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Article
Publication date: 28 October 2021

Yeongjoon Yoon

Studies comparing the consequences of payroll cost reduction methods (i.e. cutting pay and downsizing) have been limited, with no studies comparing these methods' impact…

Abstract

Purpose

Studies comparing the consequences of payroll cost reduction methods (i.e. cutting pay and downsizing) have been limited, with no studies comparing these methods' impact on job-seeker attraction. The current research tries to close this gap by comparing the effects of cutting pay and downsizing on job-seeker attraction outcomes.

Design/methodology/approach

Two studies are conducted. The first study compares the effects of the two payroll cost reduction methods (i.e. cutting pay vs downsizing) on job-seeker attraction through a within-subject design experiment of people in the United States. The second study analyzes secondary data in South Korea to compare the two methods' effects on the number of job applicants applying for job openings.

Findings

The results demonstrate that organizations with a history of pay cuts yield more favorable job-seeker attraction outcomes than organizations with a history of downsizing.

Practical implications

Although firms that choose to downsize may better maintain the morale of surviving employees, the decision of downsizing can have long-term costs, such as having a worse capability to attract job-applicants than firms that choose to cut pay and share the pain as a group.

Originality/value

The research provides an insight into which payroll cost reduction method yields better outcomes in terms of job-seeker attraction. The research responds to the call in the payroll cost reduction method literature of identifying a feasible alternative to downsizing in terms of various outcomes other than the morale of current (or remaining) employees.

Details

Employee Relations: The International Journal, vol. 44 no. 2
Type: Research Article
ISSN: 0142-5455

Keywords

Book part
Publication date: 13 April 2011

Tim Callan, Brian Nolan and John Walsh

An important aspect of the impact of the economic crisis is how pay in the public sector responds – in the face not only of the evolution of pay in the private sector but…

Abstract

An important aspect of the impact of the economic crisis is how pay in the public sector responds – in the face not only of the evolution of pay in the private sector but also extreme pressure on public spending (of which pay is a very large proportion) as fiscal deficits soar. What are the effects on the income distribution of cutting public sector pay rates or alternative strategies to reduce the public sector pay bill? This chapter investigates these issues using data and a tax–benefit simulation model for Ireland, a country which faces a particularly severe fiscal crisis and where innovative measures have already been implemented to claw back pay from public sector workers in the guise of a ‘pension levy’, followed by a significant cut in nominal pay rates. The SWITCH (Simulating Welfare and Income Tax Changes) tax–benefit model first allows the distributional effects of these measures, which achieved a substantial reduction in the net public sector pay bill, to be teased out. The overall impact on the income distribution is assessed. This provides empirical evidence relevant to policy choices in relation to a key aspect of household income over which governments have direct influence, while at the same time illustrating methodologically how a tax–benefit model can serve as the base for such investigation.

Details

Who Loses in the Downturn? Economic Crisis, Employment and Income Distribution
Type: Book
ISBN: 978-0-85724-749-0

Keywords

Article
Publication date: 1 February 2002

Patricia K. Zingheim and Jay R. Schuster

Little research has explored how best to reduce labor costs when the economy turns down. A recent phone survey of CEOs and senior executives at 20 “Fortune 100” companies…

1399

Abstract

Little research has explored how best to reduce labor costs when the economy turns down. A recent phone survey of CEOs and senior executives at 20 “Fortune 100” companies suggests that CEOs are now concerned and confused about how best to shrink their workforce. It also indicates that they would rather use layoffs than pay cuts to reduce labor cost. But these senior executives realize they cannot “shrink to greatness.” Eventually these successful companies must again begin to add staff. So planning strategically now for both the growth and shrinkage of the workforce is essential to providing a high‐performance workforce and workplace.

Details

Strategy & Leadership, vol. 30 no. 1
Type: Research Article
ISSN: 1087-8572

Keywords

Article
Publication date: 6 November 2017

Wen Wang and Roger Seifert

Since the 2008 financial crisis, the UK workforce in general has experienced a period of stagnant and falling wages in both nominal and real terms. The main parties…

1615

Abstract

Purpose

Since the 2008 financial crisis, the UK workforce in general has experienced a period of stagnant and falling wages in both nominal and real terms. The main parties involved remain unsure of the consequences from such a historically unusual phenomenon. The purpose of this paper is twofold: first, to explore the main effect on job satisfaction and organizational commitment of those employees who had experienced pay reductions (nominal wage cuts or pay freezes under a positive inflation rate) as compared with those who experienced nominal pay rises during the recent recession; and second, to examine the moderating effect of employee involvement (EI) practices on that relationship. This was done by using aggregated employee perception data to measure organizational EI practices.

