Why don't many executives take pay cuts to avoid layoffs?(businessinsider.com)
businessinsider.com
Why don't many executives take pay cuts to avoid layoffs?
https://www.businessinsider.com/executives-pay-cuts-dont-avoid-prevent-layoffs-2024-2
4 comments
If the whole company is really struggling and asking for sacrifices across the board then leading by example can be hugely symbolic and help get employees to "commit to the cause".
But neither Google nor Microsoft are struggling. They are carrying out restructuring because they identified that in some areas they had more people than needed. There is no reason for the execs to take a pay cut.
But neither Google nor Microsoft are struggling. They are carrying out restructuring because they identified that in some areas they had more people than needed. There is no reason for the execs to take a pay cut.
Why don't many generals take demotions in rank to spare soldiers' lives?
It happens with executives whose compensation is unrelated to the company’s welfare (but rather to a custom agreement between them and the board/shareholders).
As the OP notes in conclusion, saying it wouldn’t make a difference financially is missing the point: it would make a symbolic difference, which is what matters for the employees that stay, saying in substance « we are in it together ».
The reality is it isn’t true for those huge corporations. Because of the scale of their compensation (and the actual power/status it gives them), executives in these big corps have little in nature in common with executives of medium or small firms, but the name/role.
As the OP notes in conclusion, saying it wouldn’t make a difference financially is missing the point: it would make a symbolic difference, which is what matters for the employees that stay, saying in substance « we are in it together ».
The reality is it isn’t true for those huge corporations. Because of the scale of their compensation (and the actual power/status it gives them), executives in these big corps have little in nature in common with executives of medium or small firms, but the name/role.
After deregulation, executives figured out they could write themselves checkes indiscriminately. So they have done so ever since.
The conversation in the E-Suite over annual salary is entirely about "Are we gonna get our full bonus this year?" Not "Is our rank-and-file pay fair and equitable?"
Known companies that reported "No raised this year, no money for them." Because executive bonuses soaked up 80% of the profits. In fact, if they don't soak up the entirety of the profits with bonuses, they're doing it wrong.