Comment by mensetmanusman | Hacker News Reader

Comment by mensetmanusman | Hacker News Reader

“If layoffs don’t work, what is a better solution for companies that want to mitigate the problems they believe layoffs will address?

One thing that Lincoln Electric, which is a famous manufacturer of arc welding equipment, did well is instead of laying off 10% of their workforce, they had everybody take a 10% wage cut except for senior management, which took a larger cut. So instead of giving 100% of the pain to 10% of the people, they give 100% of the people 10% of the pain.

Companies could use economic stringency as an opportunity, as Goodnight at the SAS Institute did in the 2008 recession and in the 2000 tech recession. He used the downturn to upgrade workforce skills as competitors eliminated jobs, thereby putting talent on the street. He actually hired during the 2000 recession and saw it as an opportunity to gain ground on the competition and gain market share when everybody was cutting jobs and stopped innovating. And it is [an opportunity]. Social media is not going away. Artificial intelligence, statistical software, and web services industries – none of these things are going to disappear. “

If this was true, all that is missing is true leadership. Would people here take a 10% pay cut if it meant their colleagues weren’t fired?

> Would people here take a 10% pay cut if it meant their colleagues weren’t fired?

I knew a few people who went through this at the beginning of covid.

One case, a friend had just been hired in Feb 2020. March/April, everything went sideways. May, they announced a 10% pay cut to everyone (owners may have taken larger cut), with promise to get back to original pay by end of 2021. That seems a long time, but at the time of that plan, there were just so many unknowns.

They did end up getting rid of a couple of folks later in 2020, but they were sort of 'on the cards' before covid, and they weren't wanting to fire folks right as this pandemic was starting. Small company (~50 people, IIRC) and it just felt too personal at the start of the pandemic.

They also got everyone back to original pay by Q2 2021 - ahead of schedule.

Other was family member - CFO-level. Company had everyone take 10% pay cut - SVP and C-suite took 30% cut. They rode that out for more than a year, and I think got 'back' to early 2020 levels by end of 2021.

Neither of those are great options, but we had a pretty big global problem going on that few could escape.

Would I do it? If I knew it was 10% across the board (and/or even more for C-level), yes, I'd support that sort of a move, to prevent layoffs. I would also like to know the timeline that was in place.

I freelance, and early 2021, a client 'slowed' down work. I'd been ~20/hrs/week - that go reduced to ~5, but... there was no communication (to me) about expected timeline. Had I known it was only scheduled for a quarter, I would have relaxed a bit. I didn't, and took on other work, then initial client ramped back up and I was... overwhelmed. A bit of communication goes a long way.

The beginning of Covid was somewhat of a unique time. It made sense to accept wage cuts because the entire world economy was a big question mark at the time, and the likelihood of you finding another job at that point wasn't great.

My own partner accepted getting cut down to only two workdays a week at 40% of her pay, for over six months, before she finally found another job. She would have been better off furloughed like most of the rest of the company (they were in the events industry, the company made almost $0 revenue in 2020) because she would have been eligible for the extra unemployment.

But I think a 10% across the board wage cut is risky when you're not in the midst of a big recession/depression. You'll have your best employees that could have probably left and gotten a 10-20% increase elsewhere already, have now lost 10% of their wages at your company and now can get a 20%-30% bump if they leave.

People won't be loyal and stay just because you're hurting the company evenly. Speaking from experience, at a previous company we had frozen raises and removed 401k match and worse healthcare and we saw steady and significant attrition just from that. Cut salary by 10% would probably have similar results.

I guess/thought the context of this was around 'big economic events' like people are predicting for 2023 - big economic downturn/recession.

I generally agree that it's not something most people would be on board with most of the time. Extreme/national/global circumstances, yeah. If few are hiring, everything's paused, etc... taking 10% pay cut seems reasonable. If the cuts are just because the company isn't run very well... yeah... move on to something else if you can.

I'll take the unpopular opinion and say I don't think the occasional team/company shakeup is always bad.

Often times, the resulting team can be stronger than it was before. Particularly if the organization just went through an extremely ultra-fast hiring spree where it's likely low quality candidates were hired.

The "cut 10% of my pay to save my coworkers" works well if you have a high performing team/company. If you don't, the high performers may become resentful if they start to feel like they're subsidizing the salary of low performers.

> Particularly if the organization just went through an extremely ultra-fast hiring spree where it's likely low quality candidates were hired.

The trick is identifying those low quality candidates. You can try to measure them, but once you measure them they become a target, and you get to the equivalent of the person who takes all the easy jobs from a queue because they then think they'll be higher in the value queue.

> If you don't, the high performers may become resentful if they start to feel like they're subsidizing the salary of low performers.

But then they can always walk, and be replaced by high performers who were axed at other companies.

Most (all?) companies don’t want their high performers to walk away. Especially during a layoff.

Sure, but during mass layoffs, those high performers are a lot more replaceable, and they themselves would know as well, and be disincentivized to walk.

