In the US they don't do this. The thinking is someone getting a lower salary and the same job will not be very motivated. It's better to just get them go and keep other employees at their same level or higher.
That's not true - my last two companies have done haircuts along with layoffs. At my current company we were promised a bonus of Nx the haircut at a certain point in time as compensation...though whether that happens or not is still to be seen.
Kinda-sorta. We took temporary pay cuts at the start of the pandemic. One dev left, we got the PPP loans, and then full salaries were restored - that all happened in a couple of months. Then about half a year later, our whole team was offshored.
(employer speaking) at the beginning of the pandemic we sent everyone home, and did across the board pay-cuts (50%) for alomt everyone (we set a floor so those least paid kept 100%).
Those that could work from home did. Some worked 100%,some 50%.
Over the first 6 months we assessed monthly, and slowly raised the floor. Once everyone was back on 100% we paid back-pay for all the missing pay (even those who chose to only work 50%).
Ultimately everyone was made whole, actually considering the saving in fuel from commuting came out way ahead.
We managed to avoid any layoffs.
Not surprisingly (to us) we got very few thanks. Mostly we're told how bad we are running the company. Bonuses are too low etc. A long career being an employer has shown me that (with rare exceptions) the more we look out for staff the less they appreciate it.
Paying only 50% means mortgages go under. Spreading your loses to employees who don't have the upside is not fair. Did you share 50% of the profits (upside) or just pay the amount you took back from them.
You are not going to win employer of the year by shifting your risk to the backs of your employees and rewarding them by paying money they should have never lost. They should get a bonus.. you did. Did they not share in the risk? Should have taken a loan or let people go..
Given that the country shut down with 3 days notice, everyone was in the same boat. Banks offered the usual payment holidays and so on.
Certainly a lot of companies did as you suggest, and simply let everyone go. I'm not sure that's better than 50%. Clearly all our employees were welcome to quit, and since none of them did, I guess they preferred 50% to 0%.
I'll be sure to mention to them next time that they're welcome to take 0% instead.
Loans were not an option given that the banks were closed. (And given that our appetite for large loans is zero.)
>> They should get a bonus.. you did.
Did I? news to me :) I was on 50% like everyone else, and I was made whole last.
As it happens we issued 2 bonus' the following year. So yeah we share profits.
Obviously there were different approaches to dealing with unprecedented events. I'm not looking for employer of the year, but on the other hand I don't like firing people unnecessarily.
I think this is mostly true but depends on the industry and "critical mass". If you have enough people, then letting people go and then filling in with OT hours (remaining people) is still more cost effective all things being equal (some people may actually welcome the OT hours here and there) and not chronic understaffing
I would love to know how people at the company feel about this in terms of morale. It's hard to bring this stuff up. I would rather be laid off than have this because there's at least a runway with known pay to find a new job.