“Impact of Compensation Reduction on Employee Retention

and Organizational Performance”

A Case Study
College of Accountancy, Business, Economics and
International Hospitality Management
BS Accountancy and Management Accounting Department
Batangas State University
Batangas City

In Partial Fulfillment
of the Requirements for the Course
FM 101 – Financial
Management
Instructor: Ms. Leslie T. Calcetas

By:
Abella, Michaela Beatrice C. – 2101
Agustin, Sophia Mikaela A. – 2105
Albes, Jennelyn A. – 2109
Amponin, Jude Eiron G. – 2110
Atienza Clarrise Joy – 2106
Marahay, Julie Anne – 2110

December 2023
 TABLE OF CONTENTS

Page

TITLE PAGE...................................................................................................... i
TABLE OF CONTENTS...................................................................................ii

I. EXECUTIVE SUMMARY…………………………………………
II. STATEMENT OF THE PROBLEM………………………………
III. CAUSES OF THE PROBLEM……………………………………
IV. DECISION CRITERIA AND ALTERNATIVE SOLUTIONS……
V. RECOMMENDED SOLUTION, IMPLEMENTATION AND
JUSTIFICATION…………………………………………………….
VI. EXTERNAL SOURCING……………………………………………

CURRICULUM VITAE

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 I. EXECUTIVE SUMMARY

During economic downturns, corporations must make difficult decisions

about cost-cutting measures. Specifically, they must decide whether to conduct

staff layoffs or reduce employee compensation. Previous studies highlight how

common it is to choose job cutbacks overpay reductions. But when thinking about

what happens if employee salaries are cut, a crucial question comes up. The

possible detrimental effects of employee pay reductions on both the individual

and organizational levels are the main issue this study attempts to address.

According to the research, when businesses decide to reduce salaries, high-

performing workers are more likely to quit, which leads to a subsequent drop in

overall revenue for the business. Companies now must decide between cutting

worker size and lowering employee compensation because of the recession's

increasing demand for cost-saving measures. This situation was caused by a few

issues, such as financial difficulties that affected corporate funds and dire

situations that required making tough decisions, the desire to be competitive in

the business world, and worries about keeping up employee incentives and

compensation for exceptional performance.

This study aimed to address several issues, such as how employee retention

is affected by pay reductions, how much more income a business makes from

compensation reductions as opposed to layoffs, and how best to regulate

employee departures. It can be necessary for the manager or an important

3
individual to investigate strategic cost-cutting measures like targeted layoffs and

pay reductions. Long-term strategies could include funding initiatives for worker

retention and investigating fresh approaches to maintaining a competitive

workforce during recessions. The impact of pay reductions on employee

retention, the relative effects on organizational revenue, and the strategic

processes for controlling employee departures were among the factors that were

examined to identify the root causes of the issue. Analysis was also done on the

effects of present organizational policies on the hiring of highly skilled workers in

the future, the possible repercussions of harming the employer brand, and the

long-term effects on morale and business culture. It is advised that the entire

benefits and compensation package be restructured to incorporate non-cash

incentives and rewards while keeping basic pay levels. This strategy seeks to

mitigate any potential harm to employee morale, retention, and organizational

performance while addressing the organization's financial issues. The

contingency plan consists of measures including creating a strategy for

compensation reduction contributions, lowering the wages of senior executives,

and providing affected staff with permanent remote work-from-home

arrangements. These steps are intended to offer substitutes to lessen the

detrimental effects that pay cuts have on staff morale and retention.

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 II. Statement of the Problem

In times of economic downturn, companies face challenging decisions of cost-

cutting measures, often contemplating whether to implement employee layoffs or

reduce employee salaries. Existing research, exemplified by the work of

Christopher Stanton and colleagues, emphasizes the prevalent choice of job cuts

over compensation reductions. However, a critical issue arises when considering

the consequences of reducing employee salaries.

The central problem addressed in this study is the potential negative impact of

cutting employee pay on both individual and organizational levels. The research

suggests that when companies opt for salary reductions, high-performing

employees are more likely to leave, contributing to a subsequent decline in

overall company revenue. Understanding the dynamics of this phenomenon is

crucial for organizations seeking effective strategies to navigate economic

downturns without compromising long-term success.

