Why do companies typically choose to implement layoffs affecting numerous employees rather than considering salary reductions for top executives like the CEO?

Question

Why do companies typically choose to implement layoffs affecting numerous employees rather than considering salary reductions for top executives like the CEO?

In: Economics

Answer 1

Layoffs are typically a combination of reducing costs and dropping the bottom 5-10% of talent. Some companies let go of their bottom 5% every year.

When they need to save money, they will fire the roles deemed least important. Sometimes directors and VP are let go – Meta recently cleared out much of middle management. Executives will likely cost a similar amount to replace, so unless they are doing a reorg where the company is “flatter” (less management) then they wouldn’t let go of people at the top.

Also they are the ones making the decision lol.