Slashdot Mirror
"Industry Standard" Paycuts in IT?
noGarnishMe! asks: "I was just reading about a Chicago-based company that has told all its employees earning over $60K/year that they will have to accept a 50% percent paycut for the month of May. This cut might be necessary in these times but keep in mind that the bozos in senior management just finished buying up several failing companies and paying some large bonuses to themselves. The memo announcing the cut is here. This cut, coming in such large chunk and in May, seems like a draconian shot to boost the 2d quarter financials. True, the annual paycut of 3.8% is modest but it ignores that fact that many folks won't be able to pay their May bills with only half their salary. I know that many of us have been through rough times these past 18 months and so I ask, what has been the approach at your company?" There are graceful and non-graceful ways for a company to handle a lack of cash flow. In the scramble for survival, especially in an economic downturn, many companies are caught off-guard and have to show their shareholders that they are doing something to get the company back on the road to profitability (which seems to be the issue, here). In many of these cases, the group most affected by such changes are the employees. It would be interesting to note how many of you have gone through this before and what you had to do to survive the shortfall.
Having worked for a major ISP for the past few years, and seen more than one RIF in that time, I'm just glad to HAVE a job here still. I think I'd rather take half a paycheck home for one month that to be out of a job for 6. Missing/being late on one months rent/mortgage is MUCH more appealing to me than having to miss several, and go job hunting in this market at the same time.
-- Hi! I'm a
I'd take a 50% pay cut but in exchange I would only work 2.5 days a week or 4 hours days. That would give me some extra time during the nice summer months.
I am so glad I live in a country where the behaviour of that company would be illegal.
Not to say it's much better here, but...
"First lesson," Jon said. "Stick them with the pointy end."
IANAL, but I seem to remember someone telling me that your employer is not legally allowed to decrease your salary? that would make sense because otherwise its just another form of constructive dismissal
Is that wrong? does it only apply to permanent decreases? or a certain percentage?
or do / did the workers at this company have the opertunity to take redundancy or sign a waver over their rights not to have a pay decrease?
Wouldn't know about how the private sector is handling these rough times; our agency has never had a RIF. It is at times like this I appreciate being recruited by the fed. Sounds like it is more attractive everyday: employment for life + great benefits + transfer anywhere in country (and some foreign posts) + good wages.
...we are from the government - we are here to help...
My company decided to take a hard look around the shop and using a strong Performance Management System, cut all of the bottom performers entirely. They fired 6 people in a staff of 20 in the space of 3 months.
The good side to this is that the remaining people were the ones you want to keep - strong performers who brought out consistently good results. And they did use some more-or-less formalized and official measures, so it was not just "Who annoyed the boss today."
The bad side is that it showed a complete lack of loyalty to long-term employees. One was a 20 year veteran with a wealth of knowledge and another was a single mother in a tough situation, and those are just the ones easy to put into writing. This lead to a big hit in morale, which lead many of the top performers to leave because they had no problems finding other jobs.
Better than keeping everyone for a one-month 50% paycut? Maybe. It probably means better long-term health for the company. But it means worse short-term performance for a staff which is overworked and terminally depressed.
To be fair, I have no idea what I would do if I were a manager. This is why I have no interest in climbing the ladder of management.
A fifty percent pay cut doesn't say, "Stick together group, and we'll all make it through these hard times." Nope.
A fifty percent pay cut says, "We know many of you will quit because of this horrendous abuse we are imposing on our employees, and to us, this is good, because if we just fired you, we'd have to pay unemployment benefits"
Yearly raises recently came around at the company I work for, and my raise was 0.5%, a percent of a percent. So, I did what any self-respecting working stiff would do, I found a new job for a company that makes enough money to pay its employees.
I get the feeling that a number of corporations are leaning on the current state of the economy to cover up their own stupidity and lack of management skills. I always watch the want ads in the Sunday paper (even now that I am starting a new job on Monday), why? I think it is a good exercise to get a feel for where the job market is going. Should I consider pushing for training in one area vs. another, and that kind of thing. What I have seen has been an upswing in people looking for talented and experienced help. I get the feeling that successful companies realize it is better to get somebody who has some real world experience than to go cheap and hire straight from school (of course, larger operations still recruit newbies, but they have the staff to train them proper, and the need for people who'll put up with a large amount of grunt work).
