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Submitted By KimHyeongJae
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CUTTING SALARIES INSTEAD OF JOBS

Business Week
June 8th, 2009

Companies have a big worry to cut labor costs due to recession. The president of United Technologies' has frozen hiring, deferred pay increases. And his company is getting rid of more than 11,000 jobs. But one side, there are companies that cuts their staffers’ base pay like FedEx and Hewlett-Packard. FedEx trimmed pay 5% for salaried workers and Hewlett-Packard cut 5% to 15% from salaries.

Hewlett-Packard decided cutting staffers’ base pay instead of layoff. Cutting salaries has merit that staffs can get a relief in company comparing with layoff. It can also create stable atmosphere in company. So, it is factors that staffs gratitude their company and have loyalty to company, because they are not fired in recession. But, they will have side effect in the long term due to low salaries. Salary is fundamental wage to staff by contrast with bonus. If Hewlett-Packard maintains their strategy not doing some other engagement, Hewlett-Packard’s staff will complain their salaries and do not their work efficiently.

Also, Hewlett-Packard’s staff will have complains because Hewlett-Packard did not considerate to each person’s ability. If staff have similar position in their company, Hewlett-Packard get a same cut rate in their salaries despite each staff have different ability and actual results. In addition, Hewlett-Packard cut more salaries in the upper class people without reason. Of course they have much wage comparing low class, but they want to appropriate compensation their accomplishment. Without this, it can reduce their motivation to work as feeling unfair. So, Hewlett-Packard has to find different method for fair and for motivating their staffs.

In the mean time, Hewlett-Packard has been operate 'HP Way' personage management. 'HP Way' management was based on reinforcing connection and

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