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The Re-Engineering Delima

April 4, 2015

Dilemma:
In this tough economy, the leadership of my company set a target for desired cost reductions. Included in the equation are cost savings from “re-engineering” the workforce (meaning layoffs), such that the size of some executive bonuses are directly linked to the cost savings from layoffs. I would be curious to hear what others think about the ethics of this situation.

Response from Cassandra Faurote, CCP, SPHR, Total Reward Solutions:
I am not sure how you can continue to get employee engagement once the staff finds out that executives were paid bonuses based on the cost reductions achieved through layoffs. This is the kind of behavior that will cause employees to flee once the economy turns around. Staff will remember how they were treated, and more importantly, how executives acted and were paid during these tough economic times.

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Posted Under: Incentive Compensation