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Crucial Conversations QA

Pay Cut

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Ron McMillan

Ron McMillan is coauthor of four New York Times bestsellers, Change Anything, Crucial Conversations, Crucial Confrontations, and Influencer.

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Crucial Conversations

Q Dear Authors,

I have recently been informed by my boss that the president of my company intends to cut my salary by 30 percent at the beginning of the year. This is a drastic change. I have been told that I am the highest paid manager in our company, and I need to be in line with the other managers’ pay. I have been with the company for ten years. I have not had a negative performance review. I am reliable, honest, and I exhibit all the characteristics of an ideal employee.

Please advise me how to negotiate with a “corporate president.” Money is the bottom line, and corners have been cut across the board. We are up 34 percent YTD in revenue, and our margins have increased three percent. Why would an employee receive such a drastic pay cut? I am stumped and know this will be a crucial conversation when I attempt to negotiate a smaller decrease in pay. How do I present myself and qualities without seeming greedy and unappreciative?

Signed,
Pay Cut

A Dear Pay Cut,

Ouch! A 30 percent salary reduction is huge! This is definitely a high stakes issue and will require your best crucial conversations skills.

I would suggest that you first decide who to have the conversation or conversations with. Your boss presented the decision as coming from the president of the company. I would suggest talking with your boss to ascertain:

1) Does your boss agree or disagree with the decision?
2) Why?
3) Would it be appropriate for you to talk with the president about the decision to cut your pay?

Let’s assume your boss gives you an answer like, “Well, it wasn’t really my decision, it was the president’s call.” Using your most professional, most respectful tone of voice, you might ask, “Well, if it was the president’s decision, may I speak to the president about it?”

Let’s assume you get permission. Next, share with your boss your view of your performance and contributions. You describe yourself as an “ideal” employee. Does the boss agree? This is a wonderful opportunity to get insight and feedback for possible areas for growth. It could also give you clues as to reasons for your pay reduction. If your boss agrees with your perceptions, you can make use of that favorable assessment in your salary negotiations. If indeed this decision was the president’s, it would be ideal to have a crucial conversation to understand his or her view. I would recommend holding two different conversations with the president.

In the first conversation, the purpose is to understand the reasons for the 30 percent pay cut. In this conversation you’re trying to enlarge the pool of shared meaning. You’re trying to understand the president’s thinking.

To begin this conversation, share your understanding that your pay is being cut by 30 percent. Ask him or her if this is correct. Listen carefully and ask any clarifying questions you need to understand what is being suggested and why. You might consider paraphrasing the president’s comments in order to check your understanding and to demonstrate you were listening.

I would then suggest respectfully asking for a second appointment that would enable you to thoughtfully present your point of view. You might say something like, “As I’m sure you realize, this is a very important issue to me. With your permission I would like to take some time to consider what you have shared with me and get back together to present my response.” Then set a time to reconvene.

At this point you need to formulate your strategy. Clarify the reasons the president should reconsider cutting your pay and what other options you have. It’s important that you clarify your best alternative to a negotiated agreement. Will you continue working at a 10 percent pay cut? Would you stay if it were changed to 20 percent? How about 30 percent? Are there any alternatives to a reduction in pay? Get absolutely clear on what you really want.

In the second conversation with the president, your purpose is to either accept the 30 percent pay cut and determine if there is anything you can do over the coming year to merit an increase, or to propose an alternative. This would require that you give the president compelling reasons to reconsider his or her decision. For example, the ways you’ve added value and the high regard your boss has for your work. It would be important to tell the president what you want. Invite him or her to respond to your suggestions and proposals. Do not make any suggestions or threats you’re unwilling to act upon.

These suggestions do not guarantee the president will be persuaded to change his or her mind. These are not ways of controlling or manipulating others. If followed, however, these suggestions should improve your understanding of your employers’ thinking, as well as assure they understand yours. In this way, decisions can be based on reason, logic, and clear understanding instead of supposition, misunderstanding, and fear.

Best wishes,
Ron

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Ron McMillan

Ron McMillan is a New York Times bestselling author, keynote speaker, and leading social scientist for organizational change. For thirty years, Ron has delivered engaging keynotes at major conferences including the American Society of Training and Development and the Society for Human Resource Management. Ron’s work has been translated into twenty-eight languages, is available in thirty-six countries, and has generated results for three hundred of the Fortune 500. read more