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MSP Abandons Targeted Pay Cut Plan For Selected Employees

To navigate the coronavirus pandemic, an MSP and office equipment dealer in Oklahoma City initially asked some employees to take pay cuts in the amount equal to any government support they received. But the company has since abandoned that plan — conceding that it was an ill-advised strategy.

To understand the MSP’s initial thinking and revised thinking, it’s important to know the company’s overall compensation strategy. An extended statement from the company provides that context.

According to ImageNet Consulting President Pat Russell:

“As our company grapples with the massive business disruptions caused by this outbreak, our first concern was ensuring we could keep as many people as possible employed for as long as possible. We implemented a series of steps to cut costs, including asking our top executives to forego their pay and capping all salaries at $75,000,” Russell said.

“While there was uncertainty about the federal government response, we also asked a small group of employees to reduce their compensation by an amount equal to any government support they received,” he said. “Our intentions were to serve the greater good and protect our most vulnerable employees. However, we understand our plan was ill-advised. We have rescinded the potential program, and we apologize for any pain or confusion it caused.”

“Our company continues to investigate all government programs which will help us weather this unprecedented and difficult situation,” he said. “We remain committed to serving our customers and to protecting our employees’ health and safety.”

ImageNet declined further comment when reached by ChannelE2E.

The company is well-known in the IT solutions provider ecosystem, and is active on the M&A front. Key deals include acquiring Florida-based PC LAN Techs in February 2020 and fellow OKC company IT Guys in October 2019.

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4 Comments

Comments

    TSchafer:

    This article adds no value past the headline. It doesn’t say anything about why it was ill advised, what they learned, etc. I had hoped to learn something.

    Joe Panettieri:

    Hi T: I’m sorry the article didn’t live up to your expectations. My personal view is that Mr. Russell did a good job explaining the company’s original strategy, apologized for it, changed strategy and then moved forward.

    His statement also provided some lively debate between me, my wife and our kids over the dinner table. We found ourselves making a pro/con case for both Mr. Russell and his employees.

    I’ve been on both sides of the table. While working at a large media company in 2000, I laid off employees — but also brainstormed whether pay cuts would help to retain those cut employees. Ultimately, the pay cut idea was abandoned at the department level before it was even escalated to executives for consideration. As I look back on that time, I think Mr. Russell faced a similar reality here in 2020.

    PS: I was ultimately laid off in 2001 by that media company. Looking back, I’m glad we didn’t institute staff pay cuts. The job loss provided me with a sense of urgency to move into digital media.

    But again, back to the heart of your comment: Sorry the article didn’t meet your needs.
    -jp

    steveh:

    I thought it was an interesting article. I worked at HP-spinoff Agilent Technologies in 2001 when the Internet bubble burst. Agilent introduced a 5% pay cut for most employees and a 10% cut for executive level positions like mine. I think the pay cut lasted about a year. We still had to lay people off, but not as many as otherwise. Everyone seemed to understand and accept the situation. Sounds like Mr. Russell’s plan was probably too draconian, but the idea of temporary pay cuts isn’t a bad one.

    Joe Panettieri:

    Hey Steve: Sounds like we lived parallels. IT certainly recovered after the dot-com bubble. But I feel like the long work hours and more stringent compensation plans stretched on and on — long after the tech economy had recovered. But maybe that’s just me, considering I was in IT media and the print side of the businesses was collapsing.
    -jp

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