To Employees: Understanding the Layoffs and Paycuts

by | Apr 8, 2020 | General | 0 comments

To employees who don’t understand why even big companies are struggling, laying off and cutting pay after only 2 weeks of stoppage of operations, let me explain.

Cash is king, companies don’t just keep money stashed in the bank. A lot of companies firstly are for profit. They have shareholders to return dividend to. End of year, they share a good chunk of the profit as expected, they invest in capital projects and may just keep enough cash to last a little while.

2 weeks of not doing business can paralyse a company and deplete its cash reserves fast.

So what does this imply? Payroll is one of the biggest expenses and requires cash. So, even if the company is still worth billions in assets, without cash it cannot pay you meaning they will be breaching their contractual obligations.

In fact, small businesses and your notorious ‘one man business’ are even more nimble at this time. Some have managed to adopt softer strategies like pay cuts or part time working.

Your management are pulling their hair out at this time. Headache abounds, many are not sleeping.

Which normal organisation or business owner will be happy to stop doing business. They are devastated and just operating based on survival instincts, some poor decisions will be made but hey they are human.

If you have bright ideas and are willing to renegotiate terms, help them out. You will be surprised you are providing a welcome life line to them.

Try and be more understanding as you expect them to understand you.

Hope this helps?

Your thoughts?

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