The Pay Cuts Become a Tool for Some Companies to Avoid Layoffs news article by Nelson D. Schwartz examines the impact of Covid-19 on companies. Most American companies let their go employees during the height of the Covid-19 pandemic. However, some organizations are embracing a different strategy: implementing salary deductions, particularly at senior levels to avoid layoffs. Companies such as HCA Healthcare, Aon, and Chemours implemented up to 30 percent pay cut in senior levels of management to maintain jobs. The central theme of this article is that companies are moving away from the traditional management approach that valued salaries than jobs.
However, the pay cut trend is the opposite of the traditional management approach, which values salaries than retaining more employees. In other words, companies that use traditional management can cut positions and limit the number of employees to maintain favorable wages. It seems that there has been an honest desire to protect employees during the Covid-19 outbreak (Schwartz, 2020). At the same time, companies must prioritize long-term financial interests. In the last ten years, HR managers have learned vital lessons. Once companies lay off employees, it becomes expensive to hire, train, and retain workers.
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A recent study, which targeted more than 537 public corporations, found out that HR managers implemented pay cuts in senior organizational levels. However, if the Covid-19 pandemic lasts longer, companies are unsure if pay cuts can save jobs and losses (Schwartz, 2020). In general, most global companies have cut their salaries as a response to economic losses created by Covid-19. Currently, it seems that there is a sense of mutual sacrifice. Companies do not want to throw their employees under the bus at the time of a financial crisis. As most employees continue to work from home, the HR managers decided to cut their salaries as a way of keeping their jobs.
Reference
Schwartz, N. D. (2020, May 24). Pay cuts become a tool for some companies to avoid layoffs . The New York Times - Breaking News, World News & Multimedia. Retrieved September 6, 2020, from https://www.nytimes.com/2020/05/24/business/economy/coronavirus-pay-cuts.html
