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Cutting salary is a nonstarter because those individuals will move on to other companies to regain the salary they had. Cutting headcount is necessary if you

Cutting salary is a nonstarter because those individuals will move on to other companies to regain the salary they had. Cutting headcount is necessary if you A. Made poor hiring decisions, as you alluded to, perhaps by over hiring during a period of high growth or expected growth. This happens often with startups who just raised a ton of cash and feel like they need to spend it. B. You have a good stable business but your revenue outlook has changed and you need to adjust expenses. There is no reason to keep people onboard who simply are no longer in the budget. Doing so would be an irresponsible decision that negatively impacts everyone at the company, it’s shareholders, and (if it fails) customers too. There are other reasons but I think these two are relevant to your question

pHollda 4y ago
Edited the question to include 'temporary'. You would pay them back in the future, after the company has recovered from the economic setback. I'm asking the question in the context of the current downturn. Say the need to reduce burn were not a result of poor hiring decisions, but larger macro reasons like difficulty raising funding in the face of a general downturn.
- bombcar 4y ago
  It has been done in some cases (small startups, for example) - I was involved in one where the boss pay went to $1 and everyone went to minimum wage for a bit until funding came in. First time it worked and we got back paid, second time boss recommended everyone take the offer but also start looking for work.