Tuesday, September 15, 2009

How to motivate your employees - don't cut their pay

When a company runs into financial trouble, one of the common pieces of advice from Wall Street is to "trim the fat" and "get the income statement in order" and bla bla bla. The idea is that if you can improve your revenue statement, things will look better than stockholders will buy your stock and things will be wonderful. Plus, it sounds really prudent to do stuff like that. What could go wrong?

Plenty, if you remember that such cost-cutting moves can have a negative impact on your employees. Perhaps Jane Stockholder will be pleased that net profit was positive for WidgetCorp's most recent quarter, but Jane Stockholder might want to listen to the conversation next door, where a WidgetCorp employee is grousing about the way his company is going to hell, and how he isn't going to do anything extra for WidgetCorp any more, because WidgetCorp certainly isn't doing anything for HIM.

Or perhaps Jane Stockholder's neighbor left WidgetCorp altogether and got a better job with another firm. Of course, it's only the best WidgetCorp employees that will score the good jobs elsewhere, so while WidgetCorp is telling Wall Street about its impressive revenue figures, it's doing so with a less talented staff.

As everyone knows, General Motors has not been in the best of health lately, and they've had to do all sorts of things to keep on running. Now that they're trying to get back to health, they're reversing some of the decisions that they made earlier. Unfortunately, I learned of this via the Associated Press, so I am very limited in the amount of text that I can quote from this article:

...rescinded white-collar pay cuts...

I'm assuming that a hyphenated word counts as a single word, but I could be wrong.

But how many talented employees left GM - perhaps to work for Ford - when the initial pay cuts were announced?
blog comments powered by Disqus