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How big a pay cut would you take?
6

How big a pay cut would you take?

How big a pay cut would you take?

(OP)
Having done the festive rounds meeting up with friends and family I don't normally see on a regular basis I was very surprised how many were already feeling the recession.

Throughout a variety of jobs in different sectors many were on either on extended holidays, working a short week (some on full pay some not) or facing pay cuts and or redundancy.

I have not heard of short working weeks or pay cuts in the UK for many years now and it got me wondering, how many on here would take a pay cut (and how much) or a short working week in order to save their, or others jobs?

 Or how many feel they are totally safe, or could go out and match what they are on in the current market place, or even would not take a pay cut under any circumstances?
 

RE: How big a pay cut would you take?

I work at a union shop (one of the few unionized engineering workforces) so it's a moot point - my contract stipuates the pay and I don't think the union would agree to a pay cut under any circumstances. Instead, my company will simply do a massive layoff of probably around 12,000 people in 2009.

I think that a massive layoff is surely better than a pay cut, right? Well, maybe for those who will keep their jobs and union leadership.

RE: How big a pay cut would you take?

It depends on the circumstances.  I've recently had a few very enticing headhunter calls, so I'm not feeling particularly inclined to take a pay cut w/my current job.  If it seemed a bit colder out I might take a very substantial pay cut to keep the bills paid while I looked for a greener pasture.

Regardless of the economic conditions, I might be easily persuaded to work 3 days/wk for 3/5 of my salary...  that'd cover the bills, and I'd certainly be able to fill the extra days with fun stuff.

 

RE: How big a pay cut would you take?

2
ajack,

Being from a utilty background I feel pretty safe, certainly much safer than I did in production. My industry is losing people to old father time faster than they can replace them, so I feel relatively secure and will do for as long as the industry faces a desperately under-supplied job market. I'm actually in consulting right now - about as vulnerable as it gets - but if things go to hell then I'll be back on plant pretty quickly. Worst case is that I would end up working away from home, maybe overseas. I think it's unlikely with my group about to lose three out of five engineers to retirement, but the fallback plan is reassuring.

I saw the back end of the last recession when I was working in manufacturing. I am not surprised to hear of the short weeks, much as I hoped I'd never hear of them again. My memories of those hard times haven't faded and the feeling of despair which ran through the staff as the lines shut down is still quite fresh many years later. I am pretty sure that the lads in the steel industry are expecting short weeks, a pay cut, or both to protect their jobs and perhaps delay the inevitable for another year or two. In my opinion it is better to be working at a lower salary than not to be working at all; if I was in that position I would take the cut if asked while looking for alternatives.
  

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If we learn from our mistakes I'm getting a great education!
 

RE: How big a pay cut would you take?

I am not busy at work but I still feel safe, very safe.

Thanks to the Dot.com era that sucked in every student to IT in the 90's, you can hardly find a good Engineer around.

The employer knows it, today a company can survive only if it has the talent, and talent is a precious commodity nowadays.

If you are that sought-after talent, you should not worry about it. I wouldn't take 3days/week, imagine, that's almost a 50% pay cut.

RE: How big a pay cut would you take?

As a utility protection engineer in a group of 5 where 3 of the 5 will be retired in the next 5 years, I'm feeling pretty good about job security.  Like ScottyUK says, there are too few of us.

RE: How big a pay cut would you take?

"I wouldn't take 3days/week, imagine, that's almost a 50% pay cut. "

ha.  a 40% work cut too!
 

RE: How big a pay cut would you take?

When I hear that the US Congress and my county supervisors will accept a pay cut, then I will take one myself.

Chris
SolidWorks/PDMWorks 08 3.1
AutoCAD 08
ctopher's home (updated Aug 5, 2008)
ctopher's blog
SolidWorks Legion

RE: How big a pay cut would you take?

Taking a pay cut per se isn't such a good idea as it's difficult to get back what you have lost. Working for low wages suddenly becomes very attractive to senior executives who can see even bigger bonuses for themselves. If the pay cut was in return for a reduced working week then I'd find that tolerable. I'm not sure how someone younger with a mortgage on their house would manage with only 50-80% of their wager coming in, but then if it meant that eventually you'd be living in a cardboard box but still keeping your job, then it must be better, surely?

corus

RE: How big a pay cut would you take?

Hey corus,

Have you any idea what the situation is for the Lackenby & Redcar works? Some of the rumours filtering through don't sound too good. Hope your site is not facing the same.
  

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If we learn from our mistakes I'm getting a great education!
 

RE: How big a pay cut would you take?

ajack,

The recession has myself concerned as well. I am positive that the world is not operating any different than what it was 12 months ago and that this entire economic crisis is just public opinion.

I would not accept any pay raise which is less than inflation so I would only accept a pay cut if inflation is in the negative.  

RE: How big a pay cut would you take?

ScottyUK,
I'm not entirely sure what is happening on the main sites, but did hear that in Holland the company were laying off people and would pay 30% of the salaries, whilst the government would pay the remaining 70% of the salary until they returned to work. I'd presume this was so that the company would keep people on the books (and off the dole) and not have to re-recruit again when the economy turned at some time in the future. The Indian owners also approached the UK government but were shown the door. The same owners have of course since bailed out Jaguar etc., which will in turn help other industries who supply them.

 

corus

RE: How big a pay cut would you take?

My job is safe - although others in my field are not so lucky.  My company has diversified itself well to take advantage of a lot of different markets as well as getting into developing markets (3D design and sustainability).

But, in my opinion, if it is a choice of a pay cut or a layoff - if there is little or no real possibility of getting a comparable job anytime soon - I would take the pay cut.

Something positive coming in is better than 0.

RE: How big a pay cut would you take?

Back in the Silicon Valley recession of the 80s, we got pay reductions in the form of working 40 hrs for 32 hrs pay, and getting 2 weeks off at Christmas, unpaid., but that eventually turned around, which then led to the dot.com bust, when then led to the latest crash.  I switched back to defense, and we've had only one major layoff cycle in start of the 90s, which was actually fueled by a run-up in defense spending, resulting in mergers that led to the trimming of "excess" personnel.

TTFN

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RE: How big a pay cut would you take?

I stand corrected. News today is that in Corus employees in Holland will work a 4 day week, and the government will pay for the remaining 5th day, ie. a reduced working week but on full pay. The agreement will last for a maximum of 6 weeks.

I think I'd accept that.  

corus

RE: How big a pay cut would you take?

That's a pretty good arrangement although I don't think six weeks is going to see a big shift in economic conditions. At least it gives some breathing space to the workers affected. I assume the plan after that is 4 days / week at 80% pay?
  

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If we learn from our mistakes I'm getting a great education!
 

RE: How big a pay cut would you take?

The problem of accepting pay cuts is that you open a Pandora's box. For line workers which their output is mainly physical products, a short week corresponds to the same percentual decrease in output. But for workers which output cannot be directly linked to an output, thie will be difficult to assess. The top management will try that you work 4 days, produce the equivalent to 5 days and receive 80% of the salary. Once they see that they can do this, then the drive to maintain the things long after the recession pass is very big.  

RE: How big a pay cut would you take?

(OP)
It is interesting to see the different points of view. Perhaps unsurprisingly the person I spoke too that felt safest, outside of government employees, was also in the utilities sector, but even they were laying off sub contractors.

It is hardly the worlds best kept secret that automotive is in a real mess and I foresee really hard times ahead in this sector and whilst no one would willing take a pay cut, unless maybe taken with a shorter working week and even then it would depend on personal circumstances, I wondered how many would see this as the lesser of two evils?

I found MedicineEng reply most interesting in the fact that management would expect people to continue to do five days work in four days after the recession was over, does that not actually imply that they are currently overstaffed and that good management should be laying staff off now in order to protect the majority of employees and the company itself? Can any company exist in the current climate that carries a 20% unnecessary cost?

