Why don't company execs take a paycut instead of lying off employees?

Oct 27, 2017
528
#54
There's a misconception that management loves to downsize. Good managers, at least, know that downsizing very often backfires. Reasons include:

-They cut too deep, and have to rehire later (making for hefty firing and rehiring expenses).
-They let go of people with vital "organizational memory" that hurts later.
-The effect on the "survivors" can be severe. People leave to avoid the next round of cuts, or feel guilty for surviving.

However, due to mergers, acquisitions, technological change, or a recession, layoffs sometimes become necessary, and it's a manager's job to adapt properly for the long-term health of the company and its stakeholders. Sometimes that means growing the company and hiring employees, other times it means downsizing to survive a change. As long as they're adding value they're due a proper paycheck. A CEO keeping people around just because would hurt the organization's competitiveness.
 
Nov 3, 2017
111
#55
unless "someone fucked up" is a employee burning down a whole warehouse or something. i dont think the "fuck up" of someone on a low level can affect the whole company.

everybody is just following the execs orders.
That's not how they see it though. I'm not saying it's correct. I am just telling you how it is.
 
Oct 27, 2017
1,881
#56
Unions aren't what they once were.
These are people in a union, crazy enough. I have heard from workers who remain that they are expected to work more/longer hours. Those people may not have had "essential" workloads" but to just cast off 1400 workers after them helping you to become wildly profitable is capitalism at its finest.
 
Dec 3, 2017
1,670
#57
Detachment from the workforce is also a thing, if you are the boss of let's say 20 employees it's more likely you know them personally one by one and if things aren't going well you are more eager to deprive yourself of something to keep them around, if you are a CEO of a megacorp that has thousands of employees inevitably they don't "feel" like real people but just a number making the choice of cutting them off much easier.
 
Dec 5, 2018
374
#60
They have bills to pay too. Would you take a pay cut because some people under you fucked shit up?
Even when you are super rich this mentality still exists. Except now they can't make payments on their 3rd yacht instead of, you know, not being able to make a car payment or pay medical bills.
Then they should downsize and live within their means.

Perhaps get a second job.
 
Oct 28, 2017
3,517
#63
what is worst is that all the top companies executives and the like could cut their salary in half, and their life style wont change a fucking bit. thats how much money they make.
 

Arc

Member
Oct 25, 2017
1,121
#68
A lot of times layoffs are the results of restructuring where the company is changing strategy. So if you’re a person on product A that is being phased out as the company will now focus on product B, you have specialized employees that unfortunately have to be cut.

Obviously it’s still shitty but there are cases when layoffs aren’t just executive greed.
 
Oct 27, 2017
8,367
#70
They have bills to pay too. Would you take a pay cut because some people under you fucked shit up?
Even when you are super rich this mentality still exists. Except now they can't make payments on their 3rd yacht instead of, you know, not being able to make a car payment or pay medical bills.
Your response is for us to empathize with people who have three yachts. Am I reading this correctly? I want to assume this is sarcasm but...
 
OP
OP
Youngfossil
Oct 27, 2017
722
#72
A lot of times layoffs are the results of restructuring where the company is changing strategy. So if you’re a person on product A that is being phased out as the company will now focus on product B, you have specialized employees that unfortunately have to be cut.

Obviously it’s still shitty but there are cases when layoffs aren’t just executive greed.
Of course. This isnt an absolute. I know layoff can be unavoidable sometimes.
 
Oct 25, 2017
2,131
San Francisco
#75
It's less about the exec pay cut being able to compensate for worker salaries as it is owners (including anyone with savings or 401ks and whatnot) pay execs to slim operational costs because it makes a better return. If it costs only an extra .001 % of your investment roi (towards an efficient exec) that leads to increase that roi .5 % (by running operations leaner) isn't that what you want? Your savings dollars push this. The people that manage your investment money do this.

Do I agree with this way of doing things? No.

Execs aren't the problem people. It's owners demanding the best return they can get, at all cost. The most common owner? You. (if you have a retirement plan)
 
Oct 27, 2017
1,180
Portland, OR
#77
High level executives don't generally get to where they are though kindness and empathy - they pretty much stomp on people all the way to the top and pull the ladder up behind them.
 
Oct 28, 2017
1,246
#79
It would just be a bandaid. If the company just needed a short term loan, chances are they'd just get one.

Layoffs are more often due to restructuring the business for future growth than due to immediate cost concerns.
 
May 17, 2018
1,853
#80
It's a bit more complex than some comments make it sound, but a good answer is psychopathology. Several studies have shown that corporate CEOs, particularly male, tend to show clear symptoms and traits of being psychopaths. While this makes up a tiny portion of the general population, it makes up a surprising percentage of CEOs. Same in politics. It explains that huge lack of empathy that their decisions exemplify.
 
Oct 27, 2017
2,769
#82
The real answer to this question and many others is that everything in life is a competition through leverage of power.

The executive class in the 21st century understands power and how to leverage it better than the laborer class, and they have no qualms about it. You get power by being the right race, being born into the right family, having the right connections or being exceptionally skilled. People that understand power usually keep rising through the ranks until they become the new generation of executives instead of being happy taking a lower position and helping negotiate from a position of collective power instead of individual power.

As Pompey the Great once said: Stop quoting laws at us , we carry the swords.
 
Oct 27, 2017
1,288
#83
but i mean, if they are laying off people it means they dont need them, what a union can do? threating with a strike? they would be terminated anyways
That is some anti union propaganda doing its work.

