by Meridith Levinson

IT Salaries: Want to Earn More? Fire People

Sep 01, 2010

The CEOs who oversaw the largest layoffs at their companies during the recession earn more than their peers, new research shows.

IT workers at all levels are unhappy with their compensation, given that their workloads have exploded while their pay has stagnated or taken a nose dive, thanks to the layoffs, pay cuts and salary freezes their employers instituted during the recession.

But there’s a surefire way IT professionals with management responsibility can improve their pay: Fire people.

New research from the Institute for Policy Studies shows a direct correlation between compensation (in particular, CEO compensation) and layoffs. The CEOs who oversaw the largest layoffs at their companies during the recession earned more money in 2009—42 percent more—than their peers at S&P 500 firms.

The Institute for Policy Studies’ data demonstrates that the larger the layoffs a CEO oversees inside his company, the more money he will make. Consider the following facts from the think tank:

  • Fred Hassan, the former CEO of Schering-Plough, earned nearly $50 million in compensation in 2009, the year his company merged with Merck and 16,000 employees at those companies subsequently lost their jobs. According to the Institute for Policy Studies’ data, Hassan’s 2009 pay package could cover the average cost of those laid-off workers’ unemployment benefits for more than 10 weeks.
  • William Weldon, the CEO of Johnson & Johnson, saw his 2009 compensation hit $25.6 million, despite the fact that his company was facing a drug recall scandal and laying off 9,000 employees. 
  • Mark Hurd, the embattled former CEO of HP and noted hatchet man, banked $24.2 million in compensation in 2009 while 6,400 HP workers saw their paychecks vanish after they lost their jobs.
  • The 50 CEOs who laid off the most employees during the recession earned $12 million on average in 2009, compared to the average compensation of S&P 500 CEOs, which was $8.5 million.

Judging by the Institute for Policy Studies’ data, conducting layoffs appears to be a guaranteed strategy for improving one’s personal earnings. 

In case it’s not obvious, I am being ironic in recommending to IT managers and CIOs that they lay off staff in order to boost their own paychecks. It may work for the layoff kings, but I don’t believe in ruining other people’s livelihoods in order to enrich one’s own.   

What makes the layoff-as-salary-boosting-strategy even more ironic is that companies allegedly conduct layoffs and institute pay cuts and salary freezes for staff to make or maintain their numbers when business goes down the tubes—yet CEO pay rises at the same time that the business appears to be suffering the most. 

I’ll leave you with one last data point from the Institute for Policy Studies:

• The $598 million that the top 50 layoff CEOs earned in 2009 could provide average unemployment benefits to 37,759 workers for an entire year—or nearly a month of benefits for each of the 531,363 workers their companies laid off.