Anyway keep the views coming and a happy and prosperous new year to you all.
 

RE: How big a pay cut would you take?

There must be a formula somewhere that says just how profitable a "bad company" can be in a gorup of otherwise profitable companies.

Recession or not, diversification is a means by which companies can get a piece of the action across a range of markets, one of which will always, recession or not, be in trouble.

Automotive and aerospace companies seem the most popular choices.

So, you take a profitable company and tell its workforce that "times are hard" (a genuine recession is always a great help but not strictly necessary) and warn them that there must be "savings across the group".

This equates to:
A downturn in recruitment followed by actual cut backs. Cut backs means the same amount of work is expected to be done but with fewer people ergo you now do two or three peoples jobs for your one salary and you should be "thankful to still have a job".
Next comes the less than COL pay rise followed by delayed pay rise the following year and none at all the year after.

After a good few years of this the financial benefits to the group of having an automotive or aerospace albatross in the group must be rather significant.

Of course, if aerospace recovers, the company is in the soup unless they have another albatross that can go "into recession". In the case of one company I worked for the aerospace business did pick up (I wonder if it was ever as bad as they said it was) and with no other albatross, they sold the aerospace group for a fortune and shared out the cash amongst the shareholders.

The workforce? Not even a thank you. No additional staff to take back any of the extra load and certainly no restoration of the status quo.... the new lean and fit condition was the status quo and come pay rise time, back to a basic COL rise but based on depressed salaries.

Yes, when there is a recession, companies are genuinely in trouble.

I'm just saying that some companies milk it for all its worth and when the recession is over you can be sure the fat cats will have their cream but the workforce that made it possible will get nowt.

PS how can high street companies offer 70% discounts now that they are panicked? Does that mean that they have been making huge margins all the while?


 

JMW
www.ViscoAnalyser.com
 

RE: How big a pay cut would you take?

Hi ajack,

I guess it depends on how long people think the recession is going to be - I wouldn't relish the thought of working at 20% overload for more than a month or two. In my experience and in my industry most people can take an overload of maybe 20%, perhaps 50%, for a short period without too much detriment to the quality of their work or to their health. For a few days at a time I've worked double shifts - 100% overload - when we've have really been up against it. In the long term overwork is detrimental to both quality of work and the employee's health. Tired people make mistakes - in most industries mistakes cost money; in some industries mistakes get people killed.

A good management should make sure there is always a little spare in hand, perhaps just 1% or 2%, in order to deal with the unforeseen and the unexpected without compromising safety. Are margins in manufacturing are so tight that 1% spare is too much to carry?
  

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If we learn from our mistakes I'm getting a great education!
 

RE: How big a pay cut would you take?

(OP)
Scotty, yes I agree there must always be some "spare time" and whilst I am sure we have all worked extra hours to cover for illness, holidays or to cover a crisis that is not a long term solution.

What I question is if someone can do five days work in four days is that really a full time job?

jmw takes this even further saying that one person can do three peoples jobs, I simply refuse to accept that, if there were genuinely three jobs there in the first place.

I guess it comes down to what people want, as far as I am aware no private company is there to provide employment for as many people as possible, they are there to stay in business and make money for those that have invested in them and provide safe working conditions and a realistic salary for their employees.

If there is not sufficient demand for products you either pay the same number of people less money or less people the same or more money, or cut profit margins.
 

RE: How big a pay cut would you take?

ajack1, scotty and jmw all have interesting points.  If I may insert my two cents (worth about 1/2 cent in today's US economy), I would like to suggest one other possible scenario for the "one person is now doing three persons' jobs" situation.  

Using the term job to mean one person in one position employed full time, I completely agree that if one person can do EVERYTHING that three people were doing, then there were not three real jobs in the first place.

However, I think that when this scenario appears to occur during a re-organization, in some cases it may be more accurate to state that one person is now doing what are the "essential" tasks demanded by management that used to be accomplished by three people, and the lesser priority tasks of all three jobs are either dropped, shuffled off to others, handled via overtime if non-salaried or pressure from mgt for additional non-paid hours if salaried, or moved to a "WHEN we can get to it, IF we can get to it" category.

Does this sound like a reasonable explanation for some (certainly not all) instances of the "one person doing three jobs" scenario?  I have on occasion been the "one" and that was how I managed my tasks, but I may be an aberration.

debodine

RE: How big a pay cut would you take?

One person doing three people's jobs.  I see it all the time.  I doubt the auto industry is any different from others.  Walk around an engineering centre and count the contributors.

Me though?  A pay cut would make the offers more interesting.

- Steve

RE: How big a pay cut would you take?

Our perception of what can and cannot be done often differs significantly from management's perceptions and expectations.
They'd really love to think they have been employing more people than they should. The truth is they were probably already undermanned.

Yes, in some few cases it is true; in the union shops and of nationalised industries. It has even (but very rarely) been true of the odd private company.

But even before the crunch it would be fair to say many were stretched. Most engineers here would have to say that even doing their own job they work far longer hours than contracted.

Management then start a head count reduction, always the first response and they then hand out responsibilities to the remaining employees.
For a while those employees will try to do all three jobs and then they will try and prioritise what each job should deliver.

Sooner or later there will be a reckoning when the many housekeeping tasks and less essential tasks not done start to assume major proportions and the cracks begin to show.

Management at this time appears the completely surprised to discover things are not getting done as they used to be. They may also decide people aren't "pulling their weight". They will disagree about what tasks are essential (anything they need for their monthly reports is essential and often innovated on the spot.... as times get tough then is when the management reports start to get far more detailed which imposes a bigger burden on everyone).

Let's face it, even in the best of times management will not usually have to good a hands on understanding of who does what and why and how well.

So, you and I know it is often damned difficult to do just your own job and impossible to do justice to the extra jobs added on.
But what we know isn't what counts, it is what management expects that counts and while management may pay lip service to the "times are tough" and "yes, they understand the problems" they really don't.

I expect, because none of them really wants to know the real story and they really haven't the bottle to stand up to their bosses and explain that you can't get a quart out of a pint pot; after all they will also want to keep their jobs and they will do that best by promising the directors that they "can do" even if they know damn well they can't.

At times like this there aren't too many managers prepared to stick their heads above the parapet and detail exactly how bad it will be and how they will have to scale back their expectations.

remember that old problem: If it takes 10 men a week to build a wall, how long will it take one man?
Math answer: 10 weeks
Management answer: 2 weeks, OK maybe four but heads will roll if it slips. (time for the pep talks, they'll fx every problem)
Real answer, it ain't gonna get done. Forget about walls, we're too busy baling out the boat.

Sooner or later, of course, management will start to "retrench" but while staff are the first to go, last to go is that beginning of the year forecast (which was probably fiction even before the recession hit).
 

JMW
www.ViscoAnalyser.com
 

RE: How big a pay cut would you take?

JMW - your wall example is similar to the real life example in "the mythical man month", pulling people OFF a development project was found to make it run faster.

I think if I had the authority to reconfigure what I do at work then a 20% improvement in my efficiency would be fairly easy to do, but there'd be no t's dotted and i's crossed. For instance, I'll often run investigations for other people that could be done by a draftsman, but since I live in topsy turvey world at the moment it is quicker and so in some ways more efficient if I do it and let the draftie get on with his main job.

 

Cheers

Greg Locock

SIG:Please see FAQ731-376: Eng-Tips.com Forum Policies for tips on how to make the best use of Eng-Tips.

RE: How big a pay cut would you take?

The concern about a company holding on 80% pay after the recession is over is completely overblown.  In any recession, there will be companies that either have no cuts, or there will be companies that quickly reverse the cuts once the recession is over.  This is a natural consequence of companies needing to attract people to fill the jobs needed for the expanding economy later.  No company will survive the upturn by maintaining a recession profile and pay scale, simply because their workforce will bail en masse to the better paying jobs and conditions.  This is always been a strict fact in a capitalist economy.