Design/methodology/approach

Employee-employer matched data were used, involving 8,489 employees and their associated 497 organizations (medium or large sized). The number of employees from each organization was between 15 and 25. The data used were extracted from the 2011 Workplace Employment Relations Study in the UK to which the authors applied hierarchical linear regression in STATA 13.

Findings

The results indicate that when compared with those employees who had nominal pay rises during the recession, employees who had wage cuts or freezes (with 5 percent inflation rate) are significantly and negatively associated with their job satisfaction and organizational commitment, even when controlling for important variables such as perception of job insecurity and the degree of adverse impact caused by recession on the organization studied. That is to say, facing the same perception of job loss, those who experienced pay reductions are significantly unhappier and less committed than those who had pay rises. However, the adverse effect of pay reductions on employees’ work attitudes is much less in workplaces characterized by a high, as opposed to a low level, of EI practices.

Research limitations/implications

Implications, limitations, and further research issues are discussed in light of current employment relations’ practices.

Originality/value

The intention is to extend the current debate on employment relations under adverse changes such as pay reductions. Thus, the unique contribution of this study is to examine the value of EI in modifying extreme employee reactions to adverse changes.

Details

Employee Relations, vol. 39 no. 7
Type: Research Article
ISSN: 0142-5455

Keywords

Book part
Publication date: 11 July 2019

Márton Csillag

This chapter examines the evolution of the number of days spent on sick leave following the 2011 reform which halved the maximum sick benefit provided by statutory health…

Abstract

This chapter examines the evolution of the number of days spent on sick leave following the 2011 reform which halved the maximum sick benefit provided by statutory health insurance in Hungary. This policy change sharply decreased benefits for a large group of high earners, while leaving the incentive to claim sickness benefits unchanged for lower earners, providing us with a “quasi-experimental” setup to identify the incentives effect of sickness benefits. We use a difference-in-differences type methodology to evaluate the short-term effect of the reform. We rely on high-quality administrative data and analyze a sample comprised of prime-age male employees with high earnings and stable employment. Our results show that the number of days spent on sick leave fell substantially for those experiencing the full halving of benefits. Estimating the response of the number of sick days with respect to the fall in potential sickness benefits, we find a significant elasticity of −0.45.

Article
Publication date: 7 June 2013

Patrick Gunnigle, Jonathan Lavelle and Sinéad Monaghan

This paper aims to examine the impact of the global financial crisis on human resource management (HRM) in multinational companies (MNCs) in Ireland. It focuses on four…

4106

Abstract

Purpose

This paper aims to examine the impact of the global financial crisis on human resource management (HRM) in multinational companies (MNCs) in Ireland. It focuses on four key areas of HR, namely staffing, pay and benefits, industrial relations and the HR function.

Design/methodology/approach

It uses a mixed methods approach involving four major data sources combining objective information reported on the impact of the GFC on HRM with subjective perspectives on HRM practice within MNCs.

Findings

Specific findings are presented in regard to staffing, pay and benefits, industrial relations and role of HR function. The authors find extensive evidence to indicate that MNCs have been in the vanguard of organisations engaging in multidimensional restructuring programmes in response to the GFC, incorporating many initiatives in the domain of HRM. These include job cuts, short‐term working, reduction in training and development expenditure, pay cuts and freezes, reduced benefits and changes in industrial relations. While the authors find that HR function has played a central key role in “delivering” responses to the GFC within MNCs, they also find evidence of a reorganisation of, and financial pressure on, the HR function itself.

Originality/value

This paper contributes to and develops the extant literature on the impact of economic crisis on human resource management.

