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 o

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.