IT Career JumpStart

Feb 20 2009   6:06PM GMT

A Reduction in Pay Beats a Reduction in Force

Ed Tittel Ed Tittel Profile: Ed Tittel

Back when I worked for the Feds in the 1970s, the acronym for layoffs was RIF (reduction in force). These days, the downward spiral in the economy often involves belt-tightening of all kinds. If you’re lucky enough to avoid layoffs, downsizing, right-sizing, or any of the other euphemisms for being let go, you may still have to deal with a pay cut. Hence the title for today’s blog: where less pay beats no pay hands down.

When it comes to dealing with pay cuts, you have to understand what is being cut and for how long. Paul Barada, a salary and negotiation expert for makes the following recommendations in his recent article on this painful but sometimes unavoidable subject:

1. Find out how long pay will be reduced, if you can. Given the uncertain state of the economy, the answer may be “indefinitely” or “until further notice.” It’s best to find this out up-front, rather than wondering if each subsequent pay-check will be the same size or not.

2. Find out if other reductions or changes are involved. Primarily this means benefits, especially health insurance (behind wages and salaries, this is the second largest cost in personnel-heavy organizations). In some cases coverage may be reduced; in other cases, deductibles and co-pays may go up.

3. Timing is everything: it’s essential to understand when pay and/or benefits reductions will go into effect, so you can plan and manage your expenses to follow suit.

4. If you must swallow a reduction in pay, talk to your boss about a reduction in working hours if you feel comfortable doing so. Warning: not everybody may be so bold, however, so be prepared to deal with consequences of this discussion when things get back to normal. Managers remember who kept plugging away for 40 hours or more during the downturn, and who reduced workload to match reduced pay.

In case you don’t think this kind of thing is going around, think again. Then, check out this Google Search where you’ll find thousands of stories about planned, pending, or actual ongoing pay cuts in force in government, industry, education, and elsewhere.

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