TTFN

FAQ731-376: Eng-Tips.com Forum Policies

RE: How big a pay cut would you take?

If capitalism were easy then we would not have so many companies going bust, having to be nationalised and apparently unable to survive a recession without draconian measures.

Part of the reason is a lack of benchmarking... seeing what successful companies do and emulating them... all too many companies seem to the worst possible thing through faulty logic or understanding.

For example, when the economy as a whole or a sector of the market goes into recession the almost Pavlovian response is to slash sales and marketing budgets and the sales and marketing headcount.

Expenses are reduced, exhibitions cancelled, advertising cut way back, people are laid off and entertainment budges#ts slashed. Companies also move into short term thinking. What matters most to them is the end of the month position and they consume substantially more of the sales teams time in preparing more detailed reports than ever before. They start to discount to get "orders this month" and they fail to support new products which will take time to mature and generate sales.

There are some obvious reasons why they do this but the most obvious reason for not doing it escapes most management teams; the fact that as recession ends the companies that recover fastest and best are those that not only do not cut sales and marketing budgets but expend more on them.

Of course, the rude fact is they have profited by gaining market share in the depressed market i.e. while total sales are down in the sector, one or two companies can actually show growth at the expense of their competitors who followed the conventional path.

For practically any scenario in any market sector we can see examples of companies that "buck the trend" and companies that follow their instincts but which must have lemming genes in their make up.

So capitalism is actually every bit as bloody in tooth and claw as nature and evolution works not through acquired knowledge but at a much baser level.

Too many companies do not have what it takes and thus one cannot be sanguine about the future of any one company.

If captalism were a designed and constructed entity we might be better of but it isn't, it is an evolved system in which too often governments feel inclined to act when they shouldn't and not to act when they should.

In this crisis for example, every man on the street knew what was wrong with the mortgae lending business but governments and the various fiscal watchdogs failed to act. Then when the crash happens they act to protect and preserve some of the sickest and weakest dogs in the pack.

 

JMW
www.ViscoAnalyser.com
 

RE: How big a pay cut would you take?

At the time I accepted my first pay cut [accepted an offer below my level] my career took a down turn. On the other hand, this company gave me the longest time of employment of all my jobs.

My recommendation is to avoid the pay cut if possible. The first job offer is not always your salvation. When the offers start coming in there will be others. For me they came in twos and threes.

RE: How big a pay cut would you take?

We think we will be lucky and be very busy this year, but if not then no I would not be keen to take a paycut.

Like many other engineers who have posted here, we do not get paid overtime when things are great - if we work 60 hour weeks and the company bills the client 60 hours we still only get paid for 40 hours, hence on principle I would be exceeding reluctant to take a paycut.

I would however be willing to reduce the number of hours I work for an equivalent decrease in pay, on the understanding that when the market picks up things go back to normal.

RE: How big a pay cut would you take?

I'd gladly take a 75% reduction in income and work two jobs if my family was hungry or without a warm house.  I think the question is meaningless unless you know how much someone earns to start with.  How about: how much of a pay cut would you take if the alternative was to starve or freeze to death?   

Or how about how much of a pay cut can you take before you need to change your lifestyle?
 

RE: How big a pay cut would you take?

You're right of course Zapster, principles would go out the door very quickly if my kids were hungry and cold.

Mind you, if I took a 75% reduction in income and still had to work the same hours I would not have the time to do two jobs.

RE: How big a pay cut would you take?

If the pay cut is justified by genuine lack of work then there should be no reason to work regular hours. One is intimately tied to the other: I'd take the cut, but would expect it to be pro-rata with reduced hours.
  

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If we learn from our mistakes I'm getting a great education!
 

RE: How big a pay cut would you take?

And of course, any pay cuts and extra work demanded of you would be matched by management taking similar percentage cuts and doing more work and the shareholders would be very prepared to reduce their expectations.... or am I thinking of some other planet?
 

JMW
www.ViscoAnalyser.com
 

RE: How big a pay cut would you take?

Just took a 5% paycut.  What ticks me off the most is that I heard it on the news before I heard it from the company.  2nd thing that ticks me off is that all the press releases and memos state that all salaried employees are taking a 5% pay-cut, which in my opinion makes it sound like we are volunteering and I am definetly not volunteering for a paycut.  Why don't they just state that we are being "given" or being "forced to take" a paycut.  Other than that it hasn't really sunken in yet, I guess it will hit when I get my first paycheck.

Right now in Engineering there may be other jobs out there that may actually pay me more and I have had offers at other companys, but not in my geographic region.  So I have to compare the 5% to moving the family, kids changing schools, selling and buying a house in the current market, ticked off wife because we moved three times in the last 10 years and she has to make new friends every time, etc.....  At 5%, I am going to feel it, but we won't be starving or freezing, probably just won't be eating out as much, or buying upgrades for my bicycle, etc...  So my real question is 5% worth uplifting and relocating my family, right now it is not, I would probably lose more than the 5% just on the sale of my house due to the current market, again I may get a good deal on another house.

Anyway, thanks for letting me get this out, feels good to get it out.

RE: How big a pay cut would you take?

2
I'll take a pay cut IF I'm also offered a meaningful percentage of the profit in the form of a cash bonus, or a slice of ownership, or some other benefit on the up-side.  Shared pain for shared gain is fair- as long as it's calculated fairly.  Oh yeah- and the place has to have a HOPE of generating a profit in the forseeable future, otherwise layoffs are inevitable anyway.

I'll also accept a work reduction in return for reduced pay, ie. unpaid time off.  That too is fair.

But a straight pay cut with no upside?  Same number of hours, or more, for less money?  Thanks, but no thanks.  I've lived up to my end of the employment contract and I expect them to live up to theirs.   

RE: How big a pay cut would you take?

I wouldn't take a cut because most CEOs never would.  In Canada last year (2008), the average top CEO pay increased by 22% over 2007, presumably due to their stellar performance.

RE: How big a pay cut would you take?

I'd take a pay cut down to 60% so long as I was expected to only put in 60% of the hours.  Like Scotty said, if there is a genuine lack of work, then why would they expect me to put in 100% time and get less pay?  I keep a 4-5 month buffer in my bank account in the event I might get laid off.  I also have plans for a side business that I can immediately fall back on as well.

------------------------------------------------------------------------
If it is broken, fix it.  If it isn't broken, I'll soon fix that.

RE: How big a pay cut would you take?

zero dollars.  Life is too short to go backwards.  If you need to go backwards temporarily, it should be on your own terms.  If a ship develops a leak and it may or may not sink, when exactly does one abandon ship?  This question has different implications for every individual. Only you can answer it for yourself.

RE: How big a pay cut would you take?

(OP)
I think Zapster highlighted what I was trying to get at in the original post. I would not expect anyone in their right mind to take a pay cut if they didn't need to or could walk into another job on the same or better pay, but as he/she says if you are starving you would, you would almost certainly resort to stealing from garbage cans but not out of choice. I would guess many on this site will fall somewhere between those two, a drop in lifestyle is a long way from starving.

I also expected the normal I would never take a pay cut unless management/ shareholders/ owners did but I wonder how true that is if it became reality?

If others found themselves in the unfortunate position that 737 eng found themselves in would they do the same, even if you had 4-5 months contingency money put by would you feel secure enough to believe there would be a job of equal value available in that time?
 

RE: How big a pay cut would you take?

As an automotive engineer in michigan I would certainly entertain a pay cut.  But how much I don't know.  Maybe 10% if I was desperate.  There are still jobs up here and I get calls on occasion for other jobs so I would really have to weigh my options the moment something happens.  

Some coworkers have already had temporary layoffs.  Some permanently.  I have taken a week without pay.  My wife and I planned for the temporary layoff but I was lucky and got to stay on.

