Be cautious doing this. Many people can’t easily take a 20% pay cut. Your best people might instead choose to leave. Others may be bitter about it. Since they’re sticking around it can drag down morale. This is only possibly viable if there’s a clear plan back to 100%. There’s a reason it’s not commonly done.
This is the worst advice in the thread. Don’t fall on your sword. You’ll live with the consequences, a loss of income, and a period of unemployment.. and it’ll fix nothing. Your team still won’t receive their bonuses.
A pay cut is a constructive dismissal. You've already effectively been fired with an offer to rehire at another lower paying job. Thanks but no thanks.
also, do not give a million dollar bonus to executives in the same year.
Before I got laid off, someone in my friend circle asked me a question, would you quit your job if your employer gave you a 2 1/2 month pay just for quitting?
I thought about it for a day and it sounded like a great idea. That's almost same amount YC gives you to start a start-up.
When My manager along with HR announced the news to me, there was a broad smile on my face to their confusion. It did not make me feel bad at all.
...you have already been placed in a predicament where you have to accept the financial downside either in the form of taking a pay cut or having to find a new job. Again, the downside has already manifested and you are left dealing with the situation.
You seem to be confusing your wages with a bond or perhaps a call option. Just because you sold something at a price $X does not mean you own some right to continue selling it at the same price.
And if someone chooses not to keep paying you an old price, you have lost nothing - you simply have not gained as much as you thought you might.
Being a salaried employee protects your 50 year old blue collar worker from downside because the 30 years worth of savings he piled up is completely safe even if the company goes insolvent.
Ugh, if you are a rank and file employee why would you do this. You are basically taking on a large risk where all the upside benefit is for the company.
I appreciate your view but I took OP's comment differently.
"Your job is not safe" in my view means you should treat work as if you are a mercenary. Treat every role as short term, go in do the job, get paid and always be looking for the next better thing, no emotional ties. Be prepared to cut them before they cut you.
I feel like it would actually drive salaries up as people move to higher paying roles and companies scramble to keep people that they would have otherwise expected to remain for years.
For context, I once worked at company A for 2 years then got a new job offer for 20% more than I currently made. I accepted the offer and then told my VP that I got a new job and the offer was 35% more. He matched the 35% so I stayed for another year and then got a new job for 25% more than that. A little after that, Company A started doing layoffs. If I had been loyal I would have likely been laid off, instead I left with a much higher salary because I was loyal only to the money.
Companies used to be loyal but no longer are, your job is not safe.
Perhaps we actually are on the same page in principal as I agree with all of your other suggestions "diversifying your options, building an emergency fund, have a fulfilling life outside work" just a different take on the original comment.
That would be true if in case you refuse the cut, you continue to be employed at the same salary.
If the alternative is not to get anything (or severance), you would weigh it against future scenarios and calculate your scenarios based on some assumptions eg how many years you planned to stay employed and what is the expected time it will take you to find a new job and what are the costs of switching (house sale and moving costs) etc.
Like my sibling post, I can't imagine accepting a pay cut from a current employer unless I received something valuable in return. I'd accept either better benefits (401k matching, better health insurance or equivalent but at a reduced personal cost, something) or more paid time off. But if I was making strictly less than I did before, without receiving something I valued in return I'd be looking for a new job.
What happened to you happened to a friend of mine, and he refused to leave the job. Salaried to hourly. Then leave changed from sick leave being something you could take easily to requiring it to be dire circumstances and a doctor's note. This past year they changed their pension plan from X% per year of service to Y% (Y < X). Seriously, if a company is willing to cut one benefit, they'll find a way to cut the rest unless there's enough unrest (and even then, most seem to prefer going bankrupt and getting bought out).
Turning down the promotion is certainly an option. I tried this and it ended up getting me laid off. Don't be surprised it this just forces their hand.
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