Cuts in incentive programs trigger downsizing at ITAGroup
Wednesday, February 18, 2009 3:06 PM
ITAGroup Inc. has cut its work force by 5 percent in response to a severe slowdown in company incentive programs.
The layoffs were made yesterday, two weeks after Wells Fargo & Co., one of ITA's clients, canceled a trip to Las Vegas for top employees after facing serious criticism from Washington lawmakers, who called the trip a luxury.
Company Chairman Steve Chapman said ITA has experienced a downturn in business in the past few weeks after Congress began criticizing such trips. Chapman said the trips serve to improve productivity by rewarding employees. Several businesses, especially banks that have received money through the government's Troubled Asset Relief Program, have canceled all plans for employee incentive trips this year, including Wells Fargo and Bank of America Corp.
"Our company's been in business for 45 years with a primary focus on marketing initiatives to help improve productivity and increase levels of performance, and all of a sudden, members of Congress and the Treasury have labeled bona fide incentive programs as junkets and luxury travel," Chapman said.
ITAGroup has joined a consortium of companies within its industry and the hospitality industry to try to educate lawmakers on the importance of the incentive program business. Two top executives from ITAGroup are in Washington, D.C., this week, and Chapman said he was on a conference call with Sen. Charles Grassley last week.
ITA's layoffs are the second time in the company's history it has had to downsize, Chapman said, adding that during a recession, it used to gain business as companies looked to increase market share through these programs.
"I have never in my history of being in this business had to worry about our government as an adversary to our business," Chapman said.
The biggest number of cuts was in ITA's event management business. ITA has about 400 employees. Chapman would not specify the exact number of layoffs or whether those employees would receive severance packages.
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