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

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!

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.