My company would expect 120% output regardless of how many days we had to work per week.  Just as they expect now.  I do not get overtime so from their point of view they have nothing to lose.  They would have us work on the weekend to make up for the 3 days a week we could work.  It's funny though that I have never heard the term mandatory overtime thrown around.  I think it has been hammered so much into our long term employees heads that they don't know anything else.

RE: How big a pay cut would you take?

im curious how a company can bill client 60 hours but not pay you for working it? (see earlier post). Surely you must get time off in leiu or something? How can the company charge when it has incurred no cost?  

RE: How big a pay cut would you take?

..on some other planet, maybe.
Management response to any such proposals (as with me when I asked for some time off after spending the week at the office and the weekends at a clients site):
"It goes with the territory."

JMW
www.ViscoAnalyser.com
 

RE: How big a pay cut would you take?

(OP)
No it happens on this planet jmw.

In the past when I was having to travel overseas and putting in long hours and getting some really awful flight times to troubleshoot problems I was always given extra time off and or a bonus, without even having to ask.

So it is not the management response to any such proposals, it was the managements response to your proposal. I guess it all boils down to how good your manager is and or how highly they regard you and the work you do.
 

RE: How big a pay cut would you take?

At my previous site management never officially acknowledged the long hours and lost weekends but at a local departmental level there was a lot of flexibility if we wanted a day or two off after a trashed weekend or if we needed an early finish or a lie in for some reason. Overall it was heavily weighted in the company's favour but the flexibility was nice. One of things which used to really infuriate me was when the same managers who demanded that we muster a nightshift out of the dayshift crew, usually late in the afternoon and with no time to get people home for a few hours rest, could not be bothered to pick up the phone the next day to say 'thanks for your effort, it was appreciated' to those who dropped everything they planned to do in order to deal with some emergent problem. The little things mean the most and cost the least. Like ajack says there are good managers and bad managers.
  

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If we learn from our mistakes I'm getting a great education!
 

RE: How big a pay cut would you take?

I don't know about how big but I know how long I'd take it for:

As long as it took me to find something better.

Unless being laid off and picking up unemployment is an option, in my situation that may be better than a significant pay cut.

KENAT,

Have you reminded yourself of FAQ731-376: Eng-Tips.com Forum Policies recently, or taken a look at posting policies: http://eng-tips.com/market.cfm?

RE: How big a pay cut would you take?

Ajack1:
right both times... rotten management that apparently didn't highly value my work.... but unique? no. I've seen too many bad managers and very few good ones.

PS by not highly value my work, I mean that while I was apparently the only one capable of the task, management didn't want to have to pay the price or acknowledge it in any way.

Curiously enough, that particular manager was eased out and, following a few company mergers and acquisitions his buddy, the current MD, has recruited him back into the company which just goes to show that the rot went all the way to the top.  

JMW
www.ViscoAnalyser.com
 

RE: How big a pay cut would you take?

Curious. Only one structural response concerning security.

I too am a bit concerned. Our work load has certainly diminished over the last few months.

I don't know if it's naive optimism, but I think the owner of our company is someone with long term vision. This recession, though deep, will also pass. I expect him to maintain his staff in anticipation of the rebound. For a while, it was tremendously difficult to recruit talent, given the incredibly high demand for engineers. I think he will do his best to keep those of us who are currently with the company.

I don't know about taking a pay cut. I may reluctantly agree not to take a salary increase this year, but that's about it. I think I'm fairly marketable and I'm willing to relocate, so I'd be on the phone five minutes after I was let go.

RE: How big a pay cut would you take?

maybe this culture is a US thing, I have never known a company expect people to work unpaid overtime and bill the company. Surely thats unethical. (thats how tom cruise gets the mob in The firm!).

In the UK we get paid or time off in leiu in my experience. I have in past worked on a project as overtime and not booked to the client, i.e. fixed fee jobs to keep costs down. But never unpaid and booked.  

RE: How big a pay cut would you take?

I think in Tom Cruise's case they were billing hours that didn't get worked.

Billing for the hours your engineers worked but not paying your engineer for the same hours is showing "responsibility to the shareholders interests".

It is far from uncommon.

We might go so far as to enquire: if the company is billing the engineers time at £400 per day, why is it not paying the engineer £400 per day since he evidently is earning this money?

JMW
www.ViscoAnalyser.com
 

RE: How big a pay cut would you take?

thats not the same though is it cause the billing rate reflects actual costs to employ (maybe 2.5 times your hourly rate) plus overheads plus profit. What I cant see is ethical is billing clients for no incurred cost.
Plus it may lead to poor pricing of jobs in future. Thats no different billing a client for an employee who wasn't even working on the job in my opinion. I believe it is totally unethical and will only mean reduced pay for engineers as the company will continue to get more work than paid for. Plus it is potentially keeping the company employing another engineer that the company obviously needs to meet its obligations.   

RE: How big a pay cut would you take?

herewegothen:  dunno if it's a US thing or a North American thing, but can say it happens in Canada for sure.  

You've obviously not worked for some of the b*stards I've worked for...There are unethical people out there who do compell uncompensated overtime from their staff in the name of "professionalism", or as a condition of advancement etc.  The people doing the compelling often have an ownership stake or are compensated via profit sharing for the effort that they steal from you!  In the days of one or two jobs in an entire career, perhaps this could be justified as "paying your dues", but today it's just dumb...the company will still lay you off if you're not generating a profit for them, and they won't hand you a cheque for those "dues" you paid them...

Why you would donate time to a client who is paying by the hour for the work is totally beyond me.  If you spent 40 legitimately billable hours on their project during the week, and another 10 doing non-chargeable/admin work, you're telling me that you wouldn't bill the client 40 hours?  Or if you worked 50 legit billable hours for a client to meet THEIR deadline, you're telling me that you'd donate 10 of those just because your own firm wasn't paying you for them?

I can understand (but don't agree with) the tendency of some engineers to feel compelled to work uncompensated overtime for their own employers.  Personally I think it's unethical for engineers to work for free (other than doing charity pro-bono work etc.), as it de-values our services in the marketplace.  To work uncompensated O/T for a piece of the action (shares, profit sharing etc.) or for time in lieu is fair game- it's a business investment- sweat equity if you will.  But to forego billings for the work you're doing benefits only the client- not your own firm.  What purpose does THAT serve?!

 

RE: How big a pay cut would you take?

herewegothen  it happened in the UK, maybe not in your industry but in my little patch of defense it sure did.  In practice we'd get some flexiblity or occasionally some kind of bonus etc. but none of this was official and depended how the Tech Director and/or MD was feeling.  Salaried staff were expected to be a bit flexible and give some time if required by the company.  In return we had a higher base rate.

While in theory I appreciate what molten and you are saying, right now wouldn't be a great time to get laid off and while I'm looking for something better I'll work a few extra hours to keep what I have.

KENAT,

Have you reminded yourself of FAQ731-376: Eng-Tips.com Forum Policies recently, or taken a look at posting policies: http://eng-tips.com/market.cfm?

RE: How big a pay cut would you take?

herwegothen,
While I can empathsize with your point, it just isn't the way the world works in my experience. I occasionally work some overtime, even though I am a salaried employee. The company I work for keeps track of my hours and puts it as "cost" for future estimates, at normal rate (not 1.5x as might be common for non-salaried overtime though). Then, for future projects, the number of hours, even the "free" ones are accounted for.

I try to limit my overtime because I don't want the management to avoid hiring necessary labor (and of course because I enjoy not being at work more than I need to). However, sometimes things come up and things need to get done. I wouldn't expect the company to hire another engineer for about 200 hours a year worth of work in certain circumstances. As a matter of fact, if they did hire somebody and were over-staffed, I might get a lower raise since they now have to pay another employee. And if this happened everywhere, the value of engineering and salaries across the profession could suffer, or at least not keep up with inflation. So either way, the profession could suffer, whether due to working "free" overtime or from companies needing to be overstaffed during slow times (assuming this means properly staffed in busy times).