The recession has increased the need for cost-cutting, forcing companies to

choose between lowering employee compensation and reducing worker size.

Companies have expressed concern about the risk of losing some of their best

performers because of these decisions. Several factors contributed to this

situation, including economic struggles affecting corporate funds and dire

circumstances necessitating difficult decisions; the need to remain competitive in

5
the business world; and concerns about continuing to incentivize and

compensate star-performing employees.

Specifically, this study sought to answer the following questions:

1. How does reducing employee salaries during an economic downturn affect the

retention of high-performing individuals within an organization?

2. What is the comparative impact on organizational revenue when companies

choose to cut compensation versus implementing layoffs?

3. What strategic procedures can organizations implement to try to regulate

employee exits by deciding upon headcount reduction, thus retaining less

efficient staff?

4. How might the challenge of acquiring highly qualified employees in the future

intensify if the current compensation rates are not competitive?

5. What are the potential consequences of damaging the employer brand, and

how can this challenge express itself in future recruitment of talented employees?

6. What long-term impacts could a salary reduction approach have on company

culture and morale?

The manager/key person may need to investigate a strategic cost-cutting

approach. A combination of actions, such as selective layoffs and salary

adjustments, could be used. Identify and let go of less productive staff while

6
keeping high-performing ones in selective layoffs. On the other hand, if wage

modifications are required, ensure that they do not disproportionately affect the

best-performing staff by taking a more balanced approach to compensation cuts.

Moreover, the manager should evaluate the seasonal nature of the business. If

there are down months where turnover is less costly, this might be a good

opportunity to make changes or adjustments. Furthermore, the manager should

consider the seasonal character of the firm. If there are down months when

turnover is less expensive, this could be a good opportunity to make changes.

Long-term measures could involve investing in employee retention programs and

exploring new ways to keep a competitive staff amid economic downturns. The

moral consequences of the chosen method should also be considered during the

decision-making process.

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 III. CAUSES OF THE PROBLEM

This section aims to conduct a comprehensive analysis of the problems stated

in section II and evaluate the interconnected theories and models associated with

each issue.

1. Impact of Salary Reduction on Employee Retention

According to Human Capital Theory, employees are valued since they have

unique skills, knowledge, and experiences. Salary reductions may make high-

performing employees feel undervalued, forcing them to leave in search of better

chances (Becker, 1964). When a company cuts employee pays, the top

performers are often the first to quit, often joining a competitor. This, in turn,

accelerates the firm's revenue decline. Human capital theories help to explain

why high-performing workers, who are considered vital human capital, might

leave when their salaries are decreased. When faced with compensation

declines, high-performing employees are more willing to resign due to views of

undervaluation and perceptions of inequity as they perceive an imbalance

between their skills and what they are being paid granted.

The disclosure of compensation reductions marked the start of the departure.

Individuals marked as "highly productive," making 20 to 25 percent more revenue

per call than standard, had a 28 percent greater leave rate than the average

person among sales agents. According to Stanton, their retreat reflected a 6-

percentage-

8
point drop in revenue over the next five months. The resignation of the most

capable staff is at the foundation of the problem. On average, these set-

off employees produced higher sales results. As such, replacing these high-

performing individuals with ordinary salespeople resulted in a monetary loss

equal to the performance difference between the top and average salespeople.

The action reinforced the current situation, adding to the reported sales decline.

2. Comparative Impact on Organizational Revenue

The crisis addresses the difficult decision that businesses must make in a

downturn: whether to cut salaries for workers or make layoffs. Study indicates

that it might be more financially prudent for the business to implement job

cutbacks more frequently as opposed to wage reductions. The problem that

needs to be considered is how organizational earnings compare to the use of

layoffs when businesses decide to cut pay. In employee response to

compensation cuts, the data show that high-achieving workers are more likely to

quit and even join opposing companies when their employers decide to reduce

employee pay. The revenue of the company may significantly decline because of

this top talent leave. This is in accordance with economic theories, particularly

from the perspective of transaction cost economics. Transaction cost economics

states that people take action to minimize transaction costs. Employees who

excel in such an environment can consider the decreased salary as an additional

transaction cost and leave for greater possibilities elsewhere (Williamson,

1985). In controlled layoffs for

9
improved productivity, the data suggests that if a company decides to eliminate

