If there is one moment that is more stressful than others in one’s career, it is living and working through an organization review at your employer – especially a review that is initiated as a result of a deficit of several millions of dollars. There is nothing more difficult than understanding that your employer is trying to reduce expenses and may deem you unnecessary. When your employer is trying to cut 10% of its annual budget, a budget that had already been reduce in the previous years, you know big changes are coming.
In case you cannot read between the lines, I recently went through this at my employer. It was initiated last fall and was supposed to end in early March. I avoided writing about it on my blog (and will continue to do so) for fear of breaking some unwritten code of conduct. I know that several of my co-workers read my blog and releasing too many details may have made things worse for me. However, things seem to have come to some sort of a conclusion and I feel comfortable reflecting on the situation here.
How People Typically Respond to Potential Lay-Offs
I am convinced that job security is something we often take for granted. We often assume that our position will be there forever, but if the recession has taught us anything, it should be that nothing is written in stone. No one likes to hear that they may be let go. When the organization review was announced (aka the committees assigned with the task of reducing expenses), there were a variety of natural responses that seem to apply to any similar situation.
- Begin Looking for New Employment – It has been said numerous times that a strong offense is the best defense. When there is potential for you to be let go from your current position, you have the option to look for new employment. Being pro-active in search for a new job may provide the best sense of security that you can obtain in this situation because no matter what happens, you can tell yourself you did the best that you could. It can also significantly shorten or eliminate all-together the period of unemployment. The only downside to this approach is that if it becomes known that you are looking to abandon ship, your name may move to the top of the list of people to be let go.
- Make yourself irreplaceable – Another viable option in this situation is to make yourself difficult to replace. A simple and effective way to make this happen is to volunteer for a significant project that is unique to your abilities. If you embark on a several-month project that will require your skills to be completed (and is a valuable project for the organization), you may survive the cut. Showing this kind of willingness and dedication to the organization may also be enough for them to keep you around. Committing yourself to too much work, however, inevitably means more work without any sort of compensation.
- Protect ‘Numero Uno’ – I am convinced that one of the most natural positions to take in this situation is to look out for yourself. This can be achieved through admiral methods by making yourself irreplaceable, but often resorts to pointing fingers and naming names. Instead of the chance of being let go, you make it a purpose to highlight everyone else who is expendable. While this may prevent you from being let go, it alienates you from your co-workers. If performed too publicly, it may unnecessarily create too many enemies for yourself and be counter-productive.
How I Responded
While I will admit that I looked for any other available jobs in the area, I was fairly committed to staying at my current employer (if at all possible). The primary reason is that I am receiving certain benefits that could not be matched anywhere else, including free graduate school. (This is partly how my wife and I pay for graduate school without going into debt). I decided to take on large projects that will take me the course of the year to complete. These projects did not make me irreplaceable, but would make it more difficult for them to let me go.
That wasn’t all that I did. I wasn’t willing to sacrifice the friendship of my colleagues (even though some of them were easier to justify being let go) because I knew the danger associated with that route. Instead, I poured my heart and soul into 20’s Finances and my other online ventures. In my opinion, generating a side income is one of the best options for anyone who might be laid off because of the income diversification. If I did lose my job, I would have some money still coming in. Between my wife’s income and my side income, we would survive a long time without touching our emergency fund. If I didn’t lose my job, I can always use more money for my future.
How it Turned Out
As it turns out, after a couple extra months of deliberation by high administrators, there has been a promise of no layoffs. They even committed to not reducing our retirement contributions. PHEW! You may be wondering the bad news, though. In case you haven’t already guessed it, I got hit with a decent pay cut. The only way to balance the budget without layoffs was for everyone to bear the burden together. While I don’t feel comfortable sharing the details of the pay cut, suffice it to say that I will notice it.
I can’t help but feel mixed emotions.
On one hand, I am relieved to be able to keep my job. I would hate to have to search for a new job at this point in my career, especially without a job at the time. We all know that it’s harder to find a job without a current job and I don’t need that stress in my life right now.
On the other hand, I hate that I just got hit with a pay cut. When I consider my position, I am also disappointed that I am not being paid a competitive wage. My mediocre salary is already below the average for my position. Reducing my income even more is as they say, adding insult to injury. It is enough to get by on (with my wife’s income as well), but it’s nothing to brag about. It not only affects my current choices, but puts me at a disadvantage for future positions.
Readers, how would you feel in my situation? Would you be more relieved to keep your job or resent that you took a pay cut?
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Overall I think you have to weigh the “unmatched” benefits you’re receiving at your current job compared to how much MORE you could make elsewhere. Are these extra benefits worth making significantly less than you could elsewhere?
I’m not all about chasing money though and I think it’s important that you work at a place that you enjoy (with people you enjoy). If you’ve found that then I’d encourage you to look past the pay cut as much as possible.
That’s great advice Jason. Thanks.
That is tough. I would definitely be fruaterated and if the extra benefits didn’t outweigh my below market wage I’d start looking elsewhere. There are other companies that pay for grad school butbi don’t know what other unknown benefits exist. Do you think this is just temporary or a new way of running the business? You have to tale that into account. I wouldn’t expect a raise soon either.
Yes, there’s no raises this year and I’m not even hopeful for a raise (or significant one) next year.
I think you have taken a healthy and realistic view of things, based on how you wrote this up.
The reality is that these days many qualified people do not have suitable jobs, let alone ANY jobs at all. So, it’s good to be thankful for what you do have, pay cut or not.
