Executives are often criticized for earning way more than their fair share. In 2020, CEOs of the top 350 firms in the U.S. earned 351 times more than a typical worker.
In the wake of massive layoffs, which can have detrimental effects on individuals, it begs the question how many executives have or would be willing to step up and take a pay cut in order to reduce or eliminate the need for layoffs at their organization.
With this question in mind, in January, ResumeBuilder.com surveyed 1,000 U.S. executives at companies with more than 100 employees.
- 78% of executives say their company has had layoffs in the past 6 months; 70% say there will be layoffs in next 6 months
- 66% of executives have taken a salary cut in the past 6 months, and 94% say this was to prevent or reduce layoffs
- 1 in 4 executives who had salary cut took a 30% hit or more; 5% had salary cut by at least 90%
- 67% of executives who haven’t yet taken a salary cut say they would be willing to in order to prevent or reduce layoffs
- 60% of executives say non-exec employees’ well being is ‘extremely important’
8 in 10 executives say their company had layoffs in past 6 months
Overall, 78% of executives say their company has experienced layoffs in the past 6 months. Of this group, 60% say 30% or more of their workforce was laid off in the past 6 months.
In the next 6 months, 70% of executives say their company will lay off more workers, 30% of whom say their company will lay off 30% or more of their employees.
Impending layoffs by industry vary. Below, are the percentage of executives across the industries we surveyed, where there were at least 50 respondents, who say their company will layoff employees in the next 6 months.
- Finance and Insurance – 72%
- Information – 73%
- Software – 70%
- Construction – 57%
- Health Care and Social Assistance – 57%
- Education – 30%
66% of executives have taken a salary cut since last August
Overall, 66% of executives say they have personally had a salary cut in the past 6 months.
The plurality (37%) say their salary was cut by 20%. However, more than one-quarter saw a cut of 30% or more, and nearly 5% took a 90% or greater hit.
Of those who have taken a salary cut, 94% say this was to prevent or reduce layoffs.
Additionally, 67% of executives say an executive employee at the company other than themselves had their salary cut in the past 6 months. Ninety percent say this was to reduce or prevent layoffs
Executives in some industries were more likely to take salary cuts. Below, are the percentage of executives across the industries we surveyed, where there were at least 50 respondents, who say they had their salary reduced in the past 6 months.
- Health Care and Social Assistance – 74%
- Software – 66%
- Finance and Insurance – 58%
- Information – 57%
- Construction – 44%
- Education – 39%
Chief Career Advisor Stacie Haller says executives may be taking pay cuts to improve appearances now and in the future.
“Demonstrating to employees that they too have skin in the game by taking a salary cut can help improve morale and potentially mitigate some measures that they financially may need to take,” says Haller.
“Organizations also know that when the economy improves, they will need to attract new talent. It benefits an organization to create an environment that at least appears to be more compassionate.
“However, it’s important to note that salary is only one component of most executive’s compensation, and often their payout is based on a larger package. So a salary cut, a particular one that is only several percentage points, may not be as meaningful or generous as it initially seems.”
2 in 3 executives who haven’t taken cut would to prevent future layoffs
When asked if it would help to prevent or reduce future layoffs, 36% of executives say they would ‘definitely’ take a pay cut, while 31% say they ‘probably’ would.
The plurality (33%) would only be willing to take less than a 5% cut. However, 31% say they would take a 10% cut and 15% a 20% cut. The remaining 21% of executives say they would be willing to reduce their salary by 30% or more.
Executives who say they would not be willing to take a salary cut to prevent or reduce layoffs, wrote in a variety of reasons for why not, including:
- “A good corporate culture does not encourage salary cuts. We are a good team and work hard.”
- “I need to care for my family as much as the next person. I would be willing to defer payroll to help out.”
- “It will affect my spending ability.”
- “I can get hired anywhere for the same amount of money or more.”
- “I don’t think that would be helpful. It’s better to lay off underperformers, and I can pick up their slack.”
- “I know my worth in the market and what I offer.”
- “Competent people are not afraid of downsizing
“The risk of using salary cuts as an alternative to layoffs is that an employee may choose to leave,” says Haller.
“Instead of taking a salary cut, an executive may decide to turn to a new organization, particularly in an active job market. The new landscape of remote work has opened more doors for them as well.”
6 in 10 executives are ‘extremely concerned’ about non-exec employees well-being
The majority of executives say they care about non-executive employees at their company. More specifically, 60% say they are ‘extremely concerned’ about the well-being of non-executive employees at their company, while 21% are ‘moderately concerned.’ However, 9% say they are ‘somewhat concerned,’ 6% say they are only ‘slightly concerned,’ and 3% admit they are ‘not concerned at all.’
Further, when asked how important they feel it is for companies to avoid layoffs, 68% of executives say it’s ‘extremely important’ and 23% ‘moderately important.’ On the other hand, it’s only ‘somewhat important’ to 6% of executives and only ‘slightly important’ or ‘not at all important’ to 2% and 1% of executives respectively.
All data found within this report derives from a survey commissioned by ResumeBuilder.com and conducted online by survey platform Pollfish on January 19, 2023. In total, 1,000 U.S. executives at companies with more than 100 employees were surveyed.
Appropriate respondents were found through demographic criteria settings, including age (25+), number of employees (100+), employment status, and organizational role.
This survey utilizes a convenience sampling method. For more information contact [email protected].