05/12/2008

Joe Macri, a senior marketing manager at Microsoft, holds regular meetings with his European management team from his office in Dublin. Until a few months ago, they used to meet at Amsterdam airport, the easiest venue for face-to-face meetings. Now they get together for a handshake and back-slap just once or twice a year.

All other meetings are "virtual", using a multi-camera system that allows everyone in the meeting to see everyone else at the same time.

"Now, if anyone falls asleep - and it has been known in past phone conferences - we can all see who it is," says Mr Macri, Europe general manager for business marketing.

"It saves money, increases productivity and reduces our carbon footprint as a company," he says. "And I no longer have to get up at some god-awful hour to catch my flight to the Netherlands."

This is just one way in which companies are economising during the downturn. Where once managers would have been sizing up headcounts from the first hint of recession, now there is evidence - even among the string of job cuts announced in the past two weeks - that companies are trying to hold on to employees in the knowledge that competition for good people will be fiercer than ever in the upturn.

So what practical choices are available to managers in a recession, short of cutting jobs? One option is to investigate possibilities for flexible working.

Some companies already use a proportion of temporary and contract workers. Most of these employees understand that they are in the vanguard of corporate job reductions since their work and pay reflects fluctuations in supply and demand more acutely than that of full-time staff.

BT, the UK telecommunications group, announced a week ago that it had cut 4,000 mainly temporary and contract jobs and planned to shed another 6,000 before the end of the financial year.

Within the contract market, however, the news was received with a sense of pragmatism. The Professional Contractors Group, representing more than 18,000 freelance workers in the UK, described the cutback as "real flexible labour at work in a downturn".

John Brazier, managing director of PCG, said: "BT's announcement is not good news for any contractor who may be affected by the cuts.

"However, when you choose to go freelance, you opt for the benefits, such as being your own boss, making more money and having the freedom and variety, as well as the pitfalls, which include less security and less certainty."

As John Philpott, chief economist at the Chartered Institute for Personnel and Development, points out, temporary staff usually bear the brunt of an economic downturn. "But contract staff will also be first in line to be hired when the economy eventually recovers since employers will at first be reluctant to recruit people on permanent contracts," he says.

Meanwhile, some companies are trying to use their full-time staff more flexibly. BT has some 14,500 employees who work solely from home and 80,000 who have the choice to work part of the time from home.

The company says that homeworking has increased productivity, reducing overheads and improving staff retention. "We can see the difference now at BT centre," says Bill Murphy, managing director of BT Business. "Mondays and Fridays are quiet but on Tuesdays, Wednesdays and Thursdays the building is packed. That's a classic example of people working elsewhere on Monday and Friday."

This has led to new challenges in management, he says. Employees need to be assessed on their output and the quality of their work rather than on time spent doing a job.

Work Wise UK, a not-for-profit organisation set up by the IT Forum Foundation, has calculated that the average cost of running a desk in a UK office is £7,000 a year. In central London it is something approaching £10,000 because of higher overheads.

"If you employ 100 people and can withdraw 20 desks in a 'hot-desking' arrangement, that's a saving of £140,000 a year," says Phil Flaxton, Work Wise chief executive.

Some start-ups eschew the fixed costs of offices altogether. David Lennan, managing director of Business HR, a consultancy without offices that employs 30 home-based consultants, says: "The business is visible through our website while our consultants are based all over the country, accessible through a reception number. We meet together a lot, often on clients' premises but also in hotels and coffee shops so everyone knows what is happening."

While the business is often consulted on alternative ways of working he has noticed an increase recently in clients seeking more information on redundancy procedures.

Interim managers, flexible workers by definition, are sometimes brought in to make the hard decisions in restructuring, including job cutting, admits Paul Botting, chairman of the Interim Management Association. "They bring an independence and objectivity to the workplace. An experienced interim will have worked in many different sectors and is familiar with the kind of restructuring that happens in a recession," he says.

Flexible working seems here to stay but there is little room for sentiment in the employment of contract and temporary staff. Wolfgang Clement, chairman of the Adecco Institute, a research body established by the Adecco staffing group, says that, while qualified employees remain in demand, temporary work prospects for semi-skilled workers are declining.

"Flexible labour markets help get over a crisis more quickly," he says. "But, in this kind of market, people shouldn't be in doubt that qualifications and skills are the best protection for the worker and the most reliable guarantees for job security."

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