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"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.
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.
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...
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.
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?
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.
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 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