Wednesday, January 28, 2009

Reader's Digest worldwide cuts back, imposes unpaid vacation

Employees of Reader's Digest Association, including its Canadian division, will be sharing a certain amount of pain as part of the company's "recession plan", according to a memorandum circulated to all staff by Mary Berner, the company's president and CEO. Not only are 8% of employees to be let go, but most who remain will be forced to take one week of unpaid vacation. The so-called "shutdown days" are a significant part of the company's strategy to meet its financial challenges, she said.

Referring to "negative trends" that started last summer, the memo said that print advertising was down sharply in fall and winter. The company anticipates the need to cut costs significantly beyond what it was anticipating in its fiscal 2009 budget.
  • About 8 per cent of 3,500 current full time positions are being eliminated. U.S. layoffs will be announced tomorrow; for international divisions by March 15;
  • All cash incentive programs will be suspended until further notice;
  • No merit increases will be given through the 2010 fiscal year;
  • U.S. operations will shut down for mandatory, unpaid vacation days that will total one week over the next year. Similar unpaid vacations will probably be imposed in international divisions, including Canada;
  • In the U.S., the company is suspending immediately its "matching" contributions to voluntary 401k plans (the equivalent of company-run RRSP plans in Canada). The plans will continue to operate, but only employees will make contributions;
  • Travel will be curtailed and what air travel is done will be economy class
"I am profoundly disappointed that the economy plunged just as RDA was in takeoff mode with its growth plans and that we have to say goodbye to friends and colleagues whose jobs are being eliminated," said Berner. "But it is our responsibility to deal with the reality that is in front of us, and I pledge to you that we will do just that. The Executive Committee and I are unified in the commitment to win despite the economic challenges, and I hope you will be too."


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