-- MechEng2005

RE: How big a pay cut would you take?

MechEng2005:  we're not talking about a few hours a week here to meet your personal obligations, or even a few long weeks to help out your employer through a rough stretch.  I doubt there's an engineer out there who hasn't done that at some point.  

What we're talking about here is supervisors who tell their staff that although the employment contract says 40 hrs/week, you're expected to put in 50+ to show your "dedication".  Bosses who set 90% billability targets, ie. so that proposals and just about everything else gets done out of "free" overtime.  Especially when the firm is paid for any extra hours by the client, yet the staff are not paid for O/T.  ESPECIALLY when the boss gets profit sharing and/or has ownership and compells uncompensated overtime from their staff to line their own pockets!

Putting up with that treatment does not make you a professional:  it makes you a sucker.  Volunteering for a profitable company isn't just foolish, it's also unethical, as it de-values the services we all provide.  

If a business treats me as an employee, I'll treat them like an employer:  I'll put in an honest day's work for an honest day's pay.  If they treat me like a true business partner, sharing the profits equitably with me, then I'll invest extra effort and make the necessary sacrifices for hte benefit of the business, like a real part-owner.

RE: How big a pay cut would you take?

(OP)
Would you really want to be treated like a true business partner?
If that profit turned into a loss would you want your share of that as well?
If you really want that risk and reward why not go it alone or buy into a business?

RE: How big a pay cut would you take?

I think we all agree that we would put in short term/few extra hours to help out.

It is intrinsically unethical to charge a client if you have not incurred a cost. i.e. free overtime.  

It is taking the P*** for your boss (and company) to expect free time then earn bonuses on that time.

Anyone who does that permanatly (employer or employee) are fools and are a) responsible for low pay for engineers b) reducing the attractiveness of engineering as a profession meaning skills shortage and losses to other professions.  

RE: How big a pay cut would you take?

"If a business treats me as an employee, I'll treat them like an employer:  I'll put in an honest day's work for an honest day's pay.  If they treat me like a true business partner, sharing the profits equitably with me, then I'll invest extra effort and make the necessary sacrifices for hte benefit of the business, like a real part-owner."

Thank you Molten!  That is the best summary of how we SHOULD see the 'employment transaction'

I know that I'll be adding that one to my memory for long term storage :)

"A Designer knows that he has achieved Perfection not when there is nothing left to add, but when there is nothing left to take away"  - Antoine de Saint-Exupry

RE: How big a pay cut would you take?

I'll add my 2 cents to the debate.  

Job #1 -- Consulting firm that bills clients by the hour, but pays employees a salary.  I really felt abused and taken advantage of when I worked overtime because the company was making lots more money.  I really don't see why they can't afford to pay for overtime when they are still billing hours to the client.  This practice seems to border on un-ethical and is completely driven by the greed of the company and it's owners.  

Job #2 -- Owner/Operator company that pays employees a salary.  I didn't like working overtime, but I felt less abused because the company wasn't directly making any more money because of the OT that I worked.  The company definately benefited because of increased productivity, schedule, etc., but they didn't directly make more money.  

Either way I'm not a big fan of unpaid OT, but with a company that is still billing it's clients it really hard to swallow.  

RE: How big a pay cut would you take?

I think alot of this depends on your field.  I am an automotive engineer at a supplier and do not get overtime but am expected to work 24/7 to get the job done.  Do they bill the client for the overtime? No.  Do they bill them for the 40 hours I worked that week? No.  Is that cost in there somewhere? Maybe, but when we initially quote the project.  
One of our customers wants an underhood junction box.  We quote the finished good delivered to their door.  My time is billed to a specific project # but those hours are mainly for our company to know how much time we need to develop future products.

A recent project we were awarded required me to design a JB.  When it was finished we had to request money from the customer to have it built.  This did not include my time at all.  Just the toolmakers cost.  

I believe companies look at us as a tool, much like an office product or CAD software.  I can use Office all day.  It doesn't cost anything extra.  There are the yearly maintenance fees but we will call that a raise.  I truly doubt my company includes my hourly costs in any quote.

Of course that is Automotive.  Not that all automotive companies are like that.

Some jobs that I have had, if it took longer to design than they had anticipated, would add the hours onto another job that was underbilled.

RE: How big a pay cut would you take?

I can't agree with "It is intrinsically unethical to charge a client if you have not incurred a cost. i.e. free overtime."

Does that principle mean that I can't sell a free gift that I received?

The client is receiving a service and therefore can be expected to pay for that service.

I agree it may be underhand/unethical to not pay the employee when the client is paying for the work done.

RE: How big a pay cut would you take?

I agree wholeheartedly with the idea that ALL your work efforts must have compensation.  My only possible grey area here occurs when you do something out of personal interest which happens to be of use to the company (such as summary sheets, spreadsheets, articles, etc).

No gain, no pain.  The other way round just makes no sense... I'd rather read a book than work for someone else's books.

Cheers,

YS

B.Eng (Carleton)
Working in New Zealand, thinking of my snow covered home...

RE: How big a pay cut would you take?

Is keeping your job a form of compensation?
I'd rather work 4 extra hours a week (for no additional pay) than reduce my income by 10%.

RE: How big a pay cut would you take?

fixed fee jobs where you work free overtime to make the company a profit and deliver is fine (at least short term).

Free overtime which the company then bills at the full rate, i.e. the rate arrived at by applying a multiplier to your hourly salary rate (which they are not paying) is disgusting/unethical/i would suggest bordering on the illegal. If I ever work for a client organisation in the US (unlikely I know) I would ask for details of additional costs incurred above the cost estimate and I would think the client could be in their rights to refuse to pay.  

RE: How big a pay cut would you take?

ajack1:  if the business isn't making a profit, they'll be either laying me off or they'll be into my pocket via pay cuts, no/low salary rises etc.  So there's my shared pain for my share of the gain.  A loss is a loss:  they don't need to hand me a "loss-sharing invoice" to match my profit-sharing bonus!

I treat my uncompensated work is a business investment.  I don't make that investment with zero expectation of a return, any more than I would if it were a simple monetary investment.

I'm not denying the owners their piece of the profit- they deserve it too- but I am denying them MY piece!

If my company carries my @ss through a slow period, I have no problem paying back that favour AFTER it's been granted.  To pay that sort of debt "forward" is to put more trust in company directors and shareholders than my previous personal experience, and that of a great many colleagues, would indicate is sensible.

Fortunately, I work for a company that gets all this.  AND like virtually all of my co-workers, I'm a co-owner.  I see both sides of the owner/employee divide very clearly, thanks.  No need for me to be a sole proprietor- it'd be frankly impossible for me to tackle the interesting work that I do if I didn't have the "company" of a company!

herewegothen:  to fail to bill a client for billable work just because you aren't paid for it personally is stupid. There is nothing unethical about a company billing their client for billable work donated to them by their employees, provided it meets the criteria of billable stipulated in the contract.  It IS unethical to demand or compell your employees to work time for zero compensation, whether you bill clients for the time or not.  

Volunteering for your employer might be seen as having some benefit to you, in future or maybe in heaven- but donating your time to your employer's clients is just plain dumb.  They won't even notice!

It doesn't matter a mote how your company bids or bills its work.  In a straight time and materials billing situation it's just easier to see where the profit comes from.

RE: How big a pay cut would you take?

Food for thought:  
My company bills me out at about 2-3.5 times what they pay me.  Assuming the overhead for my employment is half what they pay me, they make anywhere from 33% to 133% on me (assuming my projects come in at budget and not under-budget). If I come in under budget, they make even more, and if I come in over-budget, I start to look real good for being fired.  

