Comments on: Are Employers Missing the All-for-One, One-for-All Moment?

By: Paul Glover

Paul Glover — Tue, 24 Feb 2009 16:02:03 +0000

Acco Brands’ (an office products supplier that laid off 500 employees last year) decided to cut its 2000 employees’ wages by 47% rather than layoff additional employees. While such a drastic move defies conventional wisdom that lay offs are the best way to immediately reduce labor costs, I applaud Acco for taking a more constructive approach. Rather than lose anymore of its talent, Acco decided to make a play for team unity and, if the pay reduction was done right, it was the better decision.
As the economic crisis continues to deepen, other companies are facing the same issue as Acco: how to most effectively reduce labor costs? If the decision is to reduce wages rather than layoff Employees, here is the Pay Reduction Blueprint to follow so the morale of the entire workforce is not destroyed in the process:
1. Before there is a reduction in wages, there needs to be a selective layoff to eliminate The Others (20% of the workforce who should have been fired before the current economic crisis). If the low performing members of the workforce remain employed and there is a pay reduction morale/performance will suffer.
2. Before implementing a pay reduction, know the financial relief the Company needs to get from a pay reduction and get it. There is only one bite at this apple. Reducing pay a second time is a disaster for morale/performance.
3. There needs to be Employee buy in for the pay reduction. This means effective communications about the need for the reduction in pay before it occurs. Include the Employees in the process, and stress “we are all in this together.” Employees want to participate. Let them.
4. A drastic pay cut must be temporary. Employees need to know that, in the future, there will be an opportunity to recover from their economic loss.
5. The monetary sacrifice must save jobs. After the pay reduction there can be no further layoff of Employees or Employee morale/performance will be destroyed.
6. Really Share the Pain. If you expect Employees to accept a pay reduction and still be High Performance, the pay reduction must extend to every Employee from the President/CEO/Owner down. However, high paid Employees need to take a greater pay percentage reduction than the Front Line Supervisors and Employees. Employees know a reduction of half of a $250,000.00 salary does not hurt as much as a 50% reduction of a $40,000.00 salary.
7. There can be no Corporate Prima Donnas. If there are Corporate Prima Donnas (see definition above) in the organization after the pay reduction, they will destroy Employee morale/performance.
A company can do more than the six steps in the Pay Reduction Blueprint, but cannot do less and still retain the high level of Employee morale/performance necessary to keep the Company successful.

By: Eric

Eric — Fri, 20 Feb 2009 16:03:06 +0000

Yeah, nothing builds morale like ending merit increases. I just love knowing that the useless complainer sitting next to me will be getting the same compensation. *snort*

By: mbrooks

mbrooks — Wed, 18 Feb 2009 18:22:17 +0000

Apparently my earlier comment did not post correctly. I just wanted to comment that My husband’s company, FedExKinkos, has been demonstrating the “all for one” spirit you describe. They cut hours rather than cut jobs. Much better to have a little less in your pay, than no pay at all.

By: Paul

Paul — Wed, 18 Feb 2009 01:00:43 +0000

Good article and I like the direction you are going–spot on. Cannot say I am excited about the analogy of pay inequity in the U.S., but I do agree that employers are missing the “Three Musketeers moment.” In our company, it would not make any sense to cut pay–the problem is a lack of work–but the idea of a cut in hours makes a lot of sense. The savings would be immediate and it would help alleviate the idle time some are experiencing–just sitting around waiting for something to do. That in itself is demoralizing. Even though I probably wouldn’t loose my job in a layoff, I would be willing to take a cut in hours for the “greater good.” Am sure most would feel the same way.

By: mbrooks

mbrooks — Tue, 17 Feb 2009 15:56:48 +0000

My husband works for FedEx Kinkos and they have demonstrated the \\