Cut Payoll, Save Jobs

It's time for the 4-day work week--at least for the next year. Businesses save 20% on their payroll, keep their talent, and workers keep their jobs. What's not to like?


If you're going to be in a company that is forced to cut payroll, it would be hard to find a better one than Sun. I've been through several downsizings here, and I can tell you that in each case, the company did everything possible to prevent it. They reduced janitorial services to every other day, and then moved them to daytime. They implemented every cost-cutting measure they could think of, and only sacrificed people as a last resort.

That kind of concern exists because Sun knows that a knowledgeable workforce is the lifeblood of its business. If you lose that knowledge, you lose a lot of what makes your business run.

That attitude creates the kind of respect for individual effort that makes it a joy to be here. In a lot of ways, it's more like being on a college faculty than it is having a corporate job (but the benefits are way better). So it's a great place to be.

A few years ago, though, the company was in trouble. The company had to make changes to put itself into a more competitive position. It did, and it was beginning to rebound. Then the economy tanked. Through no fault of its own, the company finds itself in a position where it has to repeat those measures, just to survive.

But even though payroll reductions are necessary, there's another way to achieve that goal: Shorten the work week. It's a measure that makes a lot of sense right now, for several reasons.

Reason #1: Reduced Demand for Product

Now that we have a President who is actually worthy of the title, we can expect the kind of action that will actually improve life for the middle class, reversing the trend that has seen a million people a year drop out of it over the last decade.

But there is a substantial delay before even the most effective policies take effect. By all accounts, the current downturn will last for most of 2009, at the very least.

Since there will be less need for the company's products and services, there is less need for full time workers--especially in the manufacturing sector. But while you can achieve that goal by reducing headcount, doing so reduces your capacity to respond when the economy improves...which brings us to the next reason.

Reason #2: Increased Capacity to Respond to the Upturn

Given the expectation that the economic downturn is temporary, reducing the workweek is a strategy that makes a lot of sense. 

When the economy does begin to turn around, the companies that have managed to retain their knowledgeable personnel will be able ramp up their production capacity the quickest. They may then be able to leapfrog their competition.

Reason #3: People will like that option

If you had a choice, which would you choose: Drop your income by 20% and have some extra time on your hands, or take your chances on a 20% reduction in staff, which means that you might lose our job? And, oh by the way, there is a 100% certainty that if you do keep our job, your workload will be increased by 20%. (I went through several layoffs at a previous company, and several here. Not once has the departmental workload dropped off after the downsizing.)

To my mind, a known loss of income is a lot less stressful than a possible job loss. For one thing, it's something that can happen right away, so it's a known quantity. It's not something that's looming over your head for an indeterminate amount of time. Besides that, (except in rare cases) it's something you can handle.

I can always cut back 20%. I can reprioritize and make adjustments. I'll have to cut back. But I know I'll be able to make the important payments.I'll keep the home, keep the car, keep food on the table, and keep heat in the house. That's what it comes down to, after all. That's the bottom line.

And if people are grateful for keeping their job, they'll be more loyal to the company. That sort of loyalty makes a big difference to future productivity.

Reason #4: It's Overdue

Since the 1930's, our productivity has increased what? 50 times? A hundred and fifty times? So why is the work week still 40 hours? We could be working something like 2 hours a week and have the standard of living we had in the 30's.

Of course, we want more than that, so we don't mind working more--especially when the work is challenging and engaging. Between that and work's social component, many of us would work even if we didn't have to. It's just what we do.

Still, if people are working just as hard as they once were, but productivity has gone up, then we're using all of that productivity gains to produce more, rather than to work less. That's great, if you're a stockholder or highly-paid executive. The company makes more, you make more.

But it's not so great if you're a worker. You're working as long as you were before, but you're not making that much more.

A four-day work week begins to redress the balance. It puts some of the gains in the worker's hands, in the form of more free time.

Reason #5: Socially-Conscious Countries Already Do It

There is no doubt that a shorter work week is more "humane", in many ways. So it's standard practice in countries that are less mesmerized by the mantra "Maximize Profit at any Cost".

In France, for example, every other work week is 4 days long. That creates a "35-hour" week, without requiring people to put in a useless half-day where nothing much gets done.

If a company only needs to trim it's payroll by 10%, that's a strategy to consider. But for a full 20% reduction, the 4-day work week is the way to go.

