The Tribune

Today we tackle a somewhat sensitive topic that most business owners and senior executives opt to ignore.

Demotions, salary cuts and reduced days are seemingly the signs of regression. Typically, the failure is on the part of the employee, the company or the wider economy. In either case, business persons find it difficult to break the news to employees who find themselves subject to this dilemma. This article will help us understand the psychology behind demotions, salary cuts and reduced days, giving business owners and company executives clearance and methodology to exercise this right should the need arise.

Let’s begin with some basic definitions:

1. Demotion refers to reducing an individual to a lower grade, rank, class or position. It is the very opposite of promoting the person.

2. A salary cut makes reference to the lowering of an individual’s base pay from the originally agreed amount.

3. A reduced day is the corporate term for allowing a full-time person to report for active duty for less hours or days than they would normally, under regular circumstances, be required to work.

The immediate questions that first have to be answered are: When do you resort to cutting people’s salaries, demoting them or allowing them fewer days of work? Is it advisable? And how does a business owner or senior executive execute such a task without dire consequences or negative backlash?

Let’s explore why demotions, salary cuts and reduced days should become more common place in the Bahamian workplace.

Work Performance:

There are far too many individuals who have assumed high office and been granted, through sometimes treacherous and unscrupulous means, titles to which they have neither earned or are deserving. It becomes virtually impossible, then, for those individuals to even meet the minimum standards of performance and, as a result, they hold hostage the economic viability, work proficiency and overall productivity of the company.

That principal, dare I say, needs to be sent back into the classroom. That manager needs to be sent back on the production lin, and that pastor needs to be sent back into the congregation. Enough with turning a blind eye to those given titles among us who, despite numerous training, coaching and learning interventions ,fail to meet the standard.

Organisational Failure:

When a company goes through a difficult patch, as many do, there must be a human resource resolution and response to this occurrence. Any number of measures have been taken, including placing a freeze on hiring, cutting the bonuses of employees, asking senior executives to take vacation days without pay, and even reducing some of the benefits normally extended to team members.

A number of companies have done well to keep their employees on staff aby sking them to take smaller salaries or fewer working days, with hopes that when business recovers they return to the norm.

This may prove a truly challenging time for both company and employee, since most individuals, particularly in our context, cannot afford on their current lifestyles even a 5 per cent decrease in our salary. When these unfortunate and trying times come, they allow each of us the opportunity to demonstrate our resilience as well as our level of commitment to the company that we serve.

Economic Recession:

The state of the economy dictates that businesses, and even the Government, make adjustments. The 9/11 tragedy and the global recession of 2008-2009 could not be predicted, and most companies around the world had to scamper for solutions to keep their doors open.

It would be unfair to conclude this conversation without giving the business owner some idea as to how to successfully execute these important tasks. In the interest of time, we simply leave these four valuable tips in this regard:

* Ensure that you have measured correctly when demoting an officer who has not produced.

* Ensure that you have exhausted all your resources or options in assisting the officer to reach the desired standard

* Ensure that you are transparent and open in communicating to the individual what you are doing, as well as the new expectations you have for them

* Ensure that the individual remains committed to the values and objectives of the company through their verbal and written consent and contract.

• NB: Ian R. Ferguson is a talent management and organisational development consultant, having completed graduate studies with regional and international universities. He has served organsations, both locally and globally, providing relevant solutions to their business growth and development issues. He may be contacted at tcconsultants@coralwave.com.