[morgante]

> This story reminds me tangentially of the time when Hewlett and Packard, when faced with a downturn at HP, decided to cut pay across the board so the company could avoid layoffs.

It mystifies me that cutting pay instead of getting rid of deadweight is seen as noble or honorable.

If I were working at HP, I would have quit the second they decided to cut my pay just so they could avoid needed firings.

[mooreds]

> If I were working at HP, I would have quit the second they decided to cut my pay just so they could avoid needed firings.

I sympathize with your viewpoint, but I think it depends on whether you see dead weight. If you are on a great team with no dead weight, a pay cut to keep everyone together would be far more palatable.

[eru]

Especially, if you get backpay later, or get at least more equity to make up for the pay.

Even if that equity is depressed in value for a bit. `Bailing-in' creditors is actually a common technique for financially struggling companies. Employees are a kind of creditors.

[jagtesh]

I think the key here is motivation. When cost cutting is the motivation, managers are told to remove X number of people from the department, even if they all perform their jobs well. This is more common than you think.

[mjfern]

If you're careful about hiring and put in place the right incentives, then there doesn't have to be much dead weight. And if there's little to no dead weight, then I think it's very noble and honorable for a company to cut salaries across the board to avoid layoffs. It's certainly a lot more noble and honorable than a company that provides its CEO a salary that is 204x that of its average employee (https://www.glassdoor.com/research/ceo-pay-ratio/).

[maxxxxx]

For some people and at certain times it's not that easy to find a good job immediately after quitting. If this had happened in 2001 good luck finding a job!

[SilasX]

I strongly suspect that they did experience this sort of "evaporative cooling" of workforce quality when they made that decision (or quietly reversed the paycut with targeted "raises").

Ditto for GM when they offered all union employees the same (formula for) buyout from their contracts -- the best ones take it and leave because they'd get the money and the new job; the poor performers know they can't last anywhere else and stay on.

[PhasmaFelis]

How do you know they were dead weight? Why do you assume that getting rid of employees (who are still providing value to the company) is necessarily a better move, financially, than reducing pay?

Hell, for that matter, why do you assume that you wouldn't have been among those deemed "dead weight" and laid off?

[morgante]

> How do you know they were dead weight?

I've never seen any large company which didn't have at least some employees whose value was less than their salary. Frequently, such employees can even confer negative value.

Moreover, even if you don't have any deadweight, you do have an ordering of employees. Your top employees are the ones most able to find a job elsewhere and hence very unlikely to accept a pay cut.

> Hell, for that matter, why do you assume that you wouldn't have been among those deemed "dead weight" and laid off?

I don't. Even if I were supposedly in the "dead weight" I would rather be laid off, get severance, and find a new job which would pay me the salary I had negotiated previously. A pay cut is changing the terms on which I agreed to work and would frequently push the job below my BATNA.

[gech]

Are you a wolf, or a sheep?