The Semco Style 5 Principles to transform the way we work
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Salary Cuts Over Job Cuts

Crises don’t last. People do.

It is not socialist, as some of our critics contend. It isn’t purely capitalist, either. It is a new way. A third way. A more humane, trusting, productive, exhilarating, and, in every sense, rewarding way. – Ricardo Semler


Crises in the business world are almost never sudden. Instead, they simmer under the surface for long periods before things begin to boil over. And when businesses, their leaders and their employees realize that the crisis is here for good, it’s often too late to make democratic decisions that prioritize the interests of the employees. In short, it’s time for tough conversations, emotional upheavals and the much-dreaded lay offs.

While there’s no denying that the payroll of a company tends to account for the lion’s share of its bottomline, it’s not healthy, in the long run, to lose people, their technical know-how and the company’s overall goodwill. In fact, financial experts who monitored the economic downturn in 2009, touted to be the biggest world-wide economic crisis after World War II, agreed that mass layoffs did more damage than good.  

Having said that, is there a better way for companies to handle cost cuts when crisis hits? SEMCO proved that there is, in fact, a way: Whether it was the crisis between 2002-2005 or the ongoing one in 2017, SEMCO has dealt with the situation by lowering the salaries of its employees instead of laying them off. It was possible only because of the company’s long-standing culture of financial transparency as well as its strong relationship with the worker unions.




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