Stipends Degrowth

Thinking Out of the Box Stipends Degrowth

Reducing Stipends

Downsizing is not only a reality, but a necessity when a system has been pushed beyond capacity. Whether global resources, economic infrastructure or organizational wherewithal, overextension inevitably leads to the need to contract. The most common strategy companies employ is job elimination because of how effectively and swiftly a cut in payroll expenses improves the bottom line. What if companies could stabilize growth and improve performance by enculturating employees with an appreciation that less is more? The company would be less vulnerable to economic swings, which in turn would create more security long-term. It sounds simple but in practice is not. Employment is a two-way street; pay cut implications go beyond monetary sacrifice. We depend on work to define who we are, as much as wages inform our perceived value. It is a lot to ask employees to welcome a pay decrease, but there are ways to present it as an initiative vital to the future of everyone involved.•

Dealing with Lower Pay

In order to maintain workforces and competitiveness, some companies are choosing broad pay cuts over layoffs, while many college grads take internships with little or no pay in hopes of increasing their odds of finding good work in the future. Many are ready to accept lower salaries, but what about those who aren’t? The answer relates to market conditions, not what you think you deserve. If you are an outstanding performer, you will do well in the long run. Accept what the market offers and prove yourself. Companies can help their employees deal with pay cuts in several ways. If employees understand and accept the reasons, they will be better able to live with the reductions; e.g., cutting pay instead of cutting jobs is often viewed as a legitimate reason. What we do and how much we earn greatly affects how we see and feel about ourselves. In reality, our self-worth has nothing to do with how much money we have. It is our job to build our sense of self-worth and to base it on our being rather than just what we do and how much money we make.•

The Alternative Way

Over the years there has been recognition among decision-makers that reactive downsizing is a short-term quick fix that does not deliver value long-term. Downsizing erodes the goodwill of high performing employees who are often the first ones to leave. Reactive downsizing can result in “survivor syndrome,” made up of negative reactions such as anger, insecurity, perceptions of unfairness, increased workload, trust breakdown, decreased motivation, commitment and morale. Proactive approaches to managing downsizing, involving transformational change with the engagement of employees at all levels can result in enhanced innovation and greater sense of self-efficacy and resilience. To avoid reactive downsizing, organizations are exploring alternative ways to manage the crisis without losing talent. One option is to reduce the salaries of current employees and to trade recognition and experience in exchange for pay, in the case of new entrants to the market. •

Donna Flagg is founder of the

Krysalis Group.

She’s also a speaker, author and blogger for both Psychology

Today and The Huffington Post.

Kusum Sahdev

has over 25 years’ experience of working in the areas of Organization Development, Change Management and Human Resource

Management.

Michael Zwell, Ph.D., is a Competency and Talent Management expert. He is the CEO of Zwell International.