My company just make a perfect demonstration on how to demoralize your employees. The economy is bad, everywhere is cutting jobs or costs, our company is the same. However, there are two ways of cost cutting, the smart way or the stupid way. Other than usual cost reduction deals like cut down the travel budget, lay off some employees and box Kleenex, the CEO just inform us there are two unusual cuts. The first cut is the company RRSP contribution, the retire fund, which roughly equal to 5% of pay cut. This one is understandable, we are unhappy about it, but doesn’t cause too much grief. The second cut is like dropping a fire ball into the crowd.
According to BC law, employees who got laid off get about 1 month per year of employment in severance package. It is quite expensive for the company to lay off anyone here. The CEO want us sign a new contract, limiting the severance to 2 weeks per year and capped at 6 months total. The new contract is so far so good if it is given enough incentive. However, the only benefit for signing the new contract is we are allow to keep our stock options, which is worthless anyways. Anyone with a right mind will not sign the contract. You forfeit half of your severance package for virtually nothing!
The new contract on its own is just plain stupid, but the CEO’s Q&A session make it out-outrageous. It is obvious we will ask why should we sign such as stupid contract. The CEO replied that the cost of doing business is too high in Canada. He threaten us that too expensive to lay people off will make the company stop having further investment in Canada. He pull up some statistic citing it is really too expensive. If we read the number, the Canada is about the same as other developed countries, like UK, Germany, France, Japan, the only exception is US. The most outrageous part is that the CEO present it in such a way that if we sign the contract, we will have better job security, but it doesn’t make sense at all. How can you get more job security by making the company easier to lay you off?
I think his threat is just a bluff. The investment decision won’t affect by whether or not we all sign the new contract. The new hire has to sign the new contracts. US is cheaper to lay people off, but more expensive to hire. Most employee in our Silicon Valley office is already laid off. Our cost is still too high comparing to India or China even if we sign the new contract If we are really too expensive, the jobs will go to India or China regardless whether we sign the new contract. Signing the new contract will only the cut happen sooner than later, if the cut is inevitable.
If the company really want us to sign the new contract, they should give us some incentive, say a buy out of $1000 per year of employment. Treating us like idiots and try to use an empty threat to make us sign the new contract really hurt the moral in the company. I guess the lost of productivity is already more expensive than the saving they could even get from the new contract.