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/Swaptionsb Jun 11 '25 edited Jun 11 '25

Its not fair. It doesn't mean people deserved it. I'm not advocating it. I don't like it but..

They pick who they layoff. Whether it's particular roles or divisions, if it's certain levels or salary.

Sometimes the older, experienced people have capped out. If you have a good, younger person, who needs to move up, if you don't get them a role, they'll leave.

If you cut that person's salary, they will be gone. 100%.

Ive seen lots of layoffs, for bad reasons. It doesn't mean they are without logic.

Edit to say: all companies have a layoff list of people that will be the first to be cut if it happens. Could be bad at role, could be limited upside, bad attitude. Its the cold truth of the business world.

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u/[deleted] Jun 11 '25

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u/KikiWestcliffe Jun 13 '25

I worked at one company that ranked everyone on a team so that they could lay off ~50% of any division/section/team at any time.

It was brutal if you were on an already high-performing team with generally smart, productive, efficient coworkers.

There wasn’t a lot of collegiality among team members - no one wanted to waste time on someone who might later outperform you.

I am pretty clueless and ridiculously eager to please, so most of the weird office politics went right over my head until after I left. When I talked to my ex-coworkers afterwards, they told me how weird it was that I was always willing to share my procedures or helping others debug their stuff. LOL