The ADP numbers released Wednesday that showed nearly 700,000 people came off of payrolls in the month of December was even startling to those of us who expected to see a large number. I wrote recently here asking why companies still had to lay-off during the holidays. At least 700,000 people had that same question last month. And now here we sit in January with what I expect to be as many, if not more, job losses this month from the companies that did wait until after the holidays to enact changes. We won’t know those numbers until early next month, but I do expect that we are going to see another staggering number of people lose their positions. We should view the revisions to earnings estimates from companies this week as the precursor to more job cut announcements.
I am also hearing from more and more companies that they are now trying to reduce hours and salaries vs. reducing actual people from the business. The Bureau of Labor Statistics said that in November of 2008 vs. November 2007 that those full-time employees who were formally working fulltime (40 hours or more) but who were being asked to work 35 hours or less because of bad business climate increased 72% vs. a year ago — nearly a million people are working less this year than last. With this decrease in hours comes a decrease in pay, which is another tactic being taken by companies to lessen the number of positions/people that they need to reduce. I have never been a fan of pay reductions for people who are going to continue to work within the company. While it is commendable to try and keep as many people working as possible (especially in this environment where a job loss likely means an elongated time out of work), the reduction of pay and hours across the board only tends to disenfranchise and discourage those who are still with the company and in most cases, already working harder to keep up and picking up the slack from where other jobs have been cut.
These are hard decisions for companies to make. I know. I have been there. But, I fall back on the “standing in the shower talking to yourself” test. When the going gets tough and employers have to ask their talent to step up and take on more or go the extra mile for the company, it is important to manage that shower conversation. You want that conversation to be, at its’ worst, “this is tough, but I can suck it up and get through this. They need me, they treat me well, and I am making a good salary and I may not like everything that goes on, but I am better off than others”. If you cut someone’s pay or hours, you assuredly won’t get the best part of that conversation; in fact, it may be a much, much different tone and message. Something more like this; “This pretty much sucks. I’m working harder and now I get paid less. I will do this for now because I don’t have another choice, but the minute I can get out of this place, I am ‘outta here.
The recent Harris Interactive survey commissioned by Glassdoor reinforces that people do not want to have their pay cut. More than70% said that they will take on more responsibility and work longer hours, but 61% say they would not be willing to take a pay cut even if they found out there job was in jeopardy. We need to listen. I encourage those at the helm to let the water run over their head and shoulders just a little longer and try and hear what conversation they’d be having with themselves when in the same position, in the tough times, as those being affected. That voice is probably the right decision.