If a company still makes money no one will get fired, if the Union works as intended. Yes they will go on strike. Unions in Germanys automotive sector have made deals where the company can start thinking about laying people of only if they start to lose money. Like in the red.
 
Nov 13, 2017
3,910
#84
It's a bit more complex than some comments make it sound, but a good answer is psychopathology. Several studies have shown that corporate CEOs, particularly male, tend to show clear symptoms and traits of being psychopaths. While this makes up a tiny portion of the general population, it makes up a surprising percentage of CEOs. Same in politics. It explains that huge lack of empathy that their decisions exemplify.
Do you have a link to relevant studies? This is interesting, but not entirely surprising. At some high up level, even if you are the most benevolent man in the world and donate 90% of your earnings to charity, you're going to have to make a decision that lays thousands of people off or negatively affects someone else.
 
Nov 3, 2017
111
#85
Your response is for us to empathize with people who have three yachts. Am I reading this correctly? I want to assume this is sarcasm but...
It is. But it is true that this mentality exists from the really poor to the super rich. Everyone has a lifestyle that is proportional to their income level. Most people are unwilling to change their lifestyle. Even though for the super-rich it would seem much less difficult for them. For the CEO it would be horrible to have to explain to their 3 children they now have to share 2 yachts.
 
Oct 27, 2017
12,978
#86
Because, more often that not, it would not cut costs enough to save those jobs. Executives are primarily compensated through performance based bonuses and stock options, not a base salary.
 
Oct 25, 2017
1,750
#87
Typically when you are looking at layoffs the business is in a bad place. That is, it might be about to fail or there is too much focus on ventures that aren't profitable. A healthy company might reshuffle good workers, but often you have more of them than you need, at least until you successfully reorg. "Why doesn't the captain of a sinking ship throw out their luggage?" kinda thing.
 
Nov 2, 2018
19
#89
I worked at a place where the owner/president cut his pay in half when we had to layoff several people....so it happens. It probably saved having to lay off even more.
 
Oct 25, 2017
3,509
#90
Because people bought into the fable of the way "jobs" work and the executives are taking full advantage. Same reason why the pay gap at top to bottom is growing.

"Capitalism will fix itself, laissez faire"

No, the top will keep eating and not leave a crumb if left alone. They don't care about anyone else, you a resource to make them rich.
 
Oct 30, 2017
1,984
Canada
#92
I don't really think execs should take a pay cut rather than laying off employees. I think they should just be paid less in general.

Especially when you see a pattern of terrible CEOs coming in, laying everyone off and selling everything to meet an arbitrary target for the next year and get their bonus, then fuck off on their golden parachute to the next company that will hire them even though they've ran the last seven companies into the ground.
 
May 17, 2018
1,853
#95
Do you have a link to relevant studies? This is interesting, but not entirely surprising. At some high up level, even if you are the most benevolent man in the world and donate 90% of your earnings to charity, you're going to have to make a decision that lays thousands of people off or negatively affects someone else.
You can start with this Wikipedia article, it's full of interesting links. https://en.m.wikipedia.org/wiki/Psychopathy_in_the_workplace?wprov=sfla1

While I agree with you on the fact that we don't see the bigger picture that they have to work with, this refers to things like the 2008 financial crisis or Monsanto and most nations not wanting to ban neonicotinoids despite the current bee collapse and its consequences. It also explains a couple bosses I've had, but that's another story.
 
Oct 25, 2017
4,472
#96
Short answer: Because they don't have to.

Longer answer: Because market forces make that a really strange thing to do.

Even longer answer: Company execs jobs are to make the company efficient, which includes, unfortunately, locating where jobs may not be necessary and cutting them so that there can be more profit. That's literally their job. If they take a pay cut the inefficiency still exists and either someone else at the company or shareholders will see it and force that to happen anyway. If they consider a pay cut then they may as well look for a different job where they could make the same or similar amount instead of staying. And then the company is forced to get someone else and that new person's job is literally to locate those places where they can cut.

Companies aren't charities. Jobs exist because they're needed. If one exec doesn't cut them then another might. Or somewhere down the road they might. Or they'll get undercut by another business that does. That's probably the biggest thing. If your company doesn't get efficient someone else will and if they can undercut you by even a few percentage points you're fucked. Then everyone loses their job.

Then on top of that there's just really nothing pushing in the other direction. Humans are the same as anything else in the company. They're the same as cutting any other cost. If there were more unions this would be different, but there aren't really anymore.

Then there's the calculus that the math may not really mean anything. An exec makes a fuckton, but divided out by however many people's jobs may be inefficient and you might not get everyone anyway. You may save a quarter of them. Maybe less. Who knows.

Personally I don't think Execs are evil. I don't think companies are evil. They're just following the rules of the game we put forward. You want to change the game? Change the rules. Support unions. Support labor laws. And I say this as a business manager who literally right now is taking a massive cut in hours along with my owner so we can keep the lights on and not lay people off. Our company's a bit different though. And tiny.
 
Nov 1, 2017
2,764
#99
You purposely being dense? If you are laying off 100 employees that would keep at least half of those if not more.
It's often not just simply 100 employees, and when things are going bad, greed kicks in cause the company is likely going under or that CEO is gonna get replaced, so they just horde up what they can get before it's too late.
 
Oct 25, 2017
9,748
Western sensibilities see the company as a way to make money for you, so Execs would rather lay off people than take cuts to their pay checks.

There is not that Japanese style loyalty to the success of the company rather than one's own profit where a CEO would voluntarily take a pay cut if he felt HE failed the company rather than the employees.