The current recession has almost every company in a state of red alert, cutting costs across the board, from canceling the year-end bonuses to purchasing cheaper toilet paper for office bathrooms. No expense is being spared.

However, the employee has been the most unfortunate victim of the recession. With unemployment at its highest rate in a quarter-century, tens of thousands of workers have found themselves in the cross-hairs of cost-cutting, and thousands more are wary of being next on the chopping block.

“Everybody is so fearful that companies are thinking, ‘What can we hang on to and what should we liquidate?’ ” Martin N. Baily, chairman of the Council of Economic Advisers under President Clinton told the New York Times recently. “A lot of the reduction in employment is businesses deciding to close down operations or get out of a certain line of activity.”

Scary stuff to think about, especially if your company just ordered a big supply of pink slip paper from the local Staples. But more and more experts are warning companies to tread carefully when taking the slash-and-burn approach to controlling costs, and think about the value proposition of what they’re doing. Sacking a bunch of employees may look good to the bottom line, but if it ultimately undermines the fundamental value proposition to customers, that company’s reputation could suffer a fatal blow.

Cutting costs is nothing new for companies, but most want to do it without sacrificing results of their products or services. The SSO idea is a fairly mainstream offering to companies that are looking to trim their budgets. The range of cutbacks can swing from creative to downright kooky. Here are a few:

▪ Employees at Microsoft won’t have to worry about ants at the company picnic, because there won’t be any company picnic. The software maker is cutting the fat and fried chicken out of its budget, canceling its annual summer picnic for the Seattle-area, which includes about 41,000 workers. That’s a lot of potato salad.

▪ At SRS Inc., employees have been recruited to be cost-cutting cops. SRS, a FEMA contractor, enlisted the help of its workers as expense monitors, rewarding individuals based on their efforts to help the company save money. One coordinator centralized office supplies ordering for SRS’s five offices through Staples, making ordering more efficient and improving the bottom line.

▪ An Australian television station has really taken a fanatical stand, downgrading the staff’s free luxury coffee to the bargain-basement Nescafe brand.

▪ Air travel is down around the world for the ninth consecutive month, according to the latest industry statistics, and business travel is one of the main culprits. With the economy in the tank, companies are cutting costs and staying at the office, choosing conference calls and virtual event solutions. As the economy sags, many events marketers are adding virtual events to their calendar. ON24 Inc., a supplier of webcasting and virtual-event solutions, recently released the results of an online survey it conducted of more than 300 enterprise business executives about their plans to attend or host live trade shows, conventions, and sales training seminars in 2009 versus their use of virtual events. Every metric from the survey showed that companies are embracing virtual events over travel, which is more bad news for the airline business.

▪ Where all the money goes is a mystery for some companies, so many are investing in software that counts every penny. Ariba, for example, sells software that helps companies track where they spend money, even when thousands of people in the company are making purchases. The Ariba software consolidates information into one place, so it becomes clear that instead of using seven different suppliers for paper, the company could use just one. Then Ariba sets up a reverse auction for suppliers to bid for business. That should leave the boss shouting, Ariba! Ariba!

▪ Even one of the most extravagant spenders on employee perks, Google, is cutting back, canceling afternoon tea at its New York office. Egads! What would the Queen think? For much of its history, Google spent money like drunken techies, hiring thousands and dishing out generous perks, including three free meals a day, free doctors, ski trips, laundry facilities, and subsidized personal trainers. While the company has vowed to keep the Google culture alive, it predicts that belt-tightening will continue as revenue growth continues to slide.