Layoffs versus Pay Cuts: Part 2

The debate between what’s better for company’s experiencing a downturn in sales, layoffs or pay cuts, continues to draw differing opinions.  In today’s US edition of The Wall Street Journal, columnist Cari Tuna reports that while 65% of companies resort to lay offs when faced with economic short falls, a growing percentage are choosing mandatory furloughs and pay cuts as an alternative. 


What are the deciding factors in determining which path to follow? It all depends on how you see the future unfolding. 


If you “don’t see a light at the end of the tunnel, it just makes sense to lay off less productive workers,” says Satish Deshpande, a management professor at Western Michigan University’s Haworth College of Business. 


Other workplace experts believe that pay cuts and mandatory furloughs are the better choice if you believe a sales decline will be temporary.


Which route would you choose?  It probably depends on your outlook for the future.


If you’ve already had to make some changes in compensation or structure because of the economy, be sure to check out our free webinar tomorrow on Revitalizing the Downsized Organization.  Senior Consulting Partner Chris Edmonds will be sharing some hands-on management strategies for keeping everyone focused, productive, and optimistic as we ride out this downturn.


For more on this debate, check out our earlier post on January 30, Layoffs or Pay Cuts: How would you decide?





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