'Over the last year or so, my firm has cut costs with almost religious zeal. Heads have been chopped in their thousands, perks have been all but eradicated, and marketing and sponsorship deals have been scaled back. And now, there are rumours that the powers that be are considering asking senior staff to take a 15% base pay cut across the board.

But I'm having none of it. Even if my refusal to voluntarily reduce my (fairly decent) base salary eventually gets me the boot (and I end up being being laid-off as the firm can't find cost-savings elsewhere), I will have no regrets. And that's because, despite the fact that some firms in Asia have been doing this kind of thing in the last few months, I just don't think it makes much sense. Sure, it may save jobs in the short-term, but it only breeds resentment and will merely serve to postpone the inevitable.

But the speculation has been mounting for weeks now that, such is the parlous state of our firm, we will either have to undertake yet more massive job cuts, or executives will ask all staff at Vice President level and above to take significant pay reductions. And, as the firm is apparently concerned that further job cuts may eat into the bone and affect the ability of the franchise to take advantage of market conditions when (if ?) we eventually see a recovery, the latter course is thought to currently be the favoured option.

But I think that 'asking' senior staff to take pay cuts is tremendously shortsighted. Many of our staff are already working under pressure - previous rounds of lay-offs have seen to that. And morale has also been impacted due to last year's poor bonus payouts, and the fact that bonuses in future years also appear to be at the mercy of our not so bountiful (at least when it comes to others) lawmakers. So basically asking some staff to give more for even less is, in my view, just not on. And, looking ahead, what new talent will ever likely join us if we come to be regarded as a firm which cuts base pay when the going gets tough ?

In addition, such a move will only stave off the inevitable. Our firm has to look into the future and work out which businesses it regards as key. And it must take a view that is longer than our next quarterly earnings cycle. If the firm really believes that we will make serious money in the near-term from a business (or businesses) that is (are) currently under stress, then it must bite the bullet and take the current losses on the chin - it should not ask the rest of the staff to subsidize these losses. And what happens when the firm gets the pay cuts and things still don't improve ? More pay cuts ? More jobs losses ? Or both ? No, if we have a diseased branch on the tree, we must lop it off. And quickly. No-one knows what will happen in the future (especially in these times), and our executives would be foolish to gamble on a quick upturn.

And surely there is a kind of 'moral hazard' here too - staff will be less concerned about their futures if they feel that, despite their business unit having very little to do and incurring heavy losses, they can stay on the payroll in some form, at the expense of others. This is no way to run a business.

So, I hope that the executives who run our firm resist the temptation to take the 'easy option' (if there is such a thing) and seek pay cuts. They will be no good for morale, and, in the end, no good for our overall business. Better to cut more heads and move on.

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