headcount, it can control who leaves, potentially letting go of less-productive

workers. Through the retention of more valuable contributors, this strategic

approach aims to mitigate the negative impact on revenue. The concept of

agency theory states that the company, acting as the principal, seeks to align the

interests of employees (agents) with organizational goals. By strategically

choosing who to dismiss, the company aims to maximize overall productivity and

minimize agency costs (Jensen & Meckling, 1976). Determining whether to

reduce compensation or implement layoffs during an economic downturn requires

careful thought. Economic theories offer frameworks for understanding the

rational behavior of employees and companies under these circumstances,

particularly transaction cost economics and agency theory.

3. Strategic Procedures for Regulating Employee Exits

Effective strategic procedures for regulating employee exits often draw from

various organizational theories to ensure a comprehensive and thoughtful

approach. One prominent theory is succession planning, which involves

identifying and nurturing internal talent to seamlessly fill key roles when

vacancies arise. By cultivating a pipeline of skilled individuals, organizations can

mitigate disruptions caused by unexpected departures. Another crucial theory

revolves around knowledge transfer; implementing mechanisms like

documentation, mentor-ship programs, and cross-training ensures the

preservation and dissemination of critical

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institutional knowledge. Exit interviews, guided by the understanding that

departing employees provide valuable insights, serve as a strategic procedure for

gleaning feedback and identifying areas for improvement in organizational

practices. Establishing alumni networks aligns with the idea that former

employees can become valuable assets, offering potential rehires, referrals, and

collaborative opportunities in the future. The incorporation of flexible work

arrangements acknowledges the theory that providing a work-life balance can

enhance employee satisfaction and retention. Additionally, fostering a positive

organizational culture and transparent communication aligns with theories

emphasizing the importance of a supportive work environment, ultimately

reducing turnover. Lastly, continuous employee development strategies

contribute to employee engagement and loyalty, addressing the theory that

professional growth opportunities make employees less likely to seek external

alternatives. By integrating these theories into strategic procedures,

organizations can proactively manage employee exits, ensuring a smoother

transition and maintaining a resilient workforce.

4. Impact on Future Recruitment of Highly Qualified Employees

The impact of current organizational practices on the future recruitment of

highly qualified employees is often analyzed through various theoretical

frameworks. One such theory is the "Employer Branding" concept, which posits

that the reputation and image of an organization significantly influence its ability

to attract top talent. Companies that prioritize a positive work

environment,
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competitive compensation, and a commitment to employee development are

likely to build a strong employer brand, making them more appealing to highly

qualified candidates. Another relevant theory is the "Talent Pipeline" concept,

which emphasizes the importance of strategic workforce planning. Organizations

that invest in the development of internal talent, creating a pipeline of skilled

employees, not only meet current needs but also position themselves favorably

for future recruitment. Additionally, the "Employee Value Proposition (EVP)"

theory suggests that organizations need to clearly communicate the unique

benefits and opportunities they offer to employees. Highly qualified candidates

are often attracted to companies that align with their values, provide meaningful

work, and offer opportunities for continuous growth. In summary, a combination

of strong employer branding, a well-developed talent pipeline, and a compelling

Employee Value Proposition can have a positive impact on the future recruitment

of highly qualified employees, ensuring that organizations remain competitive in

attracting and retaining top talent.

5. Consequences of Damaging Employer Brand

As most businesses struggle to cut costs and adapt to changing market

demands to survive in the new competitive arena, workforce downsizing and

salary cutting have become an everyday occurrence. Employer branding refers to

a company's efforts to promote, both internally and externally, a clear picture of

what makes it unique and desirable as an employer1. Employer branding

involves

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managing a company’s image as seen through the eyes of its associates and

potential hires2. The emergence of conferences, awards, reports, and rankings is

a clear indication of the growing interest in employer branding, which has

emerged as one of the most significant intangible resources for the company.

Deloitte (2016), showed that, when prospective employees were choosing an

organization, pay and other financial incentives were the most important factors,

followed by work-life balance, advancement opportunities, flexibility, and a sense

of meaning3. Employee expectations of what the company is required to offer and

how well it meets these expectations will serve as the foundation for an

organization's employment experience.