This also doesnt include overtime which is free thanks to salary based pay... so the potential gains of the boss is quite evident in my opinion.   

RE: How big a pay cut would you take?

(OP)
I am not sure you do see the owner/employee divide very clearly Moltenmetal.

As an owner when the company isn't making money you do not get low salary rises, you get no salary and you have to personally fill that void, or you still take a salary pay tax on it and then have to personally fill a bigger void. Also if the company goes bust you are not only left with no job you are also left with the burden of all the debts, there is a huge difference.

You seem to have a fantastic set up with all the gain and none of the pain but you still say "If my company carries my @ss through a slow period, I have no problem paying back that favour AFTER it's been granted.  To pay that sort of debt "forward" is to put more trust in company directors and shareholders than my previous personal experience, and that of a great many colleagues, would indicate is sensible."

So you are happy for the company to carry you and trust you not to leave after doing so, but you are not willing to trust them, that does not sound like the words of a co-owner to me.

Ztrain1985 I think you will find you are miles out with your overhead idea of half of what they pay you. By the time you take into account all contributions, tax, insurance, holidays etc and then add the percentage you have to pay for non billable staff, sales, admin, accounts, HR etc and then add your percentage for running costs, rates, providing office and equipment, insurance, heating the list just goes on you will be looking at a far bigger figure. A 5-10% margin is very good these days.
 

RE: How big a pay cut would you take?

I honestly dont think I am off that much.  Consider it this way.  I get paid .5X dollars a hour.  Client A agrees to pay X dollars an hour for an Engineer.  Client B agrees to pay 2X dollars an hour for an Engineer.  (im withholding the actual numbers but the ratios are correct).

I am an engineer and get billed out at 2 different rates at these 2 places.  If they are not making a profit by billing me out to Client A, who pays almost half of what B does, then doing work for our primary client A would be a loss.  This clearly is not the case, because the company is making money, and I still have a job.  Those 2 conditions would not be possible if my work was losing money by default.    

With that said, I can say that the company must make SOME money billing me out at X dollars an hour.  So when they bill me out at 2X dollars an hour, and since the overhead is a static and predicatable value independant of my pay rate, their profit has to increase a full X.     

RE: How big a pay cut would you take?

ajack1:  you misunderstood me in part.  I have no difficulty trusting my current employer whatsoever- they've earned my trust.  And since I'm part owner, in a sense I am in part my OWN employer.  By virtue of my ownership I am afforded information and a measure of control over my own destiny here that no mere employee can claim.  

I give them any uncharged hours and the difference between my base salary and what I COULD earn elsewhere as a business investment.  During good times I receive a reliable monetary return on that investment in the form of profit sharing and dividends.  During bad times, it's an investment made in hope of future return, since there is no profit to share.  

During VERY bad times, they repay the favour by carrying my base salary even when there isn't enough work to go around.  The corporation chooses to do this not out of love or loyalty to me as a human being- corporations are NOT capable of either love OR loyalty because they are NOT human beings!  The corporation views retaining me in slow times as a business investment.  It's an investment in my retained knowledge and skill, which has in past and will in future be useful to them in generating yet more profit.

I have not been GIVEN any ownership- I bought it, just like everyone else here did.  Some of the original owners took shares instead of salary for a time, but they earned their shares too- no different than if they'd paid cold hard cash for them.  For me there was no pressure to buy, but neither was there a reduced price simply because I was an employee.  There's only one type of shareholder here.

Contrary to your assertion, owners of shares in a corporation are not left with the debts if the place goes broke, unless they borrowed from others to buy the shares.  Their liability is limited to the value of their investment.

I DID misplace my trust in other, previous employers.  I "paid forward" the investment of deferred earnings and uncompensated overtime, even though I was not an owner and had no profit sharing.  I gave them plenty of my time which they profited from directly, only to be laid off the minute their business turned sour.  I learned my lesson the hard way.

Ztrain1985:  overhead is a very real business cost, as is payroll burden.  Those accountants, salespeople, CEOs, building heat and light, property taxes etc. don't come for free.  Depending where in the world you work, and on your salary, the payroll burden alone (ie. real costs of employment other than salary:  benefits, healthcare, pension, payroll taxes etc.) can range from 15 to 100% of your salary.  

Most companies who sell man-hours for a living are not making a great deal more than about 15% of your bill-out rate as profit, unless they're in a very non-competitive industry, they have a very high overhead necessitating VERY high bill-out rates, or they're really screwing you on salary.  That profit could be ~50% of your salary by simple multiplication, but it's still only 15% of revenue.

...unless you're giving them the work for free as uncompensated overtime- then that 50% of your salary becomes 150% on every O/T hour- unless they're charging an O/T multiple billing rate in which case it's even higher still.  Your boss, who probably DOES get profit sharing, and the owners who obviously DO share the profit, are laughing all the way to the bank.  And they're not laughing with you- they're laughing AT you.

 

RE: How big a pay cut would you take?

(OP)
Moltenmetal, maybe I did just misread your earlier post or maybe what you are now saying is slightly different, I apologise if it is not the latter. You seem to have a very good set up and I am sure the company must value you very highly to offer what they do, that mutual trust and willingness to both give and take is very rare indeed and not just from the companies side.

I fully accept that you may carry no liability for any debts as a shareholder in a corporation, I simply do not know. What I do know as a 50% owner of a limited  company in the UK I do for any loans personally secured by me, basically this is how you have to fund the start up and early development of a company with directors loans, some secured against my home, but that was a personal choice.

I always try and be fair to staff, but it is not always easy, for example last year we had our biggest customer go into receivership, basically we lost all monies owed to us by them, to the staff this meant no bonuses or no possibility of a pay rises in the coming year, to me it meant about a 35% pay cut, as for tax and cash flow reasons I take a very minimal salary and what I can in dividends, but guess who feels hard done by?

It just really gets my back up when I read the constant complaints on here about management/ owners all being money grabbing scum of the earth and things like the assumption that because a company charges up to 3.5X salary they are somehow making 133% profit margins, clearly some people do not have the first clue about what it takes or the costs of running a company.
 

RE: How big a pay cut would you take?

Since your basically quoting my figures, im assuming your talking about me.  And your right, I dont know the full overhead involved in running a buisness.

But then explain to me the failure in my logic.

When the company can bill be out be at 2X my salary and make a profit, how can they not be making substaintially more when they bill me out at a higher rater.  I'm doing the same work, in the same building, with the same equipment, same people, same process, only a different clients, for 3-4 times my salary salary.  How is all that not extra profit?

    

RE: How big a pay cut would you take?

I think we are just going to have to agree to disagree.  Ive seen the project reports for my projects so I know the multipiers for what I work on in regards to cost per hour and billing rate.  

Maybe companies are different.   

RE: How big a pay cut would you take?

Quote:

It just really gets my back up when I read the constant complaints on here about management/ owners all being money grabbing scum of the earth...

Interesting that you bracket owners and managers together. I guess in your company you possibly have a dual role but in most larger companies they are totally different animals, assuming that there are actual 'owners' and not public shareholders. In my industry there are few companies in true private ownership, and the shareholders are an anonymous group so it is impossible to comment whether they are good, bad, or indifferent. Directors are sometimes a legitimate target of employees and shareholders although it tends to be the shareholders who have the louder voice. You would understand why employees receiving a zero raise or facing redundancy would be dissatisfied with directors taking large bonuses at the same time. I worked for Enron, so you can imagine my feelings toward Messrs. Lay, Skilling, Fastow et al.; I would say those feelings are entirely legitimate. Managers are usually invisible to shareholders but obviously feature prominently in the lives of employees. I admit to occasionally heaping criticism upon bad managers, of whom there are far too many in the UK, but I'm equally prepared to heap praise upon the few good managers we have. I'm lucky to have worked for three bosses who I had total respect for; I've worked for several others who I could happily never see again. Rarely has criticism of management been caused by money, it has always been down to the way they have treated staff. In that respect I make no apology at all because treating people fairly is one of the most important qualities a manager must have.
  