High performing employees are not always fungible. You risk are losing significant expertise and institutional knowledge.

And you might lose more of them by pursuing mass layoffs!

I am truly amazed at the mythology of "high performers" as separate from the org. Teams can be high performing, but high performing individuals are often built by the environment.

Yet, in the US we have this almost Stakhanovite mythology where a single worker can pull an entire organization.

I have worked with individuals who had been pariahs in the previous org (got that info over beers with the individual) but were rockstars in our org. Also with so-called high-fliers from other teams/companies who just cratered when they joined our group.

Personally I think cutting 10% pay is preferable because a) the work doesn't go away - if 10% are let go, I'll probably end up doing 10%+ more work. b) it's a commitment by the organization and that shows they care enough to not unilaterally make a decision.

  > Yet, in the US we have this almost Stakhanovite mythology where a single worker can pull an entire organization.

wow never heard that term until now, it puts into terms something i've noticed a lot at companies

https://en.wikipedia.org/wiki/Stakhanovite_movement

Amusingly I was also quite unaware of this historical footnote until I listened to this song [1] from a Putamayo album that mentioned Stakhanovism and had to look it up.

[1] https://www.youtube.com/watch?v=sncLH_1oONg

> Teams can be high performing, but high performing individuals are often built by the environment.

This is a common bias I experience in American corporate culture and it drives me nuts. Viewing things at the individual level makes it really difficult to understand and cultivate productivity in a sustainable way.

Often I find it more useful to look at productivity at the team level. It tends to have more explanatory power than at the individual level because it gets more into psychological safety, communication, attributes that are crucial for high performing teams but are difficult to suss out if you are just focused on individuals. Like you, I have seen way too many smart people stuck in situations where their skills and talents were completely underutilized. Vice versa there's way too many politically adept but inept individuals out there who have the companies that employ them in a stranglehold. All they do is empty these companies of resources, time and money while bringing nothing of value in return.

A pay cut is a constructive dismissal. You've already effectively been fired with an offer to rehire at another lower paying job. Thanks but no thanks.

Depends what the market is like. I took a pay cut during dot-bomb and there really was very little out there. My compensation did creep back up over time but it did take a long-term hit until I eventually went elsewhere. (Other than low comp, I did enjoy the work for the most part.)

It's a no for me. The first part is that a 10% paycut could be a couple years of raises to get back to. Even if previous wages are restored a year later, that's a year of raises missed out on and pay is still lower due to inflation.

The second is that I don't think it's a good idea to signal that they can keep 100% of the labor for 90% of the pay. Firstly, it signals that this is something workers will accept, which is a dangerous line. Secondly, it means workers are assuming some of the risk the business is exposed to without a commensurate benefit.

The company needs to have a tangible and commensurate pain as well. A 10% decrease in pay for a 10% decrease in working hours is a maybe. Changing 10% of my salary over to company stock at a preferential rate (to compensate for risk) is a maybe. Some kind of contract stipulating that employees will be paid back double what they lost in pay is a maybe.

I'd rather roll the dice on layoffs than send the message that risks in the market can be offloaded onto employees.

Yep. As long as there is clear path to get that 10% back. Problem is most companies still have record years and fire people.

I can't think of a single company I've ever worked at, including small startups, where there wasn't at least 10% of the employees who were pure dead weight, and cutting them would either have no effect or improve productivity. I would absolutely not consider any type of cut on behalf of letting these people keep their jobs.

What qualifies you to make that determination of 10% being dead weight? But let's say the assessment is correct, the problem is that layoffs are often a bit random.

The company won't actually be able to identify these 10% you mention, or when it does they might keep them because they are cheaper than you.

In the end you are looking at good people or even yourself being affected by layoffs. I'd take the pay cut over the risk of losing my job or well performing coworkers.

I totally agree that companies may not get the right people. They also may not intend to get those people. A lot of companies get rid of teams they don't need rather than individuals. Sure, it would be more efficient to lay off dead weight from all teams, and reassign the remainder of the teams you don't want, but higher ups don't have the time for that.

And I was affected by a layoff just recently, but layoffs don't really hurt good engineers. You just find another job. My whole team was nuked back in November. But I found a new job within a month, and at a 25% pay increase. So taking a cut would have been a terrible deal. They say the market is bad, but I think that just means bad for bad engineers. Whereas quality really didn't even matter a year ago.

I remember SAS openings in the 2000/2001 recession - I had reliable information that every opening at SAS was getting around 1,000 applicants.

Keep in mind that SAS is privately held and seems to mostly ignore conditions that make publicly-traded companies go a little bonkers.

>Would people here take a 10% pay cut if it meant their colleagues weren’t fired?

Yes, especially if the executives are taking disproportionately larger cuts. Knowing that the people up top aren't as sociopathic as more typical "leaders" who feel nothing when axing thousands while getting massive bonuses is going to boost my own morale a lot. Also, even if I survive the layoffs, the thought that I'm probably next is going to weight a ton on my psyche, like the article mentions

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