo Alto, Calif., can be reached at http://www.hp.com/.