Should you lower pay?

Are employee pay cuts a good idea?

Are employee pay cuts a good idea?

It's one of the toughest aspects of being in the human resources industry. Budgetary constraints are a part of every business, and sooner or later, if you work in HR, you could required to create an incentive initiative that includes not just financial compensation for success, but pay decreases for failure. But should cutting pay even be an option? A prominent blogger in the HR world, the "Evil HR Lady," weighed in on this debate recently.

Her position is, unequivocally "No." As she puts it, "It's the way you get people who are bitter and angry and even if they are performing at a high level, they start looking for new jobs . . . Why on earth would you want to stick around in a place where your base salary could be cut?"

She realizes that there are exceptions to every rule, and that some will take pay cuts in stride and see it as an opportunity. For the most part, however, she believes that when pay cuts are made mutinous thoughts will be had throughout the workforce.

Her proposed alternative? For one, start low. Keep your base pay at the level you expect your lowest acceptable performers to meet. Therefore, pay cuts won't be necessary, and the only way to change from that pay grade would be through termination or salary perks. Secondly, stagger bonuses according to performance, rather than having one bonus package available for a single standard of success. Lastly, and most importantly, keep current employees' salaries where they are.

Focusing on the intricacies of payroll policies can take time, time that many HR executives don't have because of administrative tasks that also require their attention. HR software systems can free up that time, giving you the ability to solve the difficult problem of how to compensate your workers. Let HR Software Solutions help you implement and manage that software system.