Actually, even though I found a job right away, I still have to budget next month to stay afloat. The new job has a two week delay on pay, and my current job doesn't, so I miss a check. To boot, last month I had to pay Uncle Sam, and buy things for spring, like a lawn mower, etc.. Well, it was an expensive month overall. Luckily for me, I have some reserves for the tough times, and with some frugal behavior, I should be ok.
If you don't have money squirreled away, you might have to get creative. One thing you could consider doing is selling some stock for a loss. You'll get cash right away, and capital losses are a tax deduction. Also, if you have something that you could sell, you might think about that. I have the luxury of being able to sell my old car, as it isn't completely worthless yet, but most people can't afford to do that (however, if you drive a nice new car, you could sell it, swallow your pride, and downgrade - a car is for getting there, not being mr. cool).
Bottom line, I'd recommend updating your resume and sending it out. Why stay at a company that treats its employees like s#!t? A good company with solid management recognizes that people are the greatest asset a company can have, because people learn and improve their skills with time, while capital investments quickly becomes out-of-date.
Best of luck to you.
If you read the memo, it is clear that it only applies to people making over $60K/yr, and it applies to all employees - managers too.
Also, it amounts to 3.8%/yr, but they want to do do the entire cut in two paychecks. So by cutting those two checks by 50%, it amounts to a 3.8% cut on an annual basis. But then you're back to your normal pay. Well, at least until next quarter... see what happens then.
I like how they scheduled the conference call to all employees at 5PM. I guess this isn't something that is worthy of discussing on the company's time. So if you're concerned about the forced pay cut, you can find out more about it on your own time. Nice touch.
And it's also nice how he says that this action will improve their financial picture which should help gain the confidence of their customers. Isn't this kind of like what Enron did, only on a much fancier scale? If they are trying to "gain the confidence" of their customers, that makes them "con artists"!
I so wish I had mod points to mod you up right now... I recently saw the light and started a savings account, especially after seeing the tech drought hit home ( my brother sat idle for 6 months or so and just now got a job ) .. Problem i'm having, (as with most americans ) is paying down the major credit card bills that alot of us aquired during the 'oh, the economy is great and always will be ' boom...
I lost my concept of community when my community lost all concept of me.
For obvious reasons I'll post this anonymously. I hope enough people will see it anyway.
My present employer (but not for long!) had cash flow problems last summer. First, we all took a one-time pay cut, but that didn't solve the problem. In October word came down that the entire company would be taking a 15% salary cut until further notice. The announcement came with lots of apologies and stuff.
Here's what I was expecting: I was expecting to get information every week or so about the company's cash position, and whether and when we would be returned to full pay. At the very least, I expected to get some kind of update or status report with my next pay stub.
That was six months ago. Despite the fact that the company has since lost five employees out of a staff of 15-- all to people leaving to take better jobs elsewhere-- no salaries have been reinstated. Nor have we received any information about when that might happen.
Do not do this. Do not treat your employees like their salaries are a favor from you, to be manipulated at your pleasure. Even though we're all pretty well paid people, we still depend on that money to feed our families and make house payments; it's not all going to sports cars and yachts, you know. If you have to take some of my salary away from me for a while, make it temporary and keep me well-informed. That's not too much to ask, is it?
Bear in mind, I was hourly, so this might be different for salaried folk, but the principle is still pretty much the same.
About a year ago, I was told that of the three people we had working a total of 96 hours a week, we had to cut back to 72 hours a week. As the lead auditor, I was given first say as to how this would work. I could choose to keep my full-time, sack the part-time guy, and screw my other full-time person out of a shift if I so chose. I told them that I would not make their firing decisions for them.
So, they chose. Everyone else got to keep their hours, and I was reduced to half-time. I told them I would not accept the cut, and if they needed to reclaim the hours, I would continue working at full-time until they notified me in writing of my termination. They hemmed and hawed, and eventually gave me written notice terminating me a month hence, long enough to train the other full-timer. I went on to a job that did not suck so much, at which I work today.
About a month after my dismissal, I served them with a request for the severance package, under whose provisions I was eligible for two weeks full pay if I was offered less than 80% of my regular wage. They fought me on it for a couple of weeks, but eventually came to realize that I had them by the short hairs.
My only regret is that I didn't get to see the look on that bastard manager's face when he found out.
The only surefire protection against Microsoft infections is abstinence. - The Onion
Why should IT workers accept less than their moron bosses?
