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> Having seen both, I'm much more likely to leave /after/ a layoff than after a 10% paycut. It's different when layoffs are happening across the industry. Whe

> Having seen both, I'm much more likely to leave /after/ a layoff than after a 10% paycut. It's different when layoffs are happening across the industry. When everyone is doing layoffs, seeing your company do layoffs isn't as surprising. It's expected as everyone adjusts to changing market conditions. But when everyone is doing layoffs and your company cuts your compensation, it's a sign that you might be underpaid relative to what you could get at other companies. So people start looking around for an opportunity just to get back to their old salary. The other problem with paycuts is that you can only really do it once. In a slowing economy like ours, it's not surprising to have multiple rounds of layoffs as companies cut departments and react to dropping sales. But having multiple rounds of paycuts would guarantee that your best employees all leave for other companies where they can get back to their old compensation levels.

blagie 4y ago
As an employee, part of the upside of a pay cut is that I'm not looking at successive rounds unless the business is still bleeding. As a business, it depends on the type of business, but pay cuts tend to be a more effective way to stem bleeding. For example, a consulting firm (so horizontally scalable) with 90% of the employees can only do 90% as much work. Revenues dip. That leads to a cycle where further layoffs are necessary. A pay cut, on the other hand, doesn't have the same dip in output as a layoff. Now, all that said, many businesses (including some that did layoffs) are vastly overstaffed, to where productivity would be higher with fewer people. But even that can be managed more gracefully.