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If we learn from our mistakes I'm getting a great education!
 

RE: How big a pay cut would you take?

Speaking as a shareholder of many large companies, I want 'my' employees to squeal a bit, but I also want to make sure the good guys get rewarded (one way or another) sufficiently to stay on, and the useless ones are sufficiently discouraged that they leave.

I have yet to see a pay system that manages that.

Speaking as an employee of a meatgrinder of a company, I'm really not tempted to give anything away, although I'll swap time off for pay, due to our stupid tax rates.


 

Cheers

Greg Locock

SIG:Please see FAQ731-376: Eng-Tips.com Forum Policies for tips on how to make the best use of Eng-Tips.

RE: How big a pay cut would you take?

(OP)
Ztrain1985 try thinking off it this way. If you say the cost of employing you is what they pay you, then think of the cost of you working as the direct cost of being at work, maybe a gallon of petrol plus a factor of .5 and £2.50 to replace update clothing, so once you have earned £10 a day you are in profit, I am sure you operate on a huge profit margin. Well you would do if you didn't have to live anywhere, feed yourself etc etc. I reality I would guess you work somewhere around the first 6-7 hours a day to pay all your expenses and it is only the last hour or two that make you in profit, not the last 7 ¾ hours.

It is much the same for a company, you do not make profit every hour of the day, you make profit when your incoming expenses are greater than your outgoing expenses. It could well be and probably is at a factor of x2 if that was the only work they got they would lose money, but at a factor of 3.5 you would not get enough work to make money either.
 

RE: How big a pay cut would you take?

ZTrain1985:  I may be wrong, but it sounds to me that you are confusing margin with profit.

Gross margin is the difference between raw cost and revenue.  Some margin calcs are done on the basis of overhead cost estimates, while others are not.  I don't know what numbers are on your project reports.

Aside from a sole proprietorship or very small partnership, (ie. people consulting from their own homes), I'm not aware of any business which is so fortunate that it can be profitable at a bill-out rate of 2x salary.  But sure, businesses can generate gross margin at 2x salary!

Profit is simply this:  take all the costs of running the business for the year, and subtract them from all the revenue earned during the year.  This number is what I'm talking about.

Unless you and all of your colleagues are 100% billable 100% of the year, your firm had better be making more than 15% margin, including a measure of overhead, on your bill-out rate.  

If they aren't, they won't be earning 15% profit on revenue at the end of the year.  Your salary and payroll burden for every hour you are not billable is an overhead too.

If low profitability persists long term, the people whose money is invested in providing you a job will be thinking carefully about turfing you and your colleagues out on their @sses and finding somewhere else to invest.

RE: How big a pay cut would you take?

I hate to keep beating this horse, but let me give an example.

For the first 3 weeks of project A, I was the only one working on it, as shown on the project report.

My hourly rate is X.  My billing rate for that client is 3.5 times my hourly rate for (3.5X).  The average cost per hour is (1.3X).

So I get paid X.  My cost to the company is 1.3X.  The Company bills at 3.5X.  They make a profit so long as I come in at the prescribed number of hours they have allotted me for the project (which I make sure I always do through un-recorded overtime, not that I get paid for overtime, but it just makes me look more efficient).  Our other clients are more reasonable, like 1.5 to 2, but this one in particular is high.  

Now I want to make it clear that I have no problem with what they are doing.  They pay me well (not as well as public sector for the work, but Im happy with the income I make).  They are also the bosses, and in that sense they are doing me a favor by employing me.  If it bothered me, I'd leave.  Im just saying, they pocket a lot of money from the work I do.  

If I use up all the hours, billing rate is far greater then the average cost per hour so they make a profit.  If I don't use up all the hours, they make a profit on both the hours used and un-used.

We also do bill out almost all of the time.  The only things we don't bill out to clients are vacation and holidays, which is part of the average cost to the company rate I said above.  Even the accountants and secretarys bill to projects when they do something for me, which is also shown on the reports.   

RE: How big a pay cut would you take?

The horse doesn't care. It died a week ago. smile
  

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If we learn from our mistakes I'm getting a great education!
 

RE: How big a pay cut would you take?

Ztrain:  yep, you're confusing margin with profit.

Your client may be billed for some admin time and costs, but not all.  In some firms, the photocopier is the all-star employee of the month because it generates so much profit!  Other firms don't bill for photocopies etc.  

Your VPs, president, CEO, sales guys etc. don't bill to your job, nor does your client get separate bills for heat, light, property taxes etc. etc.  Your own time working on proposals etc. is also an overhead, while your vacation etc. go into your payroll burden.  These very real costs are overheads which eat most of the difference between your 1.3x salary payroll burden and your 2-3.5x salary bill-out rate.

I'm not saying they're not profiting on your work- they MUST if you are to stay in business long term.  I just think you're overestimating the real profit by a significant margin (no pun intended).  

The profit on your uncompensated overtime is stupendous if the work is reimbursable (time and materials) and you BILL the client for your time.

The only time being under budget in labour hours is of benefit is if your firm is on a fixed price or some kind of benefit sharing ("target price") arrangement.  Otherwise, going under the labour budget is simply not realizing revenue.

If your firm is compensated T&M and you don't book your O/T hours to the project, you've just given your client a big present for which they won't even say thank you!  If you're fixed price, you've given that present to your own company's owners, as either profit or minimized loss.  They also probably will not thank you but may notice- if you point it out to them.

Some customers get billed at an all-inclusive bill-out rate, and then don't get billed for certain things.  Some get billed at an "overhead cost" rate plus a pre-approved profit percentage.  The commercial details are between your firm and the client in their negotiations and contract language- you may not be party to them.

RE: How big a pay cut would you take?

Well, back on track to the OP.  It got mentioned last week that pay cuts may be a possibility here.  No idea of how much or if they're temporary etc but either way, it's gonna hurt.

So I'll have to really think about how much of a pay cut I can afford.  Due to my slightly unusual circumstances I'm pretty much stuck working out of town for the forseable which at my current place costs something like 1/4 of my current Gross Pay over the year (more in Summer, less in Winter and maybe a bit less right now with Gas prices).  So a relatively small pay cut is amplified for me.

And before anyone says it, yes I'm looking elsewhere.

KENAT,

Have you reminded yourself of FAQ731-376: Eng-Tips.com Forum Policies recently, or taken a look at posting policies: http://eng-tips.com/market.cfm?

RE: How big a pay cut would you take?

So the Royal Bank of SCotland needs a helping hand and yet its Chairman was awarded glbal business man of the year for taking it from obscurity to the international spolight in 10 years.
Now we know how it was done and while the rest of us will be faced with pay cuts etc, he is sitting pretty.
It is at times like these that you realise that the various regulators have done nothing but sit on their hands till too late.

JMW
www.ViscoAnalyser.com
 

RE: How big a pay cut would you take?

Found a relevant article.

http://msn.careerbuilder.com/Article/MSN-1802-Salaries-and-Promotions-Would-you-take-a-pay-cut-to-save-jobs/?sc_extcmp=JS_1802_msnbc&SiteId=cbmsnbc41802&ArticleID=1802&GT1=23000&cbRecursionCnt=1&cbsid=20d976f141de47d7a9214c7f2922299c-287145679-R5-4

Our senior staff have apparantly already taken, or at least agreed to take a cut, so we'll likely be next.  Could be up to 7.5% apparantly, at least that's what the lowese level of directors so far affected have taken.

KENAT,

Have you reminded yourself of FAQ731-376: Eng-Tips.com Forum Policies recently, or taken a look at posting policies: http://eng-tips.com/market.cfm?

