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Just ruminating here, but I didn’t fully understand the hesitance to do paycuts. Of course, I understand that in some cases the financial problem is severe enou

by nilkn 7y ago

Just ruminating here, but I didn’t fully understand the hesitance to do paycuts. Of course, I understand that in some cases the financial problem is severe enough that layoffs are the only option. But it’s conceivable that in many cases a simple, say, 20% cut to salaries across the board could be enough to tip the balance. Some employees will immediately start looking for another job, but that seems totally fine and reasonable to me, both for the employee and the employer. They get to retain most of their income and all their benefits while doing so, and if they do leave successfully that just saves you more money too. With all of that said, it does occur to me that with small startups there just may not be enough employees for paycuts to help much. The above is really written with 100+ person companies in mind I suppose.

deleted 7y ago
[deleted]
arvinsim 7y ago
Maybe they wanted to do layoff sone employees even before this pandemic. The current situation is convenient for them to do so.
- abraxas 7y ago
  The current situation is the furthest from being convenient in regards to layoffs. No company wants to be seen as heartless during a truly global tragedy.
  - tenpies 7y ago
    Counter-point: no observer would consider an employer heartless for laying off people during an unprecedented economic downturn. Do you consider restaurants heartless for laying off staff? Cruise lines? Hotels? Entertainment businesses? It's a tough decision, but failing to make it could be the difference between laying off a few people and laying off everyone because the company goes bankrupt. The key is to do this in a respectful manner so the bridge isn't burned.
paxys 7y ago
Like you point out in your second paragraph, some percentage of employees are automatically going to start looking for a new job and treat their 80% salary as a severance package. Being in a competitive job market, this is going to be pretty much every above-average employee at your company. With layoffs the company gets to choose who gets impacted, and the process is immediate rather than drawn-out. The reality is that too many VC funded companies hire too eagerly and can operate perfectly fine (in some cases better) with a smaller, more focused workforce. There is no coming back from a major across-the-board paycut, which is why no company chooses that option. BTW your question is answered in the last paragraph of the article.
- deleted 7y ago
  [deleted]
- triceratops 7y ago
  Obviously things are different now. But in a good job market where layoffs are due to the company's underperformance, people spared from the layoff are going to start looking anyway. Lest they're laid off in the (nearly) inevitable next round.
- nilkn 7y ago
  For clarity, my question was a response to the last part of the article that talks about this topic. I think you’re right that layoffs allow you to take a more targeted approach and retain top talent to the extent that it’s possible. However, really in-demand employees aren’t generally going to want to work at a financially unstable or insecure company, and layoffs would probably be a sign for them to start looking even if they weren’t impacted.
  - scarface74 7y ago
    In 2011, every developer where I was working knew that the company was on its last legs. Management was completely honest with us. We stuck around any way because we enjoyed what we were doing and knew that we would be able to get a job quickly. We were right, from looking at LinkedIn everyone had another job in less than a month. The people that were left survived three rounds of layoffs. I know this time it’s different than 2008-2011. But no job is stable. The only hope you have is to keep your skillset in line with the market and to have a strong network.
taurath 7y ago
Even a 2% pay cut is basically a big “the company doesn’t value you anymore, best move along.” signal. They can say it’s about cutting costs all they want but you’re the one being asked to take the hit not the company worth millions or billions.
- RHSeeger 7y ago
  I don't agree with this at all. It's entirely possible for a company to have pay cuts because they're looking to save as many jobs as possible; because they believe that it's better for _everyone_ to make less than _some_ to make nothing.
  - FURLOD-19 7y ago
    what about when there are pay cuts, furloughs and layoffs? My org did this. Pay cuts in tiers depending on salary level, layoffs and furloughs announced in the same announcement. I asked payroll if our final check would be affected by the pay cuts and am still waiting an answer.
pg_bot 7y ago
I can tell you've never run a company. You're likely to lose your best employees because they know what they are worth and are unlikely to live with a pay cut because working with you is no more special than working for someone else. Losing great employees is not where you want to save money. It's extremely expensive to find, hire, and train people, and once you lose them you also lose their domain knowledge within your company. If you lose the engineer that built the product that makes you money, good luck modifying or fixing any issues with it in a short amount of time. Layoffs are about survival, doing what you suggest is a sure fire way to kill your company.
- nilkn 7y ago
  I feel like this has already been brought up elsewhere, and I don't really appreciate the tone/sentiment you opened this comment with.
freepor 7y ago
This method will ensure you lose your top performers rather than your bottom performers.
- deleted 7y ago
  [deleted]
francisofascii 7y ago
I know of a company that did this, except it was a 1/3 salary cut. It was a cash flow problem where the company didn't want to take out of a loan for payroll. I bet top employees would not leave right away, employees would quietly start planning for the escape, then you might see a mass exodus six months down the road.

