If a company is doing badly, why don't the executives take a paycut instead of laying off employees?
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And the higher you go the more variable the compensation. It's true that most end up pretty well even if they're a dismal failure (Marissa Mayer comes to mind as an extreme outlier) but as a general rule people have a track record before coming CEO - usually a fairly unblemished one either rising through the ranks or by taking on more in progressive leadership capacities in other companies.
If someone is SVP of Sales making $1 million a year, they're not going to take the CEO job for less. Or even the same.
There are some who are notable turnaround CEOs - they fail as much as they succeed, but this is known going in.
And there are some that are no doubt frauds who can't do the job but are great at selling the board on them. That's again why the board needs to keep an eye on things. Rubber-stamp boards are bad for the company as well as the shareholders.
My point was money is not a motivator at that level. There have been studies that show money is not a motivating factor after a certain point. It becomes a measuring stick of how valuable a company considers you, but people are not going after c-suite jobs because they need more money to retire (as the person I was responding to said).
My point here is that no one ever takes a CEO position because they just need that extra cash to stop working (again, as the person I was responding to claims). He seems to have missed the point that people take a lot of risk in becoming an executive, with the responsibility that comes with the job, and their goals are never to just do enough to stop working.
Rubber stamp boards are bad, but poor employees are bad at any level, from executives to employees who get away with facebooking and texting for 5-6 hours/day.
Well, wouldn't you save more money by laying off 2 people who make $200,000 a year, than you would by laying off 10 people who make $20,000 a year? Just saying. And I speak as a non-liberal.
It depends. In my retail days I managed employees who earned $20k, and department managers that earned $50-$60k/year. I would periodically oversee branch store managers that made $80-$90k/year. I made $100-$150k, varied from year to year.
Layoffs and reorgs happened, and the people who were laid off depended on what the company needed. If sales were down a smidge, a cashier or receiving clerk making $20k would go. I had to oversee a larger RIF, and a laid off some managers and some clerks. I certainly wasn’t going to lay myself off (call me selfish if you like), and the company would have had to replace me with somebody similar anyway. My clerks did not gave the broad skillset I did, and the store would have foundered in weeks without me, or somebody similar to me.
At different times I was pulled from my location to support other locations. Again, not a skillset possessed by sakes clerks.
I left that company, and since then they have closed some locations. I am sure they have fewer people at all pay levels, including $100k, than they did previously.
So while you are correct in your math, it often does not make sense to lay off the skill you need to run your company.
It's a big difference and the first people in my experience that the owners will look to cut or lay off when they need to is the people who make a lot of $ and don't do a lot of anything.
The people who make bottom dollar here are generally safe. They can screw up a bunch, not be too valuable, and still keep their jobs because they're not costing the company a lot. The company may fire them because they feel like they might not grow or their gaffes will cost us clients, but its typically not a $ making decision.
People with cheap billing rates typically can be quite underutilized and still produce a profit for the company.
As to the question of if the owners will cut their salary ... depends on the owner. Some have.
That said, there's a great deal of nepotism and blind eye going on at a lot of companies. And you always have people who make good salaries for doing jack**** who are able to keep their jobs.
And you lay those people off and they find other jobs where they can make decent salaries for doing jack ****... so I hardly feel bad for them.
One just walked past me...
Most of the owners who really built the companies from the ground up are gone. Now it’s just suits that weaseled their way into power via connections etc that are in power that had little to no direct input to the companies growth
In the US, when companies are doing poorly, you tend to see more workers getting benefits cut, pay slashed, or just laid off outright so that higher ups could maintain their bonuses. Japan does indeed have a different work culture.
Fun fact, some of their CEOs take classes in kendo
Quote:
Originally Posted by finalmove
Company owners are always the LAST to get paid. Please explain your business credentials.
Just what's in the news cycles... you tend to hear about CEOs who make 7 figures in salary. If they f$#@ up, then they can always fall back on their golden parachute and make out like a bandit.
Somebody told a story where a new Home Depot CEO decided to save money by cutting their most expensive workers. Read... the experienced ones. What they were left with were high school and college workers whom customers understandably, didn't have a lot of confidence in getting advice like in electrical wiring or flooring. People flocked to Lowes in droves. They ended up having to _pay the CEO_ to GTFO.
In the US, when companies are doing poorly, you tend to see more workers getting benefits cut, pay slashed, or just laid off outright so that higher ups could maintain their bonuses.
To be fair, the CEO's job is to protect their investor's money and make them more. Since the CEO's bonus that you speak of is in stock options, if the company is doing poorly, he suffers, financially.
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