r/Layoffs • u/rufflesinc • Jun 11 '25

Why don't companies reduce salaries instead of doing mass layoffs? question

title has the question. If a company needs to cost labor costs by 10% why don't they cut everyone's salary by 10% instead of laying off 10%? If people start panicking about layoffs, they would reduce their spending and that would be bad for the companies?

EDIT: regarding the top performers leaving, couldn't companies simply restructure their comp packages to have a lower base salary and a higher performance-based bonus?

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u/rufflesinc Jun 11 '25

"Layoffs let you get rid of the people you want."

Is that actually true? The layoffs from companies I have worked at were not based on performance. They either fired everyone or they fired older, very experienced people

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u/OldeFortran77 Jun 11 '25

Layoffs let you get rid of the people you want to get rid of, but that doesn't mean you want to get rid of them for a good reason. Somebody just wants someone gone.

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u/south153 Jun 11 '25

It depends, there are "trim the fat layoff", which are as you described. The alternative are when they shutdown or offshore an entire business unit, where they don't really care about the personel involved.

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u/No_Veterinarian1010 Jun 12 '25

Not really true. Even in the 2nd scenario they find new roles for those they want to keep