Softening the Blow

With steadily decreasing profits, some cash-strapped companies believe massive layoffs are the easiest and quickest way to reduce expenses.  “But companies can’t shrink their way to greatness,” says Dan Moynihan, a principal at Compensation Resources Inc. in Upper Saddle River. N.J.  He offers the following suggestions to help limit costs without producing employee morale or turnover problems:

·         Try a tiered pay cut.  For instance, cut salaries above $100,000 by 10 percent; between $50,000 and $100,000 by 7.5 percent; between $25,000 and $50,000 by 5 percent and, don’t touch earnings under $25,000.

·         Avoid small pay cuts like 1 or 2 percent.  In the end, savings are minimal and problems with attrition and productivity can be huge.  To remotivate employees, pot for performance-based pay programs.
 
·         Don’t splurge on executive perks while other benefits are being eliminated. 

·         Cut superfluous perks such as free food and soda.  But don’t mess with coffee.  It’s a benefit that enjoys high utilization and keeps employees happy.  You’re better off doing away with related products like free milk, sugar or napkins

·         Ask employees to pay for other valued yet excessive freebies like on-site haircuts or back massages.  Oh, and sell the foosball tables-employee’s need to focus on work.

·         Leave medical and retirement benefits alone, especially if you support an aging population.  The same holds true with vacation and work/life benefits for a young workforce.