Pay Cut - other benefits 1

[graduatequestions]

We are being asked if we would consider pay cuts as part of the effort to avoid redundancies - obviously they can't force us to as our wages are part of our contract, and its not even us necessarily at threat in the redundancys.

I don't mind taking a pay cut in terms of hours worked but its been made clear hours will remain the same (i.e. its a rate cut)

Have other people taken cuts in their workplace to avoid redundancies?

What other benefits are there that I could wrangle into any negotiations to soften the blow? At the minute I can only think of Flexitime and working from home a set number of days a month or something...i dunno just mulling it all over and thought id see if other people had found themselves in a similiar quandry!

 

[jmw]

Are you sure you want to consider this?

See thread731-233836 "How big a pay cut would you take?" which is in this forum. I think you will find, indirectly or not, some of your answers there.

It would be nice, it would be appropriate even, that when the company wants something from you that it should be able to offer something in return.
But what?

Flexi time? yes sure.
Work from home and we pay something toward your energy bills? sure.
Private health care? Sure

These things are damned hard to get from management even in the best of times. These are not the best of times.

OK, promised shares in a future bounty? that might get you somewhere. Benefit now, pay later.
Management like to make promises about what will happen in the future, they only worry about their end of the month figures. So sure, you could have a bonus structure set up such that when the company comes out of recession those that are still their will get a bonus. Who knows, if it were a fairy story, this future bonus might actually get paid.... to whoever is left to claim share. (Think Walmart, think Pensions)

Shares in the company? That might be a bit harder to achieve.

But it doesn't matter, whatever you want, it ain't gonna happen.

They are in a position of strength and they have all the excuse in the world for playing hard ball.
"You lucky you still have a job." is their mantra.

The time to negotiate these things is when the company is doing extraordinarily well and even then it is difficult; when they are making money hand over fist and any disruption would threaten the cash flow, that's when you can strike your bargains but when they want to reduce head counts?

The time to get the deal sorted was before the recession. It is a thing called contingency planning, that is when you have to think the unthinkable and plan for it.

The days of the Quaker Mill Owners, the Cadbury's, Lord Lever etc, they are long gone. Today's management have employee welfare in their hearts like Ghengis Khan was just bringing UN relief aid to the poor countries he visited.

So, they are looking to reduce the head count and you are putting yours above the parapet and basically saying "choose me". Like I say, are you sure you want to do this?


JMW

http://www.ViscoAnalyser.com

 

[IceNine]

We've had a 10% reduction in salary with a 10% reduction in hours.

 

[geezee66]

I knew of a guy who was working for a research company that was dependent on grant funding. Well, the grant ran out so they couldn't pay the employees, and this guy kept showing up for work for two months without a paycheck at all! I don't think that was a good strategy for the employee, but did work for a while for the company.

As far as a pay cut, I politely explain to the company that pay cuts may not be a wise move for them. They won't be able to permenantly reduce wages without either getting a lower quality of engineer or having positions unfilled. So the new people they eventually hire will get paid more than you, which isn't fair to you who helped get them through the hard times.

 

[Lion06]

I'm probably going to get flamed for this, but this is my opinion. I would tell them that you'll take the cut they're talking about, but that you WILL be looking for another job. I've thought about what I would do in this situation since the economy seems to be so bad. I'm pretty lucky in two ways. First, the economy doesn't seem to be affecting us like it is some other firms. Second, our clients (top tier architects) don't treat our firm as commodities, and our firm doesn't treat the employees as commodities. We have a very good core of people here who the company wants to keep in place. I think they understand the costs associated with high turnover and how it outweighs the 100k a year that it will save by cutting salaries. I also feel like I could find another job pretty easily (even in this economy) if I were ever put in the position to have to.

Tell them that you're not a commodity and if they are going to treat you that way that you are going to look elsewhere immediately.

 

[MTPipeliner]

At my wife's work they recently announced that everyone will start accruing vacation at 50% of their previous rate in an effort to save money. She works in a field where the positon has to be staffed everyday, so if you are on vacation they also have to pay the person who takes your place.

I guess it's better than getting laid off, but it isn't very good for employee moral.

I have a hunch that they'll lose at least a few employees because of this.

