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Slashing Pay to Survive

Salaries, an HR consultant once told me, are the third rail of employee compensation: Managers touch them at their peril, even in a recession. Little wonder, then, that my story on the subject ("Cutting Salaries Instead of Jobs," What's Next, June 8) provoked hot debate. As cuts to base pay have become more commonplace, some readers argued that smaller paychecks are better than layoffs. Others swore they'd jump ship if their salary were cut. —Jena McGregor

[Cutting pay] is not a perfect solution, but at least it's equitable. Just as important, it allows you to keep the human capital you will need when things turn around.

Screen name: bigdog1965

There will always be demand for the very best workers—even in an economy with just 92% employment. Across-the-board wage cuts put companies at risk of losing their best.

Screen name: Nanoman

As CEO of a small software company several years ago, I found pay cuts to be our only option for survival. The key was a sense of fairness. I committed to the employees that I would take no compensation until everyone else was returned to full salary and had been repaid what they had given up, which created a strong sense of shared sacrifice. It took about a year. But in the end, the hardest period I ever went through as an executive also ended up being one of the most gratifying.

Screen name: Matt

In a deflationary environment, cutting pay a bit actually makes sense. If there is 10% true deflation and you receive a 10% pay cut, the only problem will be if you have debt—since your loan payments become a greater percentage of your take-home pay.

Screen name: Vernon Thiele

Cut my salary, and I leave. Any questions?

Screen name: db in Dallas

President Obama: Do as I Say, Not as I Do

I was reading "Public Flak Grounds Private Jets," which cites President Obama's criticisms of executives using private jets (BTW, June 8), when I glanced up at the TV to see the Obamas boarding Air Force One for dinner and a show in New York.

Susan Emore

WOODRIDGE, ILL.

A Junkyard Full of Car Companies

In "The Hard Road Ahead for Government Motors" (In Depth, June 8), GM Chief Frederick Henderson says: "Auto companies rarely die." What about American Motors, Studebaker, Packard, Hudson, Kaiser, Franklin, and Essex, to name a few?

William Nimmo

VIRGINIA BEACH, VA.

Social Networking: How a Founding Father Defines Friendship

"What's a Friend Worth?" (Special Report, June 1)brought to mind one of my favorite George Washington quotes: "True friendship is a plant of slow growth, and must undergo and withstand the shocks of adversity before it is entitled to the appellation." Washington would be appalled at how we now "friend" mere acquaintances, and might suspect, as do I, that when these "friendships" are asked to withstand the shocks of commercialism planned by modern marketers, they will fail.

David Farnsworth

LINDON, UTAH

Will GM Ever Take Drucker's Advice?

Over 60 years ago, my father, Peter F. Drucker, authored Concept of the Corporation, centered on GM (GM). In the 1983 reprint, he observed: "Policies that are 20 years old ... can always be assumed to have become obsolete. ... To the GM executives, policies were 'principles' and were valid forever."

In "How the Mighty Fall" (In Depth, May 25), Jim Collins, whom Peter liked and admired, advises companies to make the necessary, even radical, changes demanded by the economic and social environment.

It's a shame the latest infusion of funds by "Government Motors" hasn't been accompanied by demands for significant change.

Cecily Drucker

SAN FRANCISCO


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