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Company Execs that Share the Pain

July 19, 2003

Filed under: money — Terry Wohlers @ 13:49

When times are tough, I’ve always found it disheartening to watch companies lay off employees or reduce pay and other benefits, while top executives receive embarrassingly large sums in salaries and bonuses. “How can they do it in good conscience?” I ask myself. It happens time and again, even among executives who do a seemingly poor job at managing their company.

The July 7, 2003 issue of Design News published an interesting story that counters some of my pessimism on this subject. Willem Roelandts, president and CEO of Xilinx, a company in the semiconductor business, authored the article. His company, along with many others, have been impacted by what many describe as one of the worst recessions ever to hit this industry.

Through a variety of efforts, Roelandts explained, the company instituted a variety of cost-cutting measures. The most significant was savings from a company-wide strategy to reduce payroll expenses. The CEO and executive staff received the largest reduction (20%), following by directors (10%), mid-level management (6%), non-management and salaried employees (3%), and hourly employees (0%). That’s right: No pay cut for the hourly employees.

The strategy paid off. The company delivered new products in 18 months, while gaining market share. Meanwhile, employee morale remained high. In fact, the company earned a Number Four ranking in Fortune magazine’s 100 Best Companies to Work For. Roelandts said that they were totally upfront with employees and explained to them the dilemma and financial bind that the company faced, while asking for their feedback, advice, and support. It’s my hope that the top management at other companies can learn from Xilinx and others like it.