Negotiating a Pay Cut?

csb asks: "My employer will probably ask me to take a pay cut in order to prevent (or at least minimize) layoffs. I want to keep this job; but, I don't know what to request in return for accepting a temporary reduction in salary. Is this a negotiation? What questions should I bring to the table? Which issues should I stand firm on, and what should I let slide? Are there some resources out there about this sort of thing?"

Comments

Do it.

[eric2hill]

The way I see it, you have two choices:

1. Take the pay cut, no matter how much it is. Let them pay you to find another job. Stay with them until you have a better offer.
2. Tell them you'd rather be fired. Then draw unemployment. I could deal with a 10 month paid vacation right now...

First Post?

Negotiating a Pay Cut

[Anonymous Coward]

First, I'd try to find out if other employees have been asked to take a pay cut, and if so, how much. You shouldn't be asked to take a larger pay cut (percentage-wise, at least) than anyone else. In exchange, you should ask for additional training to keep you useful to your employer (and marketable to other employers, if necessary). I assume your benefits won't be touched, only your salary; if this is not the case, you should definitely keep health insurance off the table.

Few tips

[SuiteSisterMary]

Find out if it's a pay cut, or a temporary reduction. Get, if you can, in writing, an agreement that when financial condition X is met by the company, salary will go back to normal, back-pay will be coughed up, etc. Try to get time off/vacation in leiu of. Start looking for another job; everybody else will be. And some of them will leave. Those that are left will be asked to do more. They'll get pissed, look for a new job. Vicious cycle.

other possiblilities

[wmulvihillDxR]

You say that you want to keep this job, so I'm going to assume that you are truly interested in this job, having fun, and think this company is going somewhere. Here are a couple of options to think about:

1. If you really think that this company is going somewhere and that these layoffs are a temporary measurement, you could negotiate for some stock in the company. Pros: If the company really does get through this and becomes wildly successful, you've just taken care of everything. Also, it gives the managers a warm fuzzy to know that you really do think the company will be successful. If the company is large enough, then giving up a little bit of stock (like 1% or something low) is no skin off of their nose and, more importantly, its no cash out of their pocket. Finally, if the company really does tank, its not like you actually "bought" the stock and had it die. Cons: Some companies will not even "go there."

2. Negotiate "minor" perks. You probably know what I mean, longer lunch, telecommute one day a week, faster computer (before you refute me on this one, remember, they can spend up to $500, tax-deductible, on equipment), etc.

Anyways, those are my suggestions. Good luck!

Re:Let them lay you off......

[Johnny5000]

"Oh and whatever you do, don't let them pay you in stock, unless you are out of toliet paper, cause it probably won't be good for much else."

It depends... if you think the company is going out of business, then yes, the stock will be worthless. But, many traditionally successful companies are feeling the pinch of the current economic times, and are laying people off. In a few years, the economy will be better, the company will be back on its feet, and the stock will be as valuable as ever.

-J5K

Alternative to a pay cut

[webmaven]

There is an alternative to reducing your pay rate, and that is to reduce the number of hours that you're working, and pro rate your salary.

This has several advantages; First, while it reduces the number of hours that you're working, your productivity will probably go up. Second, it provides a clear boundary condition for re-increasing salaries once the company has found it's footing, ie when your hours are brought back up. Third, it allows those employees who need the missing income to make it up through consulting work without increasing their workload to the point that the productivity in their main job suffers.

This is a much more equitable proposition, with a straightforward quid-pro-quo that balances the advantages and disadvantages for both the employer and employee.

The simplest way of implementing this is to either mandate three-day weekends (starting Friday), which is a 20% reduction in work hours, and a corresponding 20% reduction in salary, or a less drastic approach would be to let the individual employee choose a day of the week to make a half-day, which is a 10% reduction.

Reduced schedule?

[RTHeath]

I would consider asking for a corresponding reduction in working hours. A good friend works for General Datacomm, and they instituted a 4-day workweek (20% paycut) to cut costs.

If you can afford a partial paycut in exchange for fewer hours, take the time and enjoy it. It worked out great for him -- he was able to spend a lot of time with his wife & young daughter that he would never have done otherwise. There aren't a lot of times during the course of a career that one is given the opportunity to back off and focus on what's really important in life. And especially after the unbelieveable pace of the last 5-8 years, it's good to slow down a bit and take a breather if you have the chance.

Re:Pay cut

[csb]

More info: I work in a small local office with a tightly knit team of people whom I have worked with before. I genuinely enjoy being with my team, this is what makes me get up in the morning.

In addition, my employer has generous benefits, including an emphasis on training and education. There's a lot of room for growth here, if we can make it through the current tribulations.

The company is IT professional services, so when we're billable, we can do little wrong; but, when we're not billable, we can do little right. Part of the problem is a legacy of poor salespeople.

This month, we found a new salesperson who shows great promise. I think that he'll have our office showing signs of life by year's end. In summary, it just isn't time to give up yet.

Of course, I'm keeping an eye on the job market; but, things are quite slow in my city. I would much rather tough it out with my crew than to hit the streets and fight the crowds.

We have savings, so if I have to take the pay cut, it wouldn't hurt too badly, I suppose. I would ask to get the difference back after business improves -- there ought to be a reward.

In sum, I don't think that my company is going down. They're just finishing a large reorganization, so I think that some of the chaos is coming from that, not just the recession.

I may be sentimental; but, I also think we can survive. I don't like changing jobs any more than I have to, and I definitely want to stay with what I think is a fun and very talented team.