Reason #6: Three Day Weekends Make Sense

I've always thought that 3-day weekends are great. You get one day to do all the things you need to do. You get another day to go out, engage in activities you enjoy, and have fun. Then you have one more day that you can use to recover from days one and two. That way, you can rest up and start the work week fresh.

I don't know. Maybe I'm strange. But it seems to me that the four-day work week makes a lot of sense.

Especially now.

Comments:

Eric,

I have to say I agree with you 100%. I have said a number of times over the last 8 years at Sun that faced with being let go as a result of cost-cutting or taking a salary cut I would prefer the salary cut. I love Sun. I love the people, the environment, the products and I truly believe in the company. I would willingly reduce my income by a fixed amount to avoid the stress of looking for a new job in a tough economy and to be able to continue working for a company I love.

Chris

Posted by Chris Drake on December 23, 2008 at 11:38 AM PST #

I agree with you Eric. Not sure why the sun management is unable to understand this simple thing. Or is it that the dont want to understand. A simple 5-10% salary cut and cutting cost in other ways (except letting go good people) would be the best way to weather the storm.
The worst part is that in even in such difficult times there are teams which are spending thousands of dollars in attending all-hands meetings at offsites by getting 50-60 people to travel half the way across the globe. I hope people have some sense of sanity and god save the company !!

Posted by sun emp on December 23, 2008 at 01:32 PM PST #

I also would rather give up some of my salary and would gladly work 4 days a week if it would help Sun to keep going! I can only hope that Jonathan & his key folks are reading this & at least looking at this as an option to save their most valuable assets.

Posted by Vicki Tan on December 23, 2008 at 02:31 PM PST #

[Trackback] Bookmarked your post over at Blog Bookmarker.com!

Posted by loyal on December 23, 2008 at 02:32 PM PST #

Peopleware author & Cutter Fellow Tom DeMarco agrees with you that it's worth looking at cutting salaries across the board to produce "discomfort for all instead of catastrophe for a few". I'm surprised not to be seeing more discussion of the idea!

Posted by Kim Leonard on December 24, 2008 at 01:24 AM PST #

I greatly appreciates the comments, you guys.
Thanks. (That Tom DeMarco guy is pretty smart!)
:_)

Posted by Eric Armstrong on December 26, 2008 at 04:01 PM PST #

People always hate to talk about when they are laid off. But as it has become every day's news headline since Yahoo started it with cutting 1500 of its task force last year, now a need of platform has been in demand where people can express their selves in words how they are feeling about their company, whey the got laid off was that justified or not.
And every thing they want to tell anonymously.And www.layoffgossip.com is providing you that platform.

Posted by LayoffGossip on December 30, 2008 at 06:40 PM PST #

Not likely to be done. When you cut salaries across the board, you also have to cut those of Sun's executives--the decision makers. This is a sure thing. But when you do RIF, most of them "believe" they will not be affected--"I will take a chance".

I think there is a name for this kind of behavior when I took a psychology course in college, but can't remember what it is called.

Posted by W. Wayne Liauh on January 15, 2009 at 07:18 AM PST #

The problem with Sun management is, most of the time the communication flows from the top to bottom. Not much of much of listening nor question to right answers, especially when it comes to strategy, risk etc.

If so, this pay cut idea has been floating for past 5yrs but no implementation. worst, even immediately after lay-off, there is a bonus!!.

The middle layers and layers of management doesn't listen to passionate hardworking employees during RIF decision making to remove the dead woods.

We should never ever blame the economy. It will follow it own course. How we are keeping our house clean and better is what we need to worry about.

Posted by sun-emp2 on March 07, 2009 at 02:36 PM PST #

Sun has been wonderful in providing a "paid" Christmas shutdown/break for many years. However, I'd gladly help reduce vacation expense by using my own vacation time during Christmas shutdown instead of Sun dollars. Remember, the same vacation expense reduction was done a few years ago for July4th week.

Posted by guest on March 09, 2009 at 12:30 AM PDT #

Makes sense - but we have been put onto a 3 day working week! 40% cut - which whilst I still have a job, I am the sole income generator in my household with a 7/12 month pregnant wife and two boys aged 3 & 6 years - this means a £900 a month loss in take home pay - thats not just trimming back - I could have handled 20% at a stretch. Great article though if only more companies where as prudent.

Posted by Andrew Sparkes on June 15, 2009 at 08:18 PM PDT #

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