 

[cvg]

look at it from the employers point of view - They are losing money. they have to reduce costs or they either lay off or shut down. At the same time they need to maintain or increase production in order to break even. Just reducing hours for everybody may not have a significant impact on the bottom line. Pay cuts are happening all over the country and so are shut downs. Take the pay cut and it will go a long way towards insuring that you are not in the next round of layoffs (redundancies). And besides, if you can get another better job great for you, but not likely to happen...

 

[Lion06]

cvg-

Are you saying that employees should suck it up and take any pay cuts requested by the company? I have to respectfully disagree for a couple of reasons.

1.) Right now, when the economy is bad, is a perfect excuse to tell you they need to cut salaries whether it is true or not.

2.) They are not jumping through hoops to give you larger than normal raises when they are making money hand over fist.

I like my job with the company I'm at A LOT. I could have taken a few jobs that would have bumped my salary by a good 20%, but I love the projects we work on and the office environment. That being said, if I started being treated as a commodity then I would absolutely look elsewhere. While most of the job market might be poor, I don't believe that is true for the structural engineering field and I feel pretty confident that I could get another job (paying at least what I'm making now) pretty quickly (less than 3 weeks). I've had 4 calls from headhunters in the last month to 5 weeks, and I don't even have my name/information out there at all.

 

[geezee66]

Here's the concern that I see.

If your company is not selling as much as before (which is likely because of the economic times) they may have more employees than required to get the work done. If this is true, layoffs make sense and are required even though they are painful.

However, if your company's cost of doing business is simply too high to be profitable but there still is plenty of work for everyone to do, they need to reduce cost rather than doing layoffs. Layoffs won't help the company lower the cost of doing business but pay cuts will.

The question I would ask myself - is cutting pay going to make this company more profitable? In the short term yes and it will help survival until the employment situation corrects itself. The long term is more of a concern because good employees will leave for more pay elsewhere (once jobs are available) and it will be hard to fill positions.

I'd be more apt to take a reduced workweek over a pay cut. Working 32 hours a week (or whatever) is obviously temporarily since no company hires part time engineers. But a 20% paycut may just become permenant if the company reduces pay and no one leaves.

 

[cvg]

like I said, if you believe you can get another job than by all means you should go where the grass is greener. I hear the economy in Qatar is booming. However, at least in my area - nobody is hiring and all the headhunters have quit calling. And yes, cuts in compensation as well as hours are happening all over the place, it is not just your company. I got a small raise in January, but was forced to take 3 days off without pay in December as the office shut down. Several fellow employees have gone on 24 or 32 hour weeks. The commercial and residential development teams have been shut down completely and let go. Other offices in the company have completely shut down and some have had 10% salary reductions for all salaried employees.

 

[Lion06]

I don't need to follow greener grass as I'm not getting a pay cut. Do you work in the civil field or the structural field?

 

[KENAT]

The approach of take the cut but look for something else sounds realisitic. Though I'm not sure why you'd tell your employer you're looking for something else, unless you are trying to bargain with them to not cut your pay.

Asking for something fairly simple like flex time or 4 day week or something wouldn't necessarily lift your head much above the parapet and depending on your situation may be quite useful. However, not being as visible in the office can have down sides.

I'm looking at a pay cut and I already get some kind of flex time so I'm pretty much at the point of looking elsewhere.

KENAT,

Have you reminded yourself of faq731-376 recently, or taken a look at posting policies:

http://eng-tips.com/market.cfm?

 

[ScottyUK]

Take the cut but take request a pro-rata cut in hours. After all it's lack of work that's creating the need to cut wages... isn't it?

Spend the extra day off with the people most important to you, or get your head down and either learn some new skills or get applying for jobs.


----------------------------------

If we learn from our mistakes I'm getting a great education!

 

[COEngineeer]

I think if you work for a small firm, I would really consider taking the pay cut and be a "team player". If you do find another job, then that is great. I always want to show my boss that I will try my best to help the firm grow. I would take structuralEIT's advice, but I wont tell your boss you will be looking for a new job. I would say, "If that is the best solution and it will help the firm, then I am all for it". At the mean time, look for another job (although it is pretty hard right now). If you do find a job lets say in 3-4 months, your boss will give you good reference.

Never, but never question engineer's judgement

 

[Krautso]

I would respect a management team that makes the cuts needed to be competitive long term and be very wary of the management that begs employees to voluntarily roll back their wages. They could prevent 10 pay cuts for every lay off. Yeah it sucks to be laid off but thats business. I don't agree with everyone taking the cut just to save some jobs.