Details

International Journal of Manpower, vol. 34 no. 3
Type: Research Article
ISSN: 0143-7720

Keywords

Article
Publication date: 1 January 1983

R.G.B. Fyffe

This book is a policy proposal aimed at the democratic left. It is concerned with gradual but radical reform of the socio‐economic system. An integrated policy of…

10436

Abstract

This book is a policy proposal aimed at the democratic left. It is concerned with gradual but radical reform of the socio‐economic system. An integrated policy of industrial and economic democracy, which centres around the establishment of a new sector of employee‐controlled enterprises, is presented. The proposal would retain the mix‐ed economy, but transform it into a much better “mixture”, with increased employee‐power in all sectors. While there is much of enduring value in our liberal western way of life, gross inequalities of wealth and power persist in our society.

Details

International Journal of Sociology and Social Policy, vol. 3 no. 1/2
Type: Research Article
ISSN: 0144-333X

Keywords

Book part
Publication date: 2 March 2011

Douglas Sikorski

This chapter analyses the causes and effects of the financial crisis that commenced in 2008, and it examines the dramatic government rescues and reforms. The outcomes of…

Abstract

This chapter analyses the causes and effects of the financial crisis that commenced in 2008, and it examines the dramatic government rescues and reforms. The outcomes of this, the most severe collapse to befall the United States and the global economy for three-quarters of a century, are still unfolding. Banks, homeowners and industries stood to benefit from government intervention, particularly the huge infusion of taxpayer funds, but their future is uncertain. Instead of extending vital credit, banks simply kept the capital to cover other firm needs (including bonuses for executives). Industry in the prevailing slack economy was not actively seeking investment opportunities and credit expansion. The property and job markets languished behind securities market recovery. It all has been disheartening and scary – rage against those in charge fuelled gloom and cynicism. Immense private debt was a precursor, but public debt is the legacy we must resolve in the future.

Details

The Impact of the Global Financial Crisis on Emerging Financial Markets
Type: Book
ISBN: 978-0-85724-754-4

Keywords

Article
Publication date: 1 November 1997

Peter Allan

Notes that sizable workforce reductions have been commonplace in the US economy in the 1980s and 1990s. However, some employers have resisted the temptation to reduce…

4333

Abstract

Notes that sizable workforce reductions have been commonplace in the US economy in the 1980s and 1990s. However, some employers have resisted the temptation to reduce costs through massive layoffs, believing that it is more advantageous to retain their employees than to terminate them. These employers have managed to minimize or even prevent layoffs by using a variety of strategies. Describes some widely used strategies and provides examples of companies that have implemented them successfully.

Details

International Journal of Manpower, vol. 18 no. 7
Type: Research Article
ISSN: 0143-7720

Keywords

Open Access
Article
Publication date: 9 March 2022

Zahirul Hoque, Kate Mai and Esin Ozdil

This paper has two purposes. First, it aims to explore how Australian universities used calculative rhetoric and practices through accounting numbers to persuade employees…

1345

Abstract

Purpose

This paper has two purposes. First, it aims to explore how Australian universities used calculative rhetoric and practices through accounting numbers to persuade employees and legitimize their financial recovery plans to alleviate the financial hardship caused by the COVID-19 pandemic. Second, it aims to analyze how the accounting-based solutions were legitimized through a well-blended pathos, logos and ethos rhetoric.

Design/methodology/approach

Building on a rhetorical theory of diffusion, we employed a qualitative research design within all 37 Australian public universities involving Internet-based documentary analysis.

Findings

This study finds that in an urgent crisis like the fiscal crisis caused by COVID-19, universities again found rescue in accounting tools, in particular budgets, as a rhetorical device to justify their operational and strategic choices such as job-cuts, programs closures and staff pay-cuts. However, in this crisis, the same old accounting-based solutions were even more quickly to be accepted by being delivered in management’s colorful blending of pathos–logos–ethos rhetoric.

Research limitations/implications

While this study is constrained to Australian public universities’ financial responses, its findings have implications for university decision-makers and higher education policymakers across the globe when it comes to university management using calculative devices in persuading employees to work their way through financial hardship caused by an extreme health crisis-like COVID-19 pandemic.

Originality/value

This study adds more evidence that the use of budgets as a calculative tool continues to play a key role in organizations in the construction, mobilization and preservation of certain strategic and operational choices during volatilities. Especially, the same way of creating calculative-based solutions can be communicated via the colorful blending of different rhetoric to make it acceptable.

Details

Journal of Public Budgeting, Accounting & Financial Management, vol. 34 no. 6
Type: Research Article
ISSN: 1096-3367

Keywords

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