That being said, I do think that quite often future job salaries are based on what you made in your last job. So, a percentage paycut may lead the next opportunity to be correspondingly lower in salary. No guarantee of that, but I think it could involve strong positioning and negotiation to avoid that. So, that part wouldn’t be ideal. But if you’re getting tuition paid, that cushions the blow a lot it would seem. Anyway, best of luck there going forward.
Thanks. You summed it up nicely. I am afraid of getting a lower salary at my next position, but part of me is still thinking about being self-employed. I have a couple of business ideas that could turn out and I have a couple years to try it out in my spare time. We’ll see how it works out.
If you are not being paid a competitive wage, you are not being paid a competitive wage. I stayed with a company despite knowing I was paid much less than most similar jobs in that area paid because of perks such as paid certification programs. But I grew more resentful that I wasn’t getting paid what I was worth and the benefits I have gained in paid certification programs did not make up for the large gap in pay. I eventually left that company.
Like Squirrelers said, you do have to remember that your next opportunity may be impacted by the current pay cut. The good thing is, you still have a job and a side income. Think of what you want based on your long term goals and see how this job fits. Best of luck to you!
Thanks for the advice. Yes, part of it does eat away at me, but there are other perks. I know that income isn’t everything so I will probably hold out for a while unless I see something that is too good to pass up.
We never got a pay cut though they haven’t given raises in over three years. They did cut our retirement matching contribution, which is about as close to cutting pay as you can get. So far no word on re-establishing that but hopefully soon.
That’s too bad. It is a tough economy right now in many sectors. I am ready for things to turn around. I hope you get your matching contribution back soon.
I think that I would be frustrated that I had a pay cut but like you said, grateful that I had a job. I think I would take the time to start looking for a different job. If I knew I was making something that was below average for my position, I would end up getting frustrated and not wanting to work (even if I liked my company). However, like you said, if there are perks that outweigh the below average salary that you get paid, those must be weighed into your choice.
My thought is to try to look at your new, current situation on its own merits, not compared to where you were pre-pay cut. Is your overall compensation & benefits package still appealing? Do you like the work? Is your package + opportunity + appeal of work still likely to add up to what you’d find at another employer? If all of these are ‘yes,’ then I’d try to put the cut behind me, psychologically and emotionally, and move ahead.
Ooohh–sorry to hear.
Last year we had to cut 10% from our operating budget, and now with the upcoming legislature, we are asked to come up with ANOTHER 10% we can cut from our operating budget. Ouch! We all ready made reductions down to having to take out our own trash (which caused a gnat problem in our office–no lie), take out our own recycling, vacuum our office, and a lot of positions were eliminated (but they were vacancies, so no person was eliminated).
Wonder what this round will bring…
You said yourself that your side income would provide enough for you if you got laid off, and instead of getting laid off, you just got a pay cut! Whee! Keep up the side venture and you won’t feel the difference.
Welcome to teaching! I have ten (10) furlough days which is a 5% pay cut. Normally, I have opportunities to work summer school to earn extra money. This the state of education!
Sorry to hear that as well krantcents! Good thing you are financially savvy. (less money still hurts though).
The good news is it doesn’t affect my pension! The bad news is larger class size and no money for anything at school.
Sorry to hear that krantcents. I hope you enjoy what you do. I do for the most part, but don’t plan to do it long-term, so it makes it more difficult to accept.
Happy for you still having the job. Do you get extra time like Larry gets? Actually when the huge debt is lurking around, you need to cut budget for something, education it is!
That’s tough to take a pay cut that doesn’t come with a new job. I know I would be giving less than 100% effort in the future.
I would continue to search for a new job. Nothing is safe anymore, and the best defense is a good offense you’re right!
I’ve never had a “pay cut” before, just a really craptastic bonus which accounts for a good amount of overall income.
I felt things have been in a structural decline for a while, so I’ve been working hard online for the past 2+ years now. You have the right strategy, and I think it will pay off! Good that Yakezie.com is an outlet to write about your more personal stuff. That’s exactly what I use Yakezie.com and Untemplater for as well, with various topics! :)
You should always have a new job prospect in your sights, but that doesn’t mean you are looking to leave. In today’s world, this is just how it works. During the “great recession” I went without a raise for a year, and got a lame raise the next year. Everyone was pretty bummed, but I networked and worked hard to get promoted. I figured if I couldn’t get my yearly raise, I’d go get it myself. I have done that twice at my current employer and it has paid off nicely.
I think your online businesses will pay off nicely in the end. Keep building your empire until you’re ready to take the leap. And then tell me how to do it, because I’m following your model :)
In that position I would continue to look for a new job. It’s GREAT that you didn’t get laid off, but if your salary was already below mediocre, well, then it seems like you might be able to do better. And provided that you’re discrete, there’s no harm in looking for a comparable position in another company where you’d make more. And if you don’t find something else, well, then you have the job you’ve already got!
Pay cuts are tough, but the job market is even tougher. No matter what you should always consider the benefits pay cut or not. My brothers company does 401K and a traditional pension plan so his company definitly is better than mines in terms of benefits so I would consider a pay cut in that scenario.
This is a tough one. I pay cut is terrible. It really depends on if that person is living paycheck to paycheck. if they were that put cut would ultimately ruin them. They might be better off looking for another job while still working or leaving and looking for a new job with more effort.
No one likes being let go. Its tough to find a new job and learn all new procedures, meet new people.
The possibility of a crap boss or co-workers can be really depressing.
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