Why should this person accept a 50% pay cut? Do you think public school teachers or Teamsters would?
One answer is that it's time to unionize. IT workers are not valued for their intelligence or problem solving ability. They're valued as "human resources" much as a company's mineral or financial resources -- to be used when necessary and discarded when useless.
If there were a union, this company would be shut down right now.
Companies should be paying attention (and paying) the people with their hand on the switch. How long could a company last with a marketing work stoppage?
How long do you think they'd operate with an IT work stoppage?
It's time to stop abuses like these before you become "too old to be retrained", replaced by an indentured H1-B visa worker, or have your salary reduced to pay for the CEOs new manor house.
This is exactly what happened at a Boulder based eBook company I just left. In Novemeber they said they were out of money. They laid off half the company and told the rest of us that we would work for $350/week (everyone including the CEO). The argument was that we were being paid what unemployment pays but still had a job. After a month of this lowered salary they laid off another third of the company, this time with zero severance. When they re-instated salaries in January, management was given a bonus. Which shattered the "save the company" attitude that everyone had shared... There has been a constant stream out every since, with everyone I know saying they will leave if they find anthing else.
-Chaswell Freewill
If you make over $60K a year, and can't pay your bills after losing $2500 (less than $2000 after deductions), then you have other problems. You need to learn how to budget and not get in debt so much. Making $60K/year you should be saving some. While this might be a bit inconvenient and a bummer, you shouldn't have any problem paying bills (it might mean dipping into your aforementioned savings though). Maybe its a good thing and a wake up call. Maybe these people that can't afford to pay their bills will become more responsible.
At my job, they fired the VP of engineering leaving just me (only a year removed from school) in development. They said it was because of poor performance and not at all due to the fact that he was overpaid and mney was tight. So I beleived them and a few weeks later bought myself a nice luxury car (as I had been planning to), discussing the matter with my bosses a number of times to see what cars they recommend - guy stuff. A week after I buy the car they tell me they can't pay me anymore. They intended to make it up to me as soon as they could, but they didn't know when that would be. I couldn't believe it. They gave me a false sense of security and let me go buy an expensive car when they knew that they couldn't pay me anymore. They were just too scared to confront me before I dumped most of my savings on a down-payment. I don't know if it's hubris or just poor people skills, but all of my experience in the working world has shown that the higher-ups are afraid or unwilling to be upfront about the company's financials. Maybe they forget who really keeps the company running - the employees.
If you consider IT to be fixing servers and instqalling cable, thats a blue collar job. If you consider it to be programming(which is different than IT in my opinion) it generally requires a college degree(at least at a big company) its a white collar job. This generally means unpaid overtime, but higher salary. Unionizing would not be a good idea, your work couldbe dumbed down and promotions wouldnt be based on a merit system and instead rely on seniority.
If you are unhappy, do some work on the side or open up your own business.
Bring back the old version of slashdot.
I'm the CEO of a small 14yo IT company. During the recent internet nonsense we were careful not to do anything blately stupid and stuck to our business plan. In doing so, we have avoided being squashed when the bubble burst and in fact are doing quite well.
However, one time in the past we hit a real rough spot. We knew we had to reduce payroll. One of the steps was a temporary paycut.
But unlike the lead story here, the paycut started with the CEO (me) and all of the executive management. Then the highest paid ($80K and up) employees on a voluntary basis. That's right, we ASKED them to do it for the good of the company. Not a single person declined.
I promised that when things got better, I'd return all of the pay. Many smiled but didn't seem to believe that was likely. But, in fact, several months later, things did recover and I tacked on all the lost pay to their next paychecks (including my own).
I think the fact that I was the first to do it made a difference. It was hard, but it worked.
David Whatley
I know of a company that just reduced everyones weekly hours to 32/week.
Their logic: If a 100 person company reduced everyones hours to 32 per week over the summer. Everyone would get a little more free time for the summer. The reduction in pay is not too painful for individuals. And the company realizes a savings that would be the same if they laid off 20 people.
The people I know at the company actually appreciated the thinking.
They are hoping that by the end of the summer they can move everyone back up to 40hrs/week..
Oh yeah, because working for the government is a good thing? Iowa is facing a catastrophic budget shortfall, and its elected officials (Democrats and Republicans) are in a pissing match trying to position themselves for reelection.