For those that get laid off, maybe they have to do something else for a while to make ends meet. Maybe their old job is waiting for them when economic times improve. Other industries/professions/trades go through this on a constant boom/bust cycle. This is nothing new.

 

[Lion06]

COE-

I don't know that I agree that one should blindly go along with "the best solution that will help the firm". Why not take a 20% cut when times are good? That would help the firm be more competitive in pricing, right? I just think that engineers, as a profession, are underpaid - why contribute even more to that? No one is standing in line to give you above average raises when times are good because then they have to "remain competitive". We keep hearing about how health care costs are going up and up and something has to be done about it, but I would bet $10 to anyone's $1 that it won't be addressed by doctors taking a pay cut.

scottyuk makes a good point. Presumably, the lack of work is the problem. Why not take the reduced salary for reduced work hours and not just a blanket cut in your salary?

 

[KENAT]

I don't know about the OP but lack of work, at least in the design side, isn't the problem at my place. It's lack of sales that's the problem.

Development of a new product takes a year or more (historically always more except for minor enhancements) so we are always working in advance of getting any money for our efforts. For long term survival we can't realistically stop developing new product so we need to keep staff in our design area.

Now certainly on the shop floor/production side the argument to cut hours (or staff) to suit the run rate has some merit.

However, we are still making sales on our less profitable lines so need the staff to build them, the thing that's really killing us is our complex/high cost product line where the profit margin is larger just aren't selling. Almost everyone specifically associated with that line has been let go apart from a few key personel.

So I'll be taking the pay cut and looking for something else, unless it's big enough that being laid off is more attractive and that's an option.

KENAT,

Have you reminded yourself of faq731-376 recently, or taken a look at posting policies:

http://eng-tips.com/market.cfm?

 

[jmw]

Kenat, the trouble is that for some companies survival is all about hitting the end of the month figures and that means that in tough times it is the future that is sacrificed in favour of meeting those end of the month targets.

So, if the recession is short lived the management may justify long term projects and ride out the bad times by cutting back in the traditional areas of sales and marketing. If it looks to go on longer then they'll focus on existing saleable product as the means of keeping the cash flow.

They will tell themselves that that can always return to R&D later when times are better and they will tell themselves that there will be plenty of engineers looking for jobs to fill those places. Maybe, even some of the engineers they let go will come back.

So the initial response may be to cut back on advertising, exhibitions, training, stationary, new computers etc. Then they'll turn to the headcount. Initially it may be that it will be marketing people and some sales that will go. Maybe some of the production people (especially if sales drop off) and they may try and maintain R&D but they may cut some of the R&D budget.

Pretty soon they'll find that this isn't enough. That's when they'll start in on anything that doesn't turn a dollar each month.

Of course, you may work for one of the smart companies that have the resources to ride out even a longish recession and who know that the conventional approach is wrong; it isn't about the end of the month figures, it is about who will be the fitest when the recession ends.

JMW

http://www.ViscoAnalyser.com

 

[KENAT]

jmw, I don't think we disagree. Engineering has already lost quite a few people and is arguably down to the bone (or less) for what they want to achieve. If they lose more people then they'll have to scale back what they want to do and risk losing (more of the little remaining) market share to competitors.

My opinion is that our management tend to be a bit short sighted, but they also have a plan (or rather hint of an idea) for restructuring/simplifying/renewing our product line - for which they need engineers.

A pay cut or freeze was suggested about a year ago, but instead they let people go as they figured a pay freeze would cause people to quit anyway (probably best first) where as with lay-offs they had more control in who left. I think now with the combination of not easily being able to cut more staff without losing key skills/experience and the job market being such that people are less likely to leave voluntarily they are considering the pay cut.

KENAT,

Have you reminded yourself of faq731-376 recently, or taken a look at posting policies:

http://eng-tips.com/market.cfm?

 

[KENAT]

Well, seems they had a change of heart, sort of. Our year end results/CEO letter to employees mention no merit pay increases this year so basically a pay freeze.

So I'm still looking but not quite as desperately.

KENAT,

Have you reminded yourself of faq731-376 recently, or taken a look at posting policies:

http://eng-tips.com/market.cfm?