It is a general understanding that the global economy is not quite as vibrant as it was before the pandemic hit. Many business executives have been asked to downsize their salaries or find other innovative ways to reduce company expenditure. Considering the pandemic has affected everyone in one way or another, workers will be expected to understand the uncertain times we are in and be understanding of the decisions they have to make in order to keep the company afloat.
One of the ways companies may execute salary cuts is through negotiation. In this scenario, the CEO or financial controller will approach workers (or at least, management) and find out how much of their salary they can part with, for the benefit of the entire team. Alternatively, business leaders may take an express decision to reduce salaries by 10% or 30% across board.
Apart from direct salary cuts, there are other ways companies may look to reduce their overhead costs and maintain the company’s profitability. Some of these tactics are discussed below:
Benefits: Companies can choose to stop supporting workers with bonuses such as clothing allowance, transportation allowance, etc. This way, the company will be able to spread those payments into other cost centers that may not be earning revenue in a downtime.
Bonuses Raises: Employers may choose to forego bonuses for employees. Once this happens, it is obvious that there is trouble aboard the company’s ship.
Reduced hours and mandatory furloughs: To reduce company overheads, workers may be asked to work fewer hours or take unpaid vacations. In such a situation, companies will encourage workers to take on additional projects outside of their work, provided there is no conflict of interest. On one hand, it may be difficult for workers to navigate such a season. However, experiencing pay cuts, bonus reductions and reduced hours are all better options than being out of a job. Once a worker is faced with such situations, there are ways by
which they can manage the situation.
Be Proactive: Look for ways to help your employer cut back on overhead costs without cutting jobs or pay.
Be creative: Outside of your office space, what can you do to generate revenue for your household? Workers can be creative in finding innovative solutions that will double as revenue streams.
Be cautious: Such situations may cause workers to be mindful of their spendthrift nature. It is in such times that expenses should be made cautiously, and not extravagantly. Even further, one could easily have a conversation with an accountant or financial expert on how to maximise the salary you receive.
There are so many more ways by which one could survive a pay cut. In these uncertain times, workers need to be mindful of this and understanding of their employers if ever they are faced with such a situation. There is always a silver lining to every cloud – it is up to us to find it!
