Why do companies typically choose to implement layoffs affecting numerous employees rather than considering salary reductions for top executives like the CEO?
In: Economics
1) If the Executives leave, that will hurt the companies operations. It is extremely difficult to find replacements for senior execs of F500 companies, even more so if the compensation is low. There are literally only a few thousands of people in the world with that kind of experience.
2) Layoffs aren’t only about reducing labor cost, they are often also about streamlining the business e.g., discontinuing low profitability products, closing poorly performing factories, outsourcing operations to more specialized contractor companies, etc. if you make those kinds of changes, you simply don’t need as many workers.
Latest Answers