Even with the potential advantages of effective employer branding

strategies, it makes sense that unfavorable incidents like downsizing and salary

reduction could have an impact on and harm an organization's reputation 4. The

organizational identification and personal attitudes of former employees, current

employees, prospective employees, and other external stakeholders are

anticipated to be impacted by shifts in perceptions related to elements of the

employment brand that are developed both inside and outside the company

during and after downsizing and salary reduction. A company's declining

reputation or loss of appeal to prospective workers is a strong indicator of their

decision to look for work elsewhere, which has a discouraging effect on luring

talent5. Shifts in how external stakeholders—primarily suppliers and

customers—perceive the

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organization's employee qualities may have an impact on their interactions with it

and harm other business or consumer brands6. Together, downsizing and salary

reduction can negatively impact the organization's short- and long-term

performance and reduce the company's brand value as an employer for people

who have left, those who stay, potential new hires, and people with non-work-

related ties to the company.

6. Long-Term Impacts on Company Culture and Morale

According to the theory of motivation known as equity theory, employees'

motivation at work is primarily influenced by their perception of justice. According

to Adams' equity theory of motivation, people must believe that the compensation

they receive for their contributions is just and comparable to that of their peers for

them to be motivated. People get upset and attempt to make changes to bring

about a sense of fairness if they believe that their rewards are unfair.

Fundamentally, Adams' theory asserts that people desire an equitable

relationship between their inputs and their outputs. This indicates that they desire

a fair balance between the inputs (contribution) they make and the benefits

(rewards) they receive from their work. When compared to others in the same

position, the employee always tries to lessen the unfairness. He may do this by

decreasing his efforts, avoiding hard work, requesting a raise, or, in the end,

quitting the company.

According to equity theory, people would feel distressed if they felt that there

was an injustice. People will be inspired to take action to restore equity by this
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upsetting situation. People are more distressed and will work harder to restore

equity when there is greater disparity. Equity restoration can be psychological or

real. The term "actual restoration of equity" describes how those who perceive

injustice behave, such as by reducing their hours worked (reducing inputs),

asking for a raise from their employer (increasing outputs), or destroying

company property (reducing output). The act of persuading oneself that this

unequal relationship is in some ways equitable through reality distortion is known

as the psychological restoration of equity.

IV. DECISION CRITERIA AND ALTERNATIVE SOLUTIONS

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 The aim of decision criteria is to provide a structured and objective

framework for evaluating alternatives, while the aim of alternative solutions is to

present a diverse set of options that can be assessed against these criteria.

IV.A DECISION CRITERIA

1. Performance and Contribution

This will evaluate individual performance based on regular performance

reviews and utilize quantifiable metrics to assess the performance of the

employees.

Using performance and contribution as decision criteria requires a careful

balancing act to ensure fairness and adherence to legal standards. It's important

to approach these decisions with sensitivity and openness, prioritizing clear

communication and a commitment to maintaining a positive work culture.

2. Financial Viability

This will assess the organization’s budgetary limitations and evaluate the

organization’s revenue and profitability. This will help the organization to

determine whether pay cuts are necessary to align expenses with available

financial resources and understand the financial health of the organization.

3. Equity and Fairness

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 This will consider proportional adjustments based on salary levels and apply

pay cuts consistently across the organization. This helps to implement

adjustments that proportionally impact higher earners while minimizing the impact

on lower- wage employees, promoting a more equitable distribution of the

burden. In order to solve financial difficulties while preserving confidence and

staff morale, using equity and fairness as decision criteria necessitates a careful

and open approach. A dedication to equity, transparent communication, and staff

involvement are essential elements of a successful implementation.

4. Employee Morale and Retention

This will evaluate the potential impact on employee morale and retention.

Consider how each option may affect the motivation, loyalty, and commitment of

remaining staff, as well as the ability to attract new talent in the future.

5. Organizational Flexibility and Adaptability

This will consider the adaptability of the organization to changes in the

economic environment. Evaluate how each option aligns with the company's

long- term goals and its ability to respond to future economic fluctuations.

