Agilent Announces Pay Cuts

PALO ALTO, Calif. -- Agilent Technologies Inc. (NYSE: A) today announced its latest and most aggressive expense reduction measure to date in response to recent dramatic slowing in customer demand. The company will temporarily reduce employee pay by 10 percent. Agilent began slowing hiring and reducing discretionary spending several months ago. As the demand from Agilent's major customers has dropped dramatically in the last four to six weeks, the company has taken progressively more aggressive expense control actions.

"We're trying to avoid across-the-board layoffs in response to cyclical market conditions," said Ned Barnholt, Agilent president and chief executive officer. "We view the economic slowdown as a business cycle -- even though it's deepening and broadening. At the present time, we believe this pay reduction is the most appropriate action for us. We value our workforce and need to be ready to meet demand as business conditions improve."

fk 12/4/2012 | 8:35:39 PM
re: Agilent Announces Pay Cuts YGBSM. Gotta love that doublespeak. We value our employees so much we are going to take away part of their salaries. Thank goodness I'm not "valued" like that...
voip-transport 12/4/2012 | 8:35:37 PM
re: Agilent Announces Pay Cuts I still believe that it's better to cut the low underperforming employees instead of taking a salary cut all across the boards.

This is a competitive business, so everyone in the industry should be aware when they played around.

But in the end, Agilent is probably just being nice to all its employees. Remember the Schwab announcement that it'll take a cut in salary from the employees or working 4 days out of 5 days in a week. A few months later, they announced the job cuts anyway.

So, we'll see what Agilent will do in a few months from now if they can not maintain its spending wisely.
mrcasual 12/4/2012 | 8:35:36 PM
re: Agilent Announces Pay Cuts You could argue that it's doublespeak but I take it a different way. Agilent is basically saying that they have the people they need to conduct their business. They believe that what they are working on is correct for the long term view and they don't want to compromise it based on what they believe is a short term market condition.

Instead of taking the easy way out and laying off large numbers, which, unless you're carrying corporate weight, means you have to delay projects, they chose to cut salaries. A bold move.

I'd have been even more impressed if the head honchos took a bigger cut than the pee-ons. Of course this doesn't prevent them from making cuts at a later date.

fk 12/4/2012 | 8:35:35 PM
re: Agilent Announces Pay Cuts How is it bold? They are saying that they have everybody they need for the long term and don't want to make the tough decisions to cut the people they can't afford, and are saying that rather than making the difficult decision of whom to let go, everyone will suffer proportionately. I think that the EFFECT of this non-decision will be to prompt the A-performers to find places where they are compensated according to performance. By not cutting the bottom, you effectively encourage the best and brightest to move on. I just don't see this is a smart strategy, even if it washes management's hands and gives them the opportunity to say "there was nothing I could do..."
hitechguy 12/4/2012 | 8:35:35 PM
re: Agilent Announces Pay Cuts I cannot remember the exact date but H-P (which Agilent was spun out of) did exactly the same thing about 10 years ago.

They weathered that storm then and came out stronger. I am sure they are hoping to do the same this time.

mrcasual 12/4/2012 | 8:35:30 PM
re: Agilent Announces Pay Cuts Cutting the bottom in tough times is easy to do. Letting under performers go during good times is something that is rarely done these days.
Obviously Agilent is a big company and there is bound to be some deadwood. But in general, if their management is "good" and is making sure that their staff are all performing adequately, then there is no need to cut a large batch of people. Especially if you need the people you have to get your product out. In that case, cutting salaries is the best way to go.

If I had the 10 smartest people in the world working for me and a cut 10% edict came down from the top I guess I'd lose a pretty smart person wouldn't I?

Big staff cuts also have the nasty side effect of causing some of the good people to leave too. Usually because they see people let go that they think shouldn't have been and get itchy.
fk 12/4/2012 | 8:35:17 PM
re: Agilent Announces Pay Cuts If you had the 10 smartest people in the world working for you, one would have to wonder what exactly was standing in the way between you and making a profit.

The fact that you "need" the people to get your product out means that you need to make some hard choices. I think it's fantasy to assume that choosing not to directly cut any particular people means that you won't experience attrition as a result of lowering everyone's salaries. I think the people who will be most likely to leave will be those in two groups: those who are A players and expect to be compensated for their efforts, and those who can't financially deal with the loss in salary. So you still end up with fewers workers than you "need to get your product out," it's just that you are selecting different people to lose to attrition. You are losing control over who leaves. Try as I might, I can't see this as clever management. I see it as spineless.
PBC 12/4/2012 | 8:35:14 PM
re: Agilent Announces Pay Cuts This is just like saying to the top performers:

"We hold you in the exact same category as the bottom third people, who by the way have no clue what Agilent does....take 3 hour lunch breaks (and are not in sales), get here at 8 and leave at 2...etc...etc..."

Lose the bottom third, raise salaries for the top third, and re-issue a load of options to the top third with a strike price of 28 (or whatever A is at)?

The key is to retain the top people, heck its more than Agilent losing good people, its the threat of the competition picking them up.

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