5 ms·

19 employees seems such a small number that you can’t but think they could have as easily not fired them and just cut everyone’s pay?

caseysoftware 6y ago
Which is more demoralizing? Doing layoffs or cutting everyone's pay? Doing a round of layoffs - especially done respectfully - can soften the blow a little while requiring only senior leadership's buy in and some input from managers. Convincing everyone to take a 15% pay cut takes a ton of coordination across the entire company and probably drives the rumor mill fast and furious. And imagine being one of the people who says "no"!? Further, with layoffs, you can choose who to cut. If people get demoralized as you're negotiating pay cuts, the top people can pack up and leave. I don't like any of it but it makes sense.
- ruffrey 6y ago
  Cutting everyone’s pay by 15% would likely lead to attrition of top performers, rather than bottom performers.
  - bluedino 6y ago
    On the other hand, those who are likely to remain loyal will stay. I worked at a place that went through hard times and the employees that stuck around were 'untouchable' in the owners eyes, for better or for worse.
  - usrusr 6y ago
    That's the conventional wisdom, but I'm not convinced that it applies in the current situation. Is anyone hiring, I mean other than more Amazon warehouse drones? (sorry pickers for that rude language, you know that you are more important now than said top performers)
    - cassalian 6y ago
      I work for a company that processes job applications for many other companies so I can say: yes, people are hiring, particularly in software, and it's actually up 3% from the glorious pre-covid days
- mandelbrotwurst 6y ago
  On top of that, you have to cut gross salary by a much larger percentage than the percentage of the company that you have to layoff because fully loaded employee cost is much higher than salary alone.
- commandar 6y ago
  The company I currently work for made across the board 10% pay cuts this past pay cycle. It has absolutely demolished morale among the rank and file. It's definitely contextual to some extent. We're in an industry that's going to take a revenue hit, but the sustainability of the company isn't in question. Doesn't help that the company could afford nearly a billion dollars in stock buybacks in the last year, either. I think one of the big takeaways for me is that it's burned any good will the company had with a lot of its employees. I expect pretty heavy turnover once hiring starts to thaw again and I'll likely be part of it.
  - perl4ever 6y ago
    I kind of think it is conventional wisdom that you can't have major, albeit temporary pay cuts. But my immediate reaction is, sure, that is strictly better than laying people off in a crisis, and my only caveat morale-wise would be that any top level people paid in stock ought to entirely forgo cash salary instead of saying "look, we're taking a 30% pay cut".
  - ashtonkem 6y ago
    Smart companies should consider how they're going to retain their talent as priority number 2. Priority number 1 is surviving.
  - onion2k 6y ago
    The company I currently work for made across the board 10% pay cuts this past pay cycle. It has absolutely demolished morale among the rank and file. Whenever I've been at a company when jobs are made redundant the same thing happens - everyone worries that their job will go if there's another round of cuts and morale plummets. That usually pushes more people to find new jobs, and it's ofter the people who are good because they can get new jobs more easily. There is no winning strategy for cutting costs.
    - barry-cotter 6y ago
      > There is no winning strategy for cutting costs. But there are better and worse ones. Cut once and cut deep is close to as good as it’s going to get.
patrickthebold 6y ago
The thinking is, if you do that the top performers will leave. If you lay people off then you have control over who leaves.
- teddyh 6y ago
  But if you lay people off, then the people left will be worried about further layoffs, and will be applying elsewhere. The top performers will find new jobs most quickly, and since these are new jobs, those jobs will pay better.
tehjoker 6y ago
Studies have shown that cooperative enterprises (and probably capitalist ones with strong unions) choose the latter strategy while more typical capitalist enterprises tend to lay people off. One reason might be that economic recessions are an excuse for a manager to, from their perspective, permanently "increase efficiency", i.e. make remaining employees do more work, while for cooperative and strong union organizations, the focus is to preserve their social bonds and help each other.

caseysoftware 6y ago

Which is more demoralizing? Doing layoffs or cutting everyone's pay? Doing a round of layoffs - especially done respectfully - can soften the blow a little while requiring only senior leadership's buy in and some input from managers. Convincing everyone to take a 15% pay cut takes a ton of coordination across the entire company and probably drives the rumor mill fast and furious. And imagine being one of the people who says "no"!? Further, with layoffs, you can choose who to cut. If people get demoralized as you're negotiating pay cuts, the top people can pack up and leave. I don't like any of it but it makes sense.

ruffrey 6y ago
Cutting everyone’s pay by 15% would likely lead to attrition of top performers, rather than bottom performers.
- bluedino 6y ago
  On the other hand, those who are likely to remain loyal will stay. I worked at a place that went through hard times and the employees that stuck around were 'untouchable' in the owners eyes, for better or for worse.
- usrusr 6y ago
  That's the conventional wisdom, but I'm not convinced that it applies in the current situation. Is anyone hiring, I mean other than more Amazon warehouse drones? (sorry pickers for that rude language, you know that you are more important now than said top performers)
  - cassalian 6y ago
    I work for a company that processes job applications for many other companies so I can say: yes, people are hiring, particularly in software, and it's actually up 3% from the glorious pre-covid days
mandelbrotwurst 6y ago
On top of that, you have to cut gross salary by a much larger percentage than the percentage of the company that you have to layoff because fully loaded employee cost is much higher than salary alone.
commandar 6y ago
The company I currently work for made across the board 10% pay cuts this past pay cycle. It has absolutely demolished morale among the rank and file. It's definitely contextual to some extent. We're in an industry that's going to take a revenue hit, but the sustainability of the company isn't in question. Doesn't help that the company could afford nearly a billion dollars in stock buybacks in the last year, either. I think one of the big takeaways for me is that it's burned any good will the company had with a lot of its employees. I expect pretty heavy turnover once hiring starts to thaw again and I'll likely be part of it.
- perl4ever 6y ago
  I kind of think it is conventional wisdom that you can't have major, albeit temporary pay cuts. But my immediate reaction is, sure, that is strictly better than laying people off in a crisis, and my only caveat morale-wise would be that any top level people paid in stock ought to entirely forgo cash salary instead of saying "look, we're taking a 30% pay cut".
- ashtonkem 6y ago
  Smart companies should consider how they're going to retain their talent as priority number 2. Priority number 1 is surviving.
- onion2k 6y ago
  The company I currently work for made across the board 10% pay cuts this past pay cycle. It has absolutely demolished morale among the rank and file. Whenever I've been at a company when jobs are made redundant the same thing happens - everyone worries that their job will go if there's another round of cuts and morale plummets. That usually pushes more people to find new jobs, and it's ofter the people who are good because they can get new jobs more easily. There is no winning strategy for cutting costs.
  - barry-cotter 6y ago
    > There is no winning strategy for cutting costs. But there are better and worse ones. Cut once and cut deep is close to as good as it’s going to get.

patrickthebold 6y ago

The thinking is, if you do that the top performers will leave. If you lay people off then you have control over who leaves.

teddyh 6y ago
But if you lay people off, then the people left will be worried about further layoffs, and will be applying elsewhere. The top performers will find new jobs most quickly, and since these are new jobs, those jobs will pay better.

tehjoker 6y ago

Studies have shown that cooperative enterprises (and probably capitalist ones with strong unions) choose the latter strategy while more typical capitalist enterprises tend to lay people off. One reason might be that economic recessions are an excuse for a manager to, from their perspective, permanently "increase efficiency", i.e. make remaining employees do more work, while for cooperative and strong union organizations, the focus is to preserve their social bonds and help each other.