The University of Iowa (just ONE of the state employers) had a $38.1 Million budget reversion for 2002. See, it's easy for politicians to say "sure we'll increase education spending by 5%" and then take the money back later.
So with a planned 32.7 Million budget CUT for 2003, things look pretty shitty. Especially when you figure that there will probably be another $20 million in reversions next year.
Yep. Working for the government is great.
"I think it's safe to say that having more money than you need makes it easier to be less cautious in your spending."
This does make sense to me.
Back in BC* I made less money, but lived well below my means. While I owned my own house, the mortgage payment was ridiculously low, car payment same, nothing to do but play and buy my spouse expensive gifts. Spouse bought same.
We did save. We're not complete...erm...idiots. But we had more money, fewer obligations, and therefore, we spent some of it like fools.
I don't know that this kind of spending is the mark of the young, childless and well-off. I work with people over age 45 with older children who still live paycheck to paycheck because of their SUVs and DVD collections. Some folks never learn.
You've at least seen the light. Keep digging yourself out. Then you'll have the best of all worlds, money now, money later, early retirement.
sweeeeet...early...retirement...ughghgh...
*BC - Before Children
Consigned to flames of woe.
yes. i would be ok. the exact amount depends on your lifestyle after the change. you're entertainment and charging habits should definately be significantly curbed. hell, revolving credit s/b just that, revolving. you charge something you pay the bill.
i have lost my job and have been searching for over 3 months. i'm a newbie on the bench from other accounts i read. the market for software developers is VERY tight these days. both of my neighbors are also umeployed and unable to find work, and neither is in the technology sector.
on a side note. if the job crunch is all about supply and demand, and there's an abundance of supply, then why is the H1-B program still continuing? this program was created to help fill supply for an over demand a few years back specifically in the technology sector.
Used to work there:
1) Many of the top management were not book trained MBA's - that would imply they can read. I mean this. You should have witnessed the ways in which these guys butchered the language.
2) They are not written up in business magazines in glowing terms, unless you consider "flaming idiots" to count. "Radioactively stupid" is one term I've seen used by a local columnist.
3) As the technology person for their marketing arm way back when, I can firmly state that their understanding of the concepts is rudamentary at best. They were focused on the marketing, not bad at it, but didn't really understand how to use tech to boost the pitch - they just wanted bells and whistles and buzzwords, not useful tools.
4) Middle management isn't encouraged to think, period. Most of the MM's (especially one rather hirsuite woman) were hired merely to put some distance between working slobs and the VP+ level folks. In one case, I kid you not, a manager was hired to oversee the personal assistants. Yep, the personal assistant to the CEO of one group couldn't actually *talk* to the the person she suported, she had to go to her boss, and then anything got routed where it needed to go. How stupid.
4) The sales force doesn't wear Armani. Primarily, they wear J. Crew and Banana Republic. This is, theoretically, a way for them to indicate to potential customers that they are hip and with it, but in a mature fashion. They are all pretty, and not terribly bright.
5) There is no one happy hour - everyone breaks off into cliques and talks shit about the other groups. You aren't elegible for promotion unless you worked for the prior company these guys all came from, Platinum.
6) They don't have goodbye luncheons - layoffs are handled by being escorted out of the building, under threat of arrest if you dawdle (no joke). As for employees who leave voluntarily, there is no mention of this: the company is so wonderful, who would ever leave?
7) HR isn't the powerful department. It's all the ex-Platinum people who are. Hires and fires are determined by this yardstick. So are other policies - if you worked for Platinum, you're golden and can do no wrong. ex-Platinum receptionists had more power than any non-Platinum people.
8) Golf not so much. Honestly, I wish they *would* have taken up golf, because it would mean uncoordinated idiots hitting each other with clubs, and maybe, just maybe, enough fatalities would happen and they'd have brought in competent execs. Or at least execs closer to "human" than "simian" in intellect.
I worked for a company for a month. They announced that they had been bought and were closing their NYC office (this was a bit of a shock - the company's been around for 148 years, and always headquartered in New York.) instead of canning us all immediately, they offered us our old wages until the office was officially closed, plus vacation, plus unemployment, plus a stay-pay bonus of 2 months pay for sticking it through to the end. The advantage? I guarantee that none of us who eventually got laid off has a single, bad thing to say about the company. T'was smart of them.
Triv