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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'm glad I only earn $59K/year!
I worked for those fuckers. I took the special "4 week" plan back in January... man, am I glad I left that job. Apparently our department is having trouble getting approval to buy RAM.
- A.P.
"Remember when the U.S. had a drug problem, and then we declared a War On Drugs, and now you can't buy drugs anymore?"
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.
You have a contract that they can't change at will. So the best course of action is simply not to accept a paycut.
True warriors use the Klingon Google
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."
When the bosses talk about improving productivity, they are never talking about themselves
It sounds like these guys have a severe short-term cashflow problem, rather than a longterm profitability problem... otherwise they could have asked staff to take the cut over the next six months, or take 2 weeks unpaiod vacation some time over the year, etc.
The real problem is that cashflow problems can be extremely hard to get over... and now they've probably alienated most of their remaining staff. I would hope that this comany tried their hardest to liquidate furniture, benefits, executive cars, office space etc before they did this, otherwise they'll have a mass exodus on their hands (which may of course be what they want).
In Europe, where I work, it's much harder to do something like this, for better or for worse; most countries don't allow unilateral cuts.
Alex.
Ah, computer dating -- it's like pimping, but you rarely have to use the phrase "upside your head" -- Bender
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...
Solving cash flow problems in this way is _not_ a good idea. First, the workplace will rumble with the roar of resumes being printed and sent to competitors by all competent staff. Second, if the customers get a whiff of this (and they might), some may decide not to do business with a sinking ship and leave (or at least postpone any contracts), and put the company in ever more difficulties than before.
Better, actually, to acknowledge that the staffing is too high, and cut some staff outright. Better for the company, and, really, better for the staff that do not have to live in a constant state of anxiety and insecurity while trying to do their job. I mean, what do you prefer: get cut outright, with a couple of months salary in your pocket and free tolook for something better; or losing half your pay for a month, maybe for the next month as well, then maybe get cut anyway (or see the company collapse) and never see that money again - and all the while expected to do your job instead of having time and energy to search for a better one?
/Janne
Trust the Computer. The Computer is your friend.
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.
Sure, they are saving money on wages, but think how much their paper and toner costs are going to go up with all the resumes being printed.
I cannot see any other imaginiable explanation.
I have in the last week been offered a job at a significantly higher sum than their cutoff number, and as a counteroffer I have been offered by my current employer a 24% share in a spinoff of ourselves dedicated to the sales and development in my area of expertise.
The coffers of companies marketing and purchasing budgets are ovrflowing since the 911 hold on most big dollar activities. Companies are gearing up to spend.
If you have a product/service that sucks, or if managment of that company is so blind to have had too much belief in an idea and over employed based on those misconceptions of the product or its marketplace youre screwed.
Big money is moving, you just need to be in the right place to catch it. If youre not its managments fault. PERIOD. Now with that said, managment will find any excuse they can to mask their involvment in your current situation, the first is to blame the economy, but even that one is wearing thin with most.
Overexpansion, Overmanagment, Underselling, Overpaid salaries (although 60k isnt much for even a howler monkey)
I looked at the company in this article, I still cannot see what tangible product or service the sell clearly, THAT is a problem in my opinion and probably has something to do with their current situation.
I wonder how much of a Pay-Cut managment is taking ?
Sig went tro...aahemmm.....fishing........
No Backups.
:)
/*drunk.. fix later*/
Apparently the company never heard of the studies that correlate employee honesty and employee satisfaction. If you screw your employees, a few will come to believe that it's ok to even the score.
They also seem to have forgotten that the vast majority of the employees have NO stake in the company. They're probably not going to be thrilled to take a kick in the groin to shore up someone else's stock options.
Finally, in the memo, it says if you don't accept it, notify the company and they "may" terminate your employment. Guess that's one way to find out whether you're really irreplaceable!
Envy my 5 digit Slashdot User ID!
You can usually cut dead weight at a company pretty easily by organizing them in alphabetical order by title, and going down the list firing people until you have enough money to pay everybody else.
Chief comes before Programmer, Executive comes before Technical...
Do daemons dream of electric sleep()?
Um. The company wants to become profiable by November, so they have 6 months, and they think cutting 1 months worth of IT salary is going to do it? 60/12=5 So Instead of paying out 5k per IT staff, they'll cut that to 2500. If they have 100 people, that's 250k. Anything less than that, I wouldn't consider worth the risk..
Besides, why would they need 100 IT people at over 60k?
Doesn't sound healthy to me..
My suggestion: GET OUT NOW
"I can't give you a brain, so I'll give you a diploma" - The Great Oz (blatently stolen sig)
We're a small web-development/consulting shop, and things have definitely been a little slow over the past few months. We've found the best ways to avoid it turning into a mess like the one linked include things like:
-Always keep your employees informed about the state of things: finances, workload, potential customers, potential problem areas. Big surprises are bad, dramatic changes are bad.
