"Market Adjustments"

Blanche

In response to the recent down-turn in the hi-tech sector, the leaders in my organization have come up with a scheme to balance revenue and costs. One element of this plan is to reduce the wages of some positions (pay cuts). I thought I'd seen it all! As we struggle through this sudden and deep recession, we have had several rounds of lay-offs, required all associates to take time off, and modified our over-all business focus. The difficulty now is maintaining a headcount that enables us to continue functioning and meet the needs of our customers, but somehow reducing our operating expenses. Hence, the salary reduction plan.

Has anyone ever undertaken such an initiative? Did it work? How can this be packaged for our employees so that they don't completely lose faith?

franfields

After laying off 4 people, all of the officers took a 10% pay cut for the remainder of the fiscal year, rather than lay off anyone else. It began 6/15 and will hopefully end 9/30. The carrot is that, if we make a profit, we will be reimbursed the lost 10% before any profits are distributed.

It has been difficult for some officers but I think most of us are thankful to have jobs in this economy. Also, even though it wasn't announced, the staff has a greater appreciation of the officers having made that sacrifice for them.

Dottie

I have to say that your company's approach is one that I have wished more companies would use. It is disheartening to hear in one breath that an officer is being compensated well over one million dollars per year, and hear in the next breath that dozens of hourly bread-winners are losing their jobs. Kudos to your execs. Also, I read an interesting bit of news today from a "trend alert" that I receive weekly that says all indicators are that the economy is getting back on track and beginning to strengthen. The article went on to say that many of the companies that reacted to large lay-offs are going to find themselves up the proverbial creek without enough staff. It sounds to me like your company took the wise path and will be well prepared for a strengthening economy.