RE: How big a pay cut would you take?

Sorry to resurrect an older thread but...

They finally decided to implement pay cuts across the board, supposedly temporary.  It's a sliding scale but for me it's about 4.4%.

Also have to take a total of 12 days vacation between end of June & end of the year.  July 4th week, Thanksgiving week (both of which include some holidays) and 40 other hours in second half of year.  Conveniently, 'junior' employees get a total of 10 days vacation + 2 'float' days, essentially holidays but with no set date.

KENAT,

Have you reminded yourself of FAQ731-376: Eng-Tips.com Forum Policies recently, or taken a look at posting policies: http://eng-tips.com/market.cfm?
What is Engineering anyway: FAQ1088-1484: In layman terms, what is "engineering"?

RE: How big a pay cut would you take?

Yea, KENAT.

I'm about where you are.

And they cut management bonuses by 50%. WHY THE F are they getting bonuses at all?!!!

V

RE: How big a pay cut would you take?

Bonuses?

Let's see:
- they are doing such a good job in such difficult times that if it weren't for them there'd be nothing left at all?
- they managed to con so much money out of the government that it'd be a shame not to grab some themselves?
- their contracts were written by lawyers who get a percentage?
- they don't need a reason, even a bad one and who are you to ask?

To be fair, there are reasons why bonuses are paid irrespective of performance.
Some jobs carry a lower pay than usual but with a guaranteed bonus - it means the company doesn't have to pay the same amount of tax e.g. National Insurance or pension contribution.
Notice that the reasons why things are done in such a manner is usually nothing to do with what is good for the employee or even the company, but generally what is good for the investors - this usually means the top management are the prime beneficiaries and their bonuses are also ring fenced and probably some also get a lower salary (as it appears in the company report) but a bigger bonus.
When I say "or even of the good of the company" it is because some directors are past masters at running companies into the ground and coming up smelling of roses.

The methods of selling failing businesses at top prices is an art form in itself. Sir Arnold Winestock (GEC)was good at putting one or two plums together with a bunch of dogs and selling the whole package to someone else who then shot the dogs.

There was a joke at one company I worked for where the management got together and did a Management Buyout, they were even worse at managing the company for themselves than for someone else: "How do you get Smith, Brown and Jones  to manage an £11million company? Give them a £22million  company."
Yes, in two or three years they halved turnover and destroyed margins. They laid people off left right and centre and then? they sold the business for more than they paid for it.
Sorry, a rant ongoing? ....I'll stop there...

 

JMW
www.ViscoAnalyser.com
 

RE: How big a pay cut would you take?

Wow... I'm a little busy job-hunting to read all of the replies. I did want to add my .02$ though.
I would've considered taking a pay-cut or working a 4 day week with coorosponding pay versus just being let go.

And I disagree with the statement that engineers are in demand and shouldn't be concerened. While I'm not a degreed engineer, one other of the 12 let go this round was. If there are no new projects to engineer, why would they keep you? Especially since the company I worked for got bought back in May, and has pleny of other engineersa overseas that can do the job.
I think it'd be foolish to assume any position is stable in this economy.

David

RE: How big a pay cut would you take?

As far as I know we haven't got any bail out bucks from the govt jmwwinky smile.

However, from what I know of it their bonuses aren't directly linked to if the company is profitable, it's not some kind of enhanced profit sharing.

They have certain goals and if they achieve them they get the bonus.

Now you'd hope the goals are in line with what's good for the company, but I wouldn't guarantee it.

My guess is most of the 'goals' are related to reducing fixed costs of business in favour of variable ones - primarily out sourcing of one sought or another.  So even if we tank, so long as they out-sourced $X million then they'll get their bonus.

My favourite example is from a few years ago.  One Engineering director had a goal related to saving money & improving aspects of quality, the operations VP  though had a goal related to on time shipment.  Given that the former was at least perceived as an enemy of the latter, guess who got a bonus and who didn't.

KENAT,

Have you reminded yourself of FAQ731-376: Eng-Tips.com Forum Policies recently, or taken a look at posting policies: http://eng-tips.com/market.cfm?
What is Engineering anyway: FAQ1088-1484: In layman terms, what is "engineering"?

RE: How big a pay cut would you take?

Forgot to ad that I'd be looking for a new job while working at this reduced income.

David

RE: How big a pay cut would you take?

jmw,

That brings back memories of Fairchild Semiconductor (University), where you learned what not to do at your own company.  When Schlumberger was losing a $1B a year on Fairchild, the management proposed a leveraged buyout, which, amazing, the Schlumberger board was actually smart enough to nix.  After all, if these knuckleheads couldn't manage their way to simple profitability working for Schlumberger, how were they going to be profitable AND pay off their buyout loan?

It seems like many companies work with retention bonuses, to keep "key" employees from bailing.  Often, they run over more than 1 year, which means they could have started when times weren't that bad, and continued through the current debacle.  Now, such bonuses aren't necessary, but they're written into a bunch of legal contracts.

TTFN

FAQ731-376: Eng-Tips.com Forum Policies

RE: How big a pay cut would you take?

I just found out we're all getting a pay cut.  I'm looking already.   

RE: How big a pay cut would you take?


What an interesting thread.  Some very good points made.

My job was cut back in the beginning of February 2009.  Corporate Engineer, managing the design aspects of work done by 7 technical folks.  The new Division Manager (my ex-boss) has essentially doubled those 7 individuals' work load by requiring that all work output must be checked by someone else.  Relying on the expertise of the more senior guys and/or expecting each to seek advice when they recognized they were in dangerous waters was unacceptable.  So, the group's workload has increased, yet the group's throughput has decreased.  Tension in the group has skyrocketed.  They are all still working, but guess who's happier?

The senior guys have lost their key perk - a company car.  As far as I know the loss comes with no change in salary.  No raises this year either.

I would have accepted the loss of the vehicle with no change in compensation.  I would have accepted a cut in pay of up to 20%, but ONLY with a corresponding cut in hours of 20%.  I would have accepted a clamp-down on my expenses related to continuing education (which were reimbursed by the company).  But none of this was offered - instead, they viewed me only as a cost center and cut my position.  Now the group has no mentor, and what P.E. services I provided will be out-sourced.

But, as I look back on it all, I'm now the only one who can get up in the morning and have a smile on my face and start the day with a very mellow atititude.  I have some limited consulting work that is starting to realize some benefits.  Certainly not the kind of income I was accustomed to, but my bride and I will adapt.  But I can pick and choose what projects to pursue, and I do not have to fear saying no to a boss.

By the way, I'm probably in the worst position to find employment here in the Northeast US - over 55 with too much experience.

I've vented.  I'm good to enjoy the weekend now.
 

Ralph
Structures Consulting
Northeast USA

RE: How big a pay cut would you take?

I take this thread to heart.  I am with a small consulting design company.  I am on a sliding scale pay rate, where I get a bonus above a certain billable hours/month.  A significant lack of work has eliminated my bonus, which represents a 10% cut from my last job. Now, a deeper lack of work means another 20% cut of my actual salary.  I am expected to show up for normal work week hours.  Is this a sign to start looking?  I have only been at this for a few months now...please advise.  I just don't see the upside...but I have been jumping jobs a lot recently due to various economic issues, that I am trying to stay put!  What would/should an engineer do?  

Thanks.   

RE: How big a pay cut would you take?

The sign to start looking was when you took the offer cpy911, you should probably always keep an eye out for alternate employment though how much time you spend on this will vary.  Certainly as soon as you weren't getting enough billable hours this should have been a red flag that prompted you into action.

That said, I don't always follow my own advice, I look for other work in fits & spurts but should probably have been putting more effort into it for a while now.

This might be better for a new thread.

KENAT,

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What is Engineering anyway: FAQ1088-1484: In layman terms, what is "engineering"?

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