IV.B ALTERNATIVE SOLUTIONS

1. Performance-Based Adjustments

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 An alternative to reducing compensation uniformly across the board is to

implement performance-based adjustments. The purpose of this method is to

distinguish between the effects of pay modifications based on the performance of

specific employees. This is done to retain the link between remuneration and

individual contributions and to reward high-performing workers with lesser or no

pay decreases. Instead of implementing pay reductions across the board,

performance-based adjustments can be a useful tool for employers to reward and

identify great performers while giving fewer performing employees a chance to

get better. However, for implementation to be successful, thorough preparation,

open communication, and a dedication to justice are necessary.

2. Reduced Work Hours

This strategy minimizes the immediate impact on employees' take-home pay

while enabling firms to make cost-saving modifications. This will implement a

reduction in hours across all employees, minimizing the impact on individual

salaries while achieving overall cost savings. Cutting hours can be a good

approach to control expenses and keep workers on board, especially in hard

times financially. Nonetheless, meticulous preparation, open communication, and

a dedication to helping staff members through the change are necessary for

successful implementation.

3. Benefit Adjustments

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 With this strategy, companies can cut expenses without significantly

affecting workers' take-home pay. Benefit adjustments ought to be handled

delicately, with an emphasis on preserving a positive work atmosphere. Benefit

adjustments as an alternative to base salary reductions must be implemented

with clarity, openness, and a dedication to the welfare of employees.

EVALUATION OF PROS AND CONS OF THE ALTERNATIVE SOLUTIONS

1. Performance-Based Adjustments

PROS:

a. Identify Areas for Improvement. By implementing performance-based

adjustments, the company can quickly identify top-performing employees. They

can also hone workers who may not be contributing as much to the company.

Putting a quantifiable amount on an employee’s contributions can help to

determine the reasons for varying performance levels. Companies that use

performance-based adjustments can identify areas in which their businesses can

improve. Offering pay increases based on performance allows you to focus on

individuals that need more guidance and strategize on change.

b. Increase Retention. Performance-based pay models help employers

differentiate between top and low performing employees. When top performers are

paid a higher compensation rate and recognized for their performance, they are
19
more inclined to remain with their organization. Employees on a compensation

plan based on performance are more driven to reach goals and earn extra

money. A performance-based compensation plan encourages more valuable

contributors to continue their best work because they are paid fairly for their

efforts. These workers are also more likely to become your biggest brand

ambassadors and attract other qualified employees to your organization.

c. Better Recruiting. When companies can identify those employees who

perform better, they can improve their recruiting processes. Instead of vetting and

hiring employees who might not contribute to the organization, they can use data

on their top performers to hire candidates with similar attributes, goals, and

personalities. This assessment process can save companies time and money by

hiring top candidates from the start. Streamlining the recruiting process with more

consistent hiring of people who are the right fit will also decrease turnover costs.

CONS:
a. A Blurred Line. Unfortunately, it’s incredibly challenging to pay employees

using this system accurately and proportionally. There is often a blurred line

between job role expectations and levels of compensation. If you do not outline

compensation and performance metrics precisely, there could be confusion and

miscommunication about company expectations to reach compensation goals.

20
b. Misalignment of Goals. For those employees who are top performers and

receive additional compensation for their work, there is the possibility they could

eventually reach a cap on their possible earnings. When employees are

motivated solely by the incentive to receive a higher wage, this could become

their only focus

- forgetting about your organization’s goals.

c. The Threat of Dissolving Profits. Sometimes, companies use performance-

based compensation to motivate employees without fully understanding the

potential issues that could result. However, companies may lack a plan for when

the cost begins to outweigh the benefits. If the promise of extra compensation

causes your employees more stress and impacts their productivity, you may

experience the law of diminishing returns.

2. Reduced Work Hours

PROS:

a. Reduced company costs. Even though employee salary and benefits costs

remain the same with a shorter work week, they can still save money by

switching to only four days per week. With the office shut down one extra day,

they cut some operating costs, such as electricity and water consumption.

b. Greater work-life balance. Shifting to a four-day week gives employees an

extra day to spend with their families. It gives them time to schedule

appointments
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for things like doctors, dentists and car repairs that are otherwise difficult to fit into

the week. Having that flexibility can improve work-life balance, which improves

employee satisfaction.

c. Improved employee well-being. Working fewer hours can also improve the

well-being of your staff. Less work often means less stress for your employees.

