How to demoralize your employees

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.

11 thoughts on “How to demoralize your employees”

  1. So sorry to hear this Horace.

    Like you’ve laid out, this is a stupid plan and very demoralizing indeed.

    While I am not a lawyer and definitely not a labour lawyer, I wander if the company’s new contract which contravenes BC labour law will have a leg to stand on in a court of law?

    It will seem foolish and a joke if provincial laws can be so easily nullify by having employees signing a contract that ignores established laws.

    For example, having employees signing a contact that says their hourly wage is half of the minimum wage and paying them accordingly doesn’t make what the company wants to do any more “legal”.

    It will be interesting to see how other employees think and do in the coming days.

  2. We are “force” to sign if we want to get new stock options. I doubt many people will sign. Probably we will wait for a better deal just like last time.

    Last year the company wants to cut the liability on vacation time, they offer to cash out our vacation at 2/3 of the value. It’s obvious, no one is stupid enough to sell the vacation back to them at a discount. At last they raise it to 100% buy back and screw those who sold their vacations earlier.

  3. Kempton: Actually among the employees, we already discuss about the legal status of this new contract. I think the 2 weeks short notice and taking away our stock options may nullify the contract.

  4. My school is a little better…

    They only do budget cuts on maximizing our ability of services and lowering the unnecessary demands on employees.

    Our kids were cut from 5 hours back to 3 hours (with no exception). Our hours are still stable!

    Looking at your stupid CEO, I think that my boss deserves a good pat on the back this time of change!!

    – wife

  5. i doubt that this could be illegal, as it would be beyond stupid if your CEO and head of HR didn’t run this by a labour law lawyer. but it certainly sounds like there’s some grey area there……have you and your colleagues spoken to a lawyer about this? might be worth getting some advice before you consider your next steps.

    and is there a union of tech workers in BC? tech workers generally aren’t unionised (there is one in Australia though, albeit a very small one) but if there is one you might wanna try talk to them too……

  6. It could be illegal. Some of us is already talking to lawyer. We just have to see the new contract on paper and will kno what to do.

    I talked to the Vancouver HR manager today. Apparently it’s CEO’s own decision, he didn’t ask any advice from our HR department.

    The CEO manage to turn the whole company against him. Brilliant.

  7. Talking to the lawyer is definitely a good idea. On the other hand, “one month per year of service” is probably a common law (from previous court cases) and the provincial labour law is more like “one week per year”.

    Also, a contract must have a consideration to be enforceable. I am not a law expert but allowing to keep the current stock option doesn’t sound like a consideration.

    Good luck!

  8. Hey pal, leave this company ASAP… but it is easier said than done, sigh.

    The seattle area should have some job if silicon valley is too far away…

  9. FTBY: All open ranks dry up in this economy. No one is hiring.

    Lawrence: Yeap. 1 month per year is common law. We have two court ruling against PMC now, so winning the case would be a piece of cake.

    The CEO just sent out email saying he will rework the detail of the new contract and present to us later. Let’s see has he learn his lesson.

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