wood burning stoves 2.0*
The moose likes Jobs Discussion and the fly likes 30% pay cut;  to stay or move on... Big Moose Saloon
  Search | Java FAQ | Recent Topics | Flagged Topics | Hot Topics | Zero Replies
Register / Login


Win a copy of The Java EE 7 Tutorial Volume 1 or Volume 2 this week in the Java EE forum
or jQuery UI in Action in the JavaScript forum!
JavaRanch » Java Forums » Careers » Jobs Discussion
Bookmark "30% pay cut;  to stay or move on..." Watch "30% pay cut;  to stay or move on..." New topic
Author

30% pay cut; to stay or move on...

Manish Hatwalne
Ranch Hand

Joined: Sep 22, 2001
Posts: 2578

My company is offering me 30% pay cut due to bad market conditions. We are working on US real estate related project and I can see that market is really bad. I am working for this company for last 5 years now and I am acting as lead developer now and leading all design and development work. Over the years I have gained good knowledge of the system and know it well, and find the work quite satisfying.

I have contacted few friends and headhunters and after some initial talk, I have 2 tentative openings - one of them is ready to pay higher than what my pay is after 30% cut; however it is still lower than what my pay was. The other offer is just marginally less than what my pay would be after 30% cut. The high paying job is in a small company with different domain, whereas the lesser paying job is in a bigger & relatively stable company. Though I don't know if the job itself will be stable after 6 months or so.

I am a bit confused. Don't know if staying in the same company would prove better in the long run or I should switch now and learn all about another domain and go through all that teething trouble again. And for all I know, this new company can shut down or downsize as well. It's a tricky situation as I have 9 years experience now and though there won't be any dearth of offers, the companies are not willing to recruit highly paid employees now.

I had given option to my current company that I will work for 32 hrs/week instead of 40 hrs a week with 30% pay cut (they revised their offer from 40% to 30%); which might allow me to take up another part time work/telecommute work or so but they are not willing to do this. To me it sounded like a better proposition as I think it's better to base income on multiple sources rather than relying on one source.

what do you guys suggest? Your inputs on this situation would be useful, and will help me arriving at a decision.
Marcel Wentink
Ranch Hand

Joined: Sep 19, 2008
Posts: 157
I wonder if it is legal to force a 30% pay cut. Have you, and your co workers, thought about that?
Tim Holloway
Saloon Keeper

Joined: Jun 25, 2001
Posts: 16019
    
  20

I know that salaries are/have been shrinking. I've been hit by it myself. But 30% is a bit extreme even for the current miserable economy. If you're the lead developer and they think that's a reasonable action to take (assuming you weren't being paid well above average), there are some things to consider.

First, is this a way of them to say "we don't really think you - or your position - is essential to the business?". This could come from one of perceptions on the behalf of management. Either they think that you yourself could be replaced with someone cheaper or they simply think that "IT doesn't matter". Either way, this doesn't bode well.

On the other hand, they may really be feeling pinched. In which case you should see if there's a better way. After all, if you are a valuable asset, they should be willing to make some compromises. An assurance that the cut is temporary and will be rescinded once the economy improves would be nice, but it's not something to depend on. A better bet would be to demand some sort of non-cash compensation such as an equity position.

If you're valuable to them, you have leverage. If you're not, bail now. Especially since regardless of which of the above 2 causes I mentioned (and some others that haven't occurred to me), the company will probably go under soon anyway.

There's not much fat in IT these days most places, and there's not much future for companies that can't make effective use of IT either. K-Mart thought IT wasn't important when the 2K1 recession took force. Now someone else owns them. Wal-Mart thought otherwise. They're bigger than even.

So. ARE you important to them?


Customer surveys are for companies who didn't pay proper attention to begin with.
Joe Ess
Bartender

Joined: Oct 29, 2001
Posts: 8874
    
    8

Originally posted by Marcel Wentink:
I wonder if it is legal to force a 30% pay cut.


