Jun
29
Salary Reduction, Now What?
June 29, 2009 | 1 Comment
An alternative to being laid off could be a reduction in salary. Companies are doing it when they do not want to lose trained and valuable employees, but they do have to reduce costs. I do not think I would advice a company to do so. A salary reduction makes everyone unhappy. And we do not want angry employees. Besides, the good employees will leave for better paying companies, while the bad employees will be contempt with the reduced salary.
However, in the event you are the one receiving the salary reduction, what should you do? In my opinion, and in short: leave for a better opportunity as soon as possible: you are not considered a valuable member of the team – not in “this individual is above everyone else” terms. If you value your career, you do want to be perceived as someone better and above everyone else: that is why they call it a ‘career’ – someone has to win the race.
Life is not perfect. There is a chance that you are left without choice: maybe no one else is hiring people like you, or you ended up on a dead end career – just like many people permanently lost their jobs when the computers and word processors where invented. What options do you have?
- Above All, Explain You Are Not Happy. This doesn’t mean that you will tell everyone you will leave – and not do it. But you should explain that “this is a temporary setback in your career and it just gives you double the incentive to remediate it at the next available opportunity“. If you do not let your boss and your boss boss and your boss boss boss know… they may even think you are just too happy to still have a job even when your ex-coworkers may not have one.
- Negotiate Other Forms of Compensation - Companies may be willing to compensate in other ways. Extra vacation weeks? Reduced hours? Training (valuable one)? Education reimbursement for a degree? Relocation to a less expensive zone/plant? Ability to work from home? Company car? Restricted stocks, technical shares, options? You would be surprised where companies do have budget even if they can’t pay salaries. And remember that no matter how little an extra benefit may be… it may be better than $0.
- Any chance of going off as a contractor? The company is not doing great anyways. You should be looking for a job. It is a bit risky. But maybe you can negotiate the same compensation you had before, but without the job security. There is no job security on a company that is reducing salaries anyways!
- Time for excellence! If you haven’t been doing your best job, this may be the time to do so. If the company recovers everyone is safe. If the company doesn’t … next time may mean job cuts. You do not want to be on the bottom of the performance list.
- Retrain for a different job description. Your job may not be in the same demand as it used to be. That may be why you haven’t been able to switch to another company even when they reduced your salary on this one. Maybe it is time to think about a career switch – time to reinvent yourself. Training. Practicing new skills. Trying things you avoided before.
- Switch to a different job inside the company. Any new hire has more visibility than someone else who have been on the same position for a while. Yes, the new guy is the lower one on the job security schedule – but there is no job security at a company that is firing employees.
In the end, the best option may be to move to a different company. Keep that in mind. Keep looking. Keep making yourself desirable to other companies.
Then again… you may have your reasons for staying with the company who just showed you that “they are not that into you“. Maybe you have a good reason. And I have seen a few people who have benefited from staying on a company that shows them no love. Only you can decide on your own future.
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The work force is being down graded do to the removal of encentives and companys have only one option to get more for less. Memos that end with “up to and including termination” a penny pincher will always destroy a business.