by nilkn 7y ago

deleted 7y ago

[deleted]

arvinsim 7y ago

Maybe they wanted to do layoff sone employees even before this pandemic. The current situation is convenient for them to do so.

abraxas 7y ago
The current situation is the furthest from being convenient in regards to layoffs. No company wants to be seen as heartless during a truly global tragedy.
- tenpies 7y ago
  Counter-point: no observer would consider an employer heartless for laying off people during an unprecedented economic downturn. Do you consider restaurants heartless for laying off staff? Cruise lines? Hotels? Entertainment businesses? It's a tough decision, but failing to make it could be the difference between laying off a few people and laying off everyone because the company goes bankrupt. The key is to do this in a respectful manner so the bridge isn't burned.

paxys 7y ago

Like you point out in your second paragraph, some percentage of employees are automatically going to start looking for a new job and treat their 80% salary as a severance package. Being in a competitive job market, this is going to be pretty much every above-average employee at your company. With layoffs the company gets to choose who gets impacted, and the process is immediate rather than drawn-out. The reality is that too many VC funded companies hire too eagerly and can operate perfectly fine (in some cases better) with a smaller, more focused workforce. There is no coming back from a major across-the-board paycut, which is why no company chooses that option. BTW your question is answered in the last paragraph of the article.

deleted 7y ago
[deleted]
triceratops 7y ago
Obviously things are different now. But in a good job market where layoffs are due to the company's underperformance, people spared from the layoff are going to start looking anyway. Lest they're laid off in the (nearly) inevitable next round.
nilkn 7y ago
For clarity, my question was a response to the last part of the article that talks about this topic. I think you’re right that layoffs allow you to take a more targeted approach and retain top talent to the extent that it’s possible. However, really in-demand employees aren’t generally going to want to work at a financially unstable or insecure company, and layoffs would probably be a sign for them to start looking even if they weren’t impacted.
- scarface74 7y ago
  In 2011, every developer where I was working knew that the company was on its last legs. Management was completely honest with us. We stuck around any way because we enjoyed what we were doing and knew that we would be able to get a job quickly. We were right, from looking at LinkedIn everyone had another job in less than a month. The people that were left survived three rounds of layoffs. I know this time it’s different than 2008-2011. But no job is stable. The only hope you have is to keep your skillset in line with the market and to have a strong network.

taurath 7y ago

Even a 2% pay cut is basically a big “the company doesn’t value you anymore, best move along.” signal. They can say it’s about cutting costs all they want but you’re the one being asked to take the hit not the company worth millions or billions.

RHSeeger 7y ago
I don't agree with this at all. It's entirely possible for a company to have pay cuts because they're looking to save as many jobs as possible; because they believe that it's better for _everyone_ to make less than _some_ to make nothing.
- FURLOD-19 7y ago
  what about when there are pay cuts, furloughs and layoffs? My org did this. Pay cuts in tiers depending on salary level, layoffs and furloughs announced in the same announcement. I asked payroll if our final check would be affected by the pay cuts and am still waiting an answer.

pg_bot 7y ago

I can tell you've never run a company. You're likely to lose your best employees because they know what they are worth and are unlikely to live with a pay cut because working with you is no more special than working for someone else. Losing great employees is not where you want to save money. It's extremely expensive to find, hire, and train people, and once you lose them you also lose their domain knowledge within your company. If you lose the engineer that built the product that makes you money, good luck modifying or fixing any issues with it in a short amount of time. Layoffs are about survival, doing what you suggest is a sure fire way to kill your company.

nilkn 7y ago
I feel like this has already been brought up elsewhere, and I don't really appreciate the tone/sentiment you opened this comment with.

freepor 7y ago

This method will ensure you lose your top performers rather than your bottom performers.

deleted 7y ago
[deleted]

francisofascii 7y ago

I know of a company that did this, except it was a 1/3 salary cut. It was a cash flow problem where the company didn't want to take out of a loan for payroll. I bet top employees would not leave right away, employees would quietly start planning for the escape, then you might see a mass exodus six months down the road.