Comments on: 47% Pay Cut In Lieu of Further Layoffs

By: Dan McCarthy

Dan McCarthy — Sun, 22 Mar 2009 03:07:49 +0000

Lori –
Wow, 50% pay cuts? Dumb strategy. Either way, everyone’s going to suffer, but I’d rather take the layoffs.

By: Lori

Lori — Sat, 07 Mar 2009 23:47:32 +0000

I do not not agree that it is a good idea to cut salaries instead of jobs.

Don’t misunderstand, cutting jobs is painful and horrible, and I wish it could avoided. However, if a company is faced with a decision like this, by not cutting, they’re discouraging individual performance and recognition. What incentive does a top performer have to work hard if they know that they will get a pay cut and that their employer does now acknowledge that their performance is better than that of his/her peers? You cannot just make an assumption that all of your employees are fantastic, maybe if you’re a small company with 15 employees you can, but if we’re talking thousands, it is just a bad business decision that will encourage mediocrity and lack of progress. I think the only way this would be acceptable if you took a vote, and cut salaries for those employees that agreed to this.

Socialism is NOT a good thing. I’ve lived it as well as communism, and, trust me, it doesn’t help save jobs or people or make better healthcare. It is a fantastic ideal, but it doesn’t work in a large community because there are always those who try to take advantage of free rides. Don’t mistake socialism’s ugly face for comradery and good human nature.

By: kris

kris — Fri, 20 Feb 2009 20:59:24 +0000

This is a common thing happening now. Everyone I know, or practically everyone has had a 10-20% paycut. All industries. I really dont think the pay will be coming back up, not for a LONG time…

By: annmartina

annmartina — Thu, 19 Feb 2009 19:21:44 +0000

I would consider letting them temporarily cut my pay if I still was able to keep my medical insurance. My brother-in-law is unemployed and they’ve bought medical insurance because they are a family of five, but the premiums are killing them.

By: Alan

Alan — Thu, 19 Feb 2009 19:12:34 +0000

Lori,

I have a friend at Fed Ex and heard about the salary cuts. They went all the way up to the CEO level. I agree in principle that it is better to retain workers rather than cutting them loose, but there should be an incentive tied into the salary reduction such as the following:

A pay cut of 10% over the next 6 months. Then if the company can meet its financial incentives (must be realistic and bought into by all employees) over the next six months or one year period, then the employees should get back that 10% and maybe an additional 1% for the inconvenience.

You can structure it however you want. The goal is to get agreement from everyone as to the measurement of success and find a way to not only get everyone’s blessing, but get them to have a part in the financial incentive. Then if the company does not reach the goal, employees cannot say that Management is acting on their own to hold back or cut back more. It puts the pay for performance spin on the hopeful recovery of the company. The only other alternative would be to cut everyone’s pay with no incentive or reduce the workfoce to cut labor and fringe expenses.

What do you think?