-Let everybody know that their loyalty and willingness to stay through rough times will be rewarded in the good times. But, complementing that, don't expect them to take their loyalty too far (i.e. to the point where they can't live their lives, pay bills, etc) - let them know that you'll support them in whatever adjustments they need to make, including leaving if necessary.
-Use the experience, skills, and wisdom of your collective staff to find new ways to bring in income, reduce expenses, and streamline operations without sacrificing quality. Having 1 or 2 people at the "top" trying to make all the right decisions is too much - include the people who will be affected by them in the process, especially when times get rough.
-Don't do anything stupid that will put you in court, jail, congressional hearings, or on the front page of the paper. Business ethics are business ethics, through good times and bad - whatever yours are, don't sacrifice them just to save this particular ship, even if it is cutting those icebergs a little close.
How's that for a dose of idealism? But really - honesty, trust, integrity and creativity will get you through a lot more crap than a 50% paycut for your employees will. It's worked for us.
Maybe they should Roll Their Own Business Desktops as a cost saving exercise. Makes about the same amount of sense.
Everyone will start to cheer when you put on your sailin' shoes.
Which category does "subscriptions" fall under?
Karma: Good (despite my invention of the Karma: sig)
My experience has always been that this type of crap is always followed by "save the company" pushes. Basicly, (we are laying off your staff)|(cutting your pay), but need you to work extra to take up the slack, and by the way, we have these new projects that need to go out faster than usual, because we need to save the company. If you don't work harder, faster, smarter, you will be out of a job too.
I'm glad I work for the government now....
room101 -- how much can you stand before they break you?
(they always break you eventually)
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've got redundancy insurance that will pay all my bills for the first 3 months I'm unemployed, as long as it's not my fault I got in that pridicament.
:-)
However I'f I had to take a 50% paycut or get fired I'd be screwed both ways, as there is no way I could live on half my salary for a month and the insurance Co. would be able to show that I caused my own redundancy by not accepting the pay cut.
I'd start looking through my contract at this point and see if there is any thing about time limits before announcing a pay cut.
That or by a shair or two in the Co. and turn up at the AGM and start asking embarrancing (sp?) questions about directors pay.
Pity you are not in the UK. Hear any shair holder is allowed to spend 2 hours a day at the Companies HQ looking over the directors renumaration package, take any notes they want, and leave the building with them.
This would give you lots of amo. for the AGM
Wouldn't it be nice if schools got all the money they wanted and the army had to hold jumble sales for guns
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.
Addendum:
Illinois Labor Board is located at
http://www2.state.il.us/ilrb/index.asp
Moral indignation is jealousy with a halo - H. G. Wells
And if you can find any executives who got bonuses, flog 'em mercilessly until you feel like you've gotten half your salary's worth.
Eloi are stupid, throw morlocks at them!
The employees of Devine, along with everyone else in the country, are aware that the economy isn't in really gung-ho shape right now. They've also heard about Enron, along with numerous dot-com companies that basically have gone belly-up overnight. They might very well be faced with the possibility of losing their job in a moment's notice.
Yet in spite of all that, those making over $60K a year somehow are unable to save enough to pay HALF the bills for one month? What would happen if they got fired? Is cost of living so horribly expensive in Chicago that 60K might as well be minimum wage?
-Restil
Play with my webcams and lights here
An employee's home life in SOME way -has- to be a manager's concern. Why?
Because if your DBA suddenly loses her husband, and you aren't sympathetic, you lose a DBA.
If your NOC monkey's car goes poof, and he's 10-15 minutes late - then you either have to bitch at him, or fire him, and you lose a NOC Monkey.
No, its not a manager's duty to make sure that an employee's home life is peachy keen, but it IS part of his or her job to remember that serious homelife problems can affect an employee's performance drastically - and cutting them, just to preserve your bottom line will likely result in other employee's jumping ship just because they percieve an unsympathetic management staff.
Yeah, fire the slackers. But giving shit to hard workers who have something happen that isn't their fault is -really- poor management practice.
(Not assuming that's what you do, just commenting that you cannot just look at the bottom line - you have to look at the bigger long-term picture as well as the immediate short term goals)
http://quiz.ravenblack.net/blood.pl?3357354385
Your advice is definitely sound, and I'm working on building up my rainy-day fund, but it's going to take a while, and meantime, I'm vulnerable.
All I'm trying to say is, some of us are no longer idiots, but still manage to find ourselves in this position.
