At Acxiom Corp. in Little Rock, Ark., executives are hoping that a pay cut will help the company hang onto employees it will need when the economy recovers. That theme also echoes at White Electronic Designs, a Phoenix microchip packaging company. CEO Hamid Shokrgozar recalls searching for up to nine months during the recent boom to find suitable candidates for jobs in engineering and marketing. He has also spent time and money training employees. It doesn't make sense to eliminate the people we brought in over the last few years.
Many companies mouth such sentiments, of course.
But few actually walk the talk, says Kim Cameron, a professor of organizational behavior at the University of Michigan's Business School. After studying downsizings for 15 years, Cameron disapproves. One, he says, is to instill the loyalty and team spirit that comes from shared adversity. Another is to prod employees to look for new ways to save money. As with any unconventional strategy, however, pay cuts involve significant risks.