How To Reduce Employees’ Salaries With Fairness

You are not alone. Globally, it has been reported that payroll expenses account for about one-third of the total expenses incurred by a company. Bloomberg Business approximated payroll expenses to gulp almost 80 per cent of your business revenue.

If you have been thinking of how to reduce your employees’ salaries without hurting them in the process; as in a WIN-WIN kind of a situation, here are some things you may try:

Discuss With Your Staff

The first and most important of all of these steps of reducing your employees’ salaries is being honest with them. Tell them about the company’s financial situation and the reason you are where you are now.

Request their suggestions on how to make things better such as salary cuts and probable lifeline ideas. Also, inform them of areas you will be affected too such as taking a pay cut.

Reduce Workweek

Only let your employees come to work when they are needed. During a slow period, reduce their time at work. This could be during a time when there is a drop in business and lesser tasks to attend to. Instead of the 5-day workweek, you may decide on 4 or 3-day workweek.

It reduces their cost of production and also offer them time to explore other opportunities.

You can resume the normal work routine when business returns to normal.

Implement Unpaid Leave

In case you don’t want to sack any of your employees during a hard time for the business, offer them unpaid leave. Assure them (in writing) they will still have their jobs at the end of the leave. Reason with them to rotate their time off to keep the company afloat for the main time.

Reevaluate Bonuses

You may have been generous with bonuses when everything was fine with the company; now is the time to rethink the bonus plan. Let everybody know why and when you are likely to re-implement it. You may also provide an alternative reward system to retain your company’s appreciation culture.

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