Wow. I could not have said that better myself. There are many of us under 30 yrs old that have old credit card debt with student loans that are trying to get that stuff paid off whilst working on a rainy day fund...
I too am doing well, I too was way too stupid with credit cards when I was 18. I am working on getting that debt taken care of so I can save for the future but it freaks me out to think of how vulnerable I am.
Oh, and as for how companies are dealing with the poor economy... my company has not paid us on-time since December. You see, we are on a monthly pay schedule (one big check on the 1st of every month) which requires good budgeting to get through the month okay. Missing that by a few days can be rough, but manageable. However, this does not work too well when you are paid 15 days late, and really sucks when you are paid 30+ days late. I have not been paid for March, and I should be paid for April this week but that is not happening anytime soon. (Ramen noodles ROCK!)
So, I guess I have to start calling lawyers to see if there is any legal action that I can take... anyone happen to have had a similar experience and have advise??
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.
Please, get a grip!
There's a HUGE difference between giving a suddenly widowed employee six months to process the death of her husband, or an employee a few hours to deal with a mechanical failure of their car, and letting stuff slide indefinitely.
I'm not saying that a single mother has 6 months to find a husband and get married, but she needs to find a workable solution. Fast. Management can cut her some slack if her usual daycare provider is sick and can't take care of her kids, but can't let her constantly go home early while her coworkers all work late several times a week because her current daycare provider requires her to pick up the kid early. She needs to either find another daycare provider or another job, or some other solution (e.g., *always* being the first person in the office because she puts in her extra hours in the morning).
The best example I've ever seen of this was a blind sysadmin. He was regularly asked how he would get to work during interviews, and he told the interviewer that that was his concern, not theirs. He asked for no accomodation on that, only modest accomodations (in one-time purchases for things like text-to-speech synthesizers) required to do his actual work.
For every complex problem there is an answer that is clear, simple, and wrong. -- H L Mencken
Tell everyone in the IT to stick together, and you may be able to "convince" the upper management, that going through with this pay cut, at ANY time, would be a "Bad Thing"
PS ... Start getting that resume polished up right now ...
Karma? Karma? I don't need no stinkin' karma.
1. We need to trim the budget. Let's fire some people.
2. One of the people we're going to fire is a broke single-mom. Oh well, not our problem.
3. Cut staff.
4. Hmm, people are quitting and citing "overwork, lack of stability, and lack of loyalty to veterans and moms" as reasons.
5. We'll have to hire some more people to replace them... We wanted to keep these people...
6. Gee, good people from outside sure cost tons more than we were paying our laid off veterans.
7. We're over budget again, have to fire some people...
And the cycle goes on and on...
Who did what now?
Many commenters have said, during a discussion about Loki employees not getting paid for months, that generally when a company starts paying its employees late, it is almost a sure sign that the company is going under (i.e., if that's it's last-resort way of keeping it financially above water). I'd suggest searching for a new job just in case, and I'm not sure what legal action you can take (I'll leave that to other IANALs to answer for).
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 don't know, I read the memo about how much the investors like to see cash on the books anbd so forth and so on. But my BS detector just kept on going ping ping ping.
IMHO, if they are not paying you at all in late May/ early June, then the reason is that they are doing so is in fear of not making payroll. Some management wonk probably figured it was better to make up this 5% dealey than to actually miss payroll.
Their is a slippery slope that a company gets into once financial misery sets in.
Do:
Good people leave,
customers get skittish,
lendors freak.
Loop.
My advice: start looking now. The company is flashing big orange DANGER warning signals, and passsing out a memo saying to ignore them, they're just for some silly regulation.
good luck
--Pete
www.avacal.com -- the home page of pete shaw
"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.
"divine helps companies maximize profits through better collaboration, interaction, and knowledge sharing across their entire value chain."
OK, let me guess...
- The top management are all book-trained MBAs. They built the business on venture capital with handshake deals where who you know is much more important than what you can do.
- They are regularly written up in glowing articles in all the local business PR rags.
- They are in technology, but they have a VP of communications and/or marketing who previously did not work in technology, and who mocks it openly.
- Middle management is encouraged to think about their political standing within the company, and routinely value that over actually getting actual productive work done.
- The sales force dresses in Armani or similar, and drives late-model cars more expensive than $40K because it is supposed to give them an advantage.
- People who don't show up for happy hour are considered ineligible for promotion, despite the fact that behind their backs everyone hates everyone else and doesn't want to drink with them.
- No management has ever showed up at a goodbye luncheon, or if they did, they spent five minutes there and didn't speak to the outgoing employee.
- HR is the second-most powerful unit in the company (behind marketing) and establishes policies with the help of corporate lawyers.
- Golf is considered essential to one's career.
divine employees or ex-employees, how'd I do?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