Stress can cause physical health issues that affect attendance. It also frees up

more time for exercising and spending time with friends and family, which can

improve mental health. Having a mentally and physically healthy workforce cuts

down on absenteeism and can help your employees be more productive.

CONS:

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a. No savings on salary or benefits. The employees won’t likely buy into the

idea of a shorter work week if the company cut their salaries and take away

benefits. The idea of a shorter work week applies to employees getting paid the

same salary and receiving benefits while also working fewer hours.

b. Changes to schedules and procedures. Switching to a shorter work week

can take a lot of time upfront. Employees need to shift deadlines, and they might

have to reschedule things that they normally do.

c. Not completing all the work. Cutting down working hours could make it

difficult for employees to finish all their work. Once they fall behind, it can be

difficult to catch up. This can ultimately hurt productivity and cost the company

money, especially if you must hire more people to handle the workload. Missing

deadlines can cause issues with key stakeholders, including your clients, which

can cause them to leave.

3. Benefit Adjustments

PROS:

a. Paid leaves. Paid leaves, whether vacation, sick, sabbatical, or bereavement

leaves, are sought after by many employees as it helps them create a balance

between work and personal life. Paid leaves are also great in combatting job

burnout that could be caused by unreasonable workload and deadlines.

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b. Retirement savings plans. Companies who offer a tax-advantaged 401(k)

plan can help employees reach their retirement goals and help attract new hires

and keep current employees motivated and satisfied. In addition, offering to

match contributions up to a certain amount is advantageous for workers and can

make the company stand out amongst competitors.

c. Remote work and flexible schedules. To cater to this demand, many

companies are already shifting to a hybrid work model where employees can

work at the office and remotely while offering employees the option to have a

flexible schedule so long as it does not disrupt their job role.

CONS:

a. Employee Discontent. Reductions or changes to benefits may lead to

employee dissatisfaction, impacting morale and potentially causing talent

retention challenges.

b. Talent Attraction Challenges. Less attractive benefits may hinder the

company’s ability to attract and recruit skilled professionals, particularly in

competitive industries.

c. Legal and Regulatory Risks. Inadequate handling of benefit adjustments

may pose legal and regulatory risks, necessitating careful compliance with

employment laws.

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 V. RECOMMENDED SOLUTION, IMPLEMENTATION, AND JUSTIFICATION

In considering the impact of compensation reduction on employ retention

and organizational performance, it is crucial to carefully weigh the potential

consequences of any actions taken. The recommended solution considers the

perspectives of both employees and the organization to create a balanced

approach that addresses the identified problems and causes while minimizing

negative impacts.

V.A. RECOMMENDED SOLUTION

The recommended solution is to implement a restructuring of the overall

compensation and benefits package to include non-monetary perks and rewards

while maintaining base compensation levels. This approach aims to address the

financial concerns of the organization while mitigating the potential negative

impact on employee morale, retention, and organizational performance. By

offering non- monetary incentives and rewards, the organization can demonstrate

a commitment to valuing and recognizing employee contributions beyond

monetary compensation.

1. Employee Salary Reductions

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Employee salary reductions during an economic downturn may have different

impacts on the retention of high-performing individuals within an organization. It

will cause lower motivation, satisfaction, and commitments among the

employees.

Ideal Course of Action:

Review current compensation and benefits package: Assess the existing

compensation structure and identify areas for restructuring to incorporate non-

monetary perks and rewards. A possible way to fix the effects of reducing

employee salaries during an economic downturn, the company should provide

alternate types of remuneration, recognition, or support that will drive and retain

them. Therefore, organizations could possibly communicate the organization's

purpose and goal, as well as how people contribute to it, especially during difficult

times. Additionally, performing these solutions could foster a sense of

togetherness and belonging among the employees. By conducting a

comprehensive assessment of the organization's financial situation, performance

metrics, and employee feedback to gain a comprehensive understanding of the

challenges and opportunities. This assessment should also include a review of

competitive compensation practices in the industry to inform the decision-making

process.

2. Cut Compensation versus Implementing Layoffs

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Both approaches can assist in lower labor costs and increase cash flow in the

short run. Tailored compensation can boost employee retention, motivation,

performance, and happiness while also aligning the compensation strategy with

the organization's goals and values.

Ideal Course of Action:

Adjustments on compensation based on performance: Instead of uniformly

reducing