I am not a lawyer, but most US states follow a doctrine of At-will employment, meaning either party can break an employment arrangement absent a specifically worded contract agreed upon by both sides.
Since laws vary from location to location, it would be nice if Manish would specify if he is stateside or working on an outsourced project overseas.
Personally, I've left employers for less ("they painted the lobby blue, I can't work under these conditions!"), but now is a very bad time to make a move. It sounds like salaries are depressed and switching jobs will leave you making less when the economy improves, forcing you to jump ship again to get back to a decent wage.
Manish, has your company made any assurances that once the economy improves, you'll get back to your original salary?


"blabbing like a narcissistic fool with a superiority complex" ~ N.A.
[How To Ask Questions On JavaRanch]
Manish Hatwalne
Ranch Hand

Joined: Sep 22, 2001
Posts: 2578

(1) My payment (it's not salary, as I am consultant to a US based firm in here in India) is well above average as of now -- effective till Dec 2008 but I haven't got my quarterly payments for last 2 quarters and that's the money they owe me now.

(2) Yes, I have reassurance that my pay will be restored to normal once economy improves, it may be in stages/steps though. So far, company has been really fair and work was challenging & work environment excellent. That's the reason I have spent 5 years with them out of 9 years career.

I believe, they value me & my contribution, but in last quarter we lost lot of clients and may brokers/agents left the business -- they are our potential customers. So I have been given to understand by US management (all negotiations are done with US management directly, as I am consultant I am paid directly by US company and not by Indian company) that investors are not willing to put in the Money, hence the cut payment.

(3) Don't know about legalities, but as I said I am a offshore consultant, and not employee as such. My contract is renewed every Jan (usually with some increment in remuneration) and hence we are now discussing all this but though I was OK with 5-10% decrease due to economy, the 40% cut proposal came to me as a big shock. After some talks and negotiations they are now offering 30% cut as their best offer, which is still disturbing for me.
Manish Hatwalne
Ranch Hand

Joined: Sep 22, 2001
Posts: 2578

What worries me is this -- once an investor/business person knows if same work can be done at 70% cost, will he go back to 100% even when economy improves or when there are sufficient funds???

@ Tim - yes, I am quite an important person now. The PM is gone, and other Java developers have been retrenched. I am single handedly taking care of entire Java related system now and others help with graphics/HTML/JS and PHP code a bit. It would be a big setback for them if I leave as I know every part of code of this enormous millions lines of code in our system; but then no one is indispensable and they can always hire programmer with lesser experience for much less payment.
Campbell Ritchie
Sheriff

Joined: Oct 13, 2005
Posts: 38433
    
  23
You need legal advice; if they haven't paid you and still expect you to work, they may already have breached your contract.
Pat Farrell
Rancher

Joined: Aug 11, 2007
Posts: 4646
    
    5

The whole US real estate racket is shattered. Given a chance, I'd bail. I don't see it getting better quickly.

I have a good friend who was a VP at a big US Mortgage company, they laid off the entire division he was in. He moved 1000 miles to get a job, at lower pay, and left his house empty in the old town.

I worked at Fannie Mae, they were taken over by the Government a few months back, and its now a political question whether or not the company survives. I think the political winds are bowing towards making it and Freddie just go away.
arulk pillai
Author
Ranch Hand

Joined: May 31, 2007
Posts: 3219
If I were you, I would consider other aspects in addition to the salary

-- Opportunity to learn new technologies/frameworks to keep your skills current.

-- Opportunity to acquire new domain knowledge.

-- Profile and visibility of the project you will be working on.

-- Motivation to go to work every day.

-- Reputation of the organization and stability.

-- How well your contributions are/will be recognized (not in monetary terms )? Are you just another resource?


You will be the best person to make that decision and what ever you do, do it amicably. Never burn bridges and networking should be a vital part of your career progression. Good luck.
[ December 22, 2008: Message edited by: arulk pillai ]

Java Interview Questions and Answers Blog | Amazon.com profile | Java Interview Books
Chetan Parekh
Ranch Hand

Joined: Sep 16, 2004
Posts: 3636
Manish check your PM.


My blood is tested +ve for Java.
Manish Hatwalne
Ranch Hand

Joined: Sep 22, 2001
Posts: 2578

@Chetan - replied!
@Others - Thanks for your inputs. @arulk -- I am indeed looking for benefits beyond monetary compensation as well. I working out various options at the moment.
Tim Holloway
Saloon Keeper

Joined: Jun 25, 2001
Posts: 16019
    
  20

Show no mercy! There's little enough of it coming the other direction. That all went out in the Reagan era when the long-term commitment between employers and employees was broken.

While it's true that they may be able to replace you with someone cheaper in the raw lakhs-and-rupees department, a wise management will realize that in the short term, they'll lose productivity and incur training costs as a replacement. Maximum leverage comes from being able to determine if they think the reward is worth the risk.
Mark Herschberg
Sheriff

Joined: Dec 04, 2000
Posts: 6037
Originally posted by Manish Hatwalne:
What worries me is this -- once an investor/business person knows if same work can be done at 70% cost, will he go back to 100% even when economy improves or when there are sufficient funds???


Here's a hint... once a programmer/employee know the same work can be done for about 50% more pay, would he continue at his present rate? (Bonus question: what about when the economy tanks, or when there are insufficient funds?)

--Mark
Manish Hatwalne
Ranch Hand

Joined: Sep 22, 2001
Posts: 2578

Originally posted by Mark Herschberg:


Here's a hint... once a programmer/employee know the same work can be done for about 50% more pay, would he continue at his present rate? (Bonus question: what about when the economy tanks, or when there are insufficient funds?)

--Mark


Usually, except while joining a new company, the hikes/increments are quite unilateral and done by the company itself; the employee/programmer has little control or negotiating/bargaining power in it.

But you have put it rightly Mark, there is no intrinsic price as such for the work that we do, adn its a function of several demographic, economic and psychographic variables. If I do same work in US I might get anywhere between USD 100 to USD 250 per hour as a consultant, and somebody sitting in Ukraine, India etc. may do it for as low as USD 10 to USD 15 per hour!

Nevertheless, thinking about it objectively - I think I was ready for 5 to 10% reduction given the market conditions, but 30% reduction is indeed alarming to put it mildly.
Deepak Bala
Bartender

Joined: Feb 24, 2006
Posts: 6661
    
    5

I think I was ready for 5 to 10% reduction given the market conditions, but 30% reduction is indeed alarming to put it mildly.


I doubt anyone can comment on the 30% reduction, because we do not know the absolute amount we are talking about here. You did mention that you are paid above average though. There are many things to consider before you make a jump and at present, obtaining a hike by jumping ship is unlikely.

Some employees have been hit in the belly due to the economic crunch. This is a situation we do not have control over. You should think this over and determine if there are other doors that you want to open for yourself. If I remember correctly you had a similar dilemma a few months back ? I hope things work out well for you in the end.


SCJP 6 articles - SCJP 5/6 mock exams - More SCJP Mocks
Manish Hatwalne
Ranch Hand

Joined: Sep 22, 2001
Posts: 2578

Originally posted by Deepak Bala:
If I remember correctly you had a similar dilemma a few months back ? I hope things work out well for you in the end.


Nope, that's unlikely. I came to know about this cut only 15 days ago. I wondering how to negotiate now and contemplating other options as well. Let's hope things work out well sooner...
Kj Reddy
Ranch Hand

Joined: Sep 20, 2003
Posts: 1704
I feel better to negotiate with your current employer to decrease your 30% cut and start looking options outside the company. But instead of moving unstable/not satisfying job(might be more money) better to continue with the current company till you find the best option. In this current market scenario it will take time to find the best offer but its worth to wait.
Roberto Tilly
Greenhorn

Joined: Jan 06, 2009
Posts: 3
I would not recommend quiting unless you think a new job would pay better and you would be happier doing that.
Henry Wong
author
Sheriff

Joined: Sep 28, 2004
Posts: 18750
    
  40


As a side note, do companies really do this anymore? I thought companies prefer to layoff employees than to give across the board paycuts...

With layoffs, you get rid of the underperformers, and hopefully, you only alienate a small portion of the good performers, who generally has the most options to leave. With across the board paycuts, you keep all the underperformers, and you alienate all of the good performers.

In the past, when companies did this, they tend to lose most of the good performers, once the market turns for the better.

Henry


Books: Java Threads, 3rd Edition, Jini in a Nutshell, and Java Gems (contributor)
 
 
subject: 30% pay cut; to stay or move on...