Last year, the management team of Image Dynamics Inc., a Baltimore advertising and public relations firm, began to see harbingers of a more austere 1990.
One sign: declining revenues for advertising and public relations firms in New England and New York, recalls Phyllis Brotman, Image Dynamics' chief executive officer. Also, trade publications were full of gloomy financial predictions, and it appeared that many companies were seriously weighing cuts in their 1990 ad budgets.
Mrs. Brotman and the company's other four top managers decided labor reductions were in order.
That goal was accomplished in two ways: by not rehiring for positions that came vacant and by laying off two people. That two-part strategy, implemented during the last half of 1989 and the first part of this year, resulted in a loss of five people.
Positions eliminated included media researcher, account executive and writer. The two employees who were laid off were given financial settlements and allowed to use Image Dynamic's office while they conducted job searches.
"We also cut back internal expenses for 1990 and have met our budget to the penny," Mrs. Brotman says. "It's prevented us from having mass layoffs, at one time in 1990, and it's prevented us from having to go to the bank for more money.
"We decided that we wanted to leave 1989 having given our raises and our bonuses and we achieved both. We have been able to give raises in 1990 and will also give bonuses at the end of the year."
Mrs. Brotman estimates that seven to eight workers might have been laid off earlier this year if her business hadn't already had a labor-reduction plan.
Image Dynamics' 26 remaining employees have felt the consequences of the staff reduction. They're handling larger work loads than in 1989, they're staying later, and they're being more accountable to their time sheets. "It has made us work harder, I will tell you that," Mrs. Brotman says.
By anticipating changes in its economic environment and making adjustments, Image Dynamics has remained fiscally healthy while its 30 clients cope with a sluggish economy.
Mrs. Brotman says she didn't have a precise handle on the savings her firm realized by cutting labor costs.
She has some advice for executives contemplating cutting workers: "I think that if you're faced with the possibility of layoffs, to handle them as cautiously as possible and as professionally as possible, and if you're really sorry, show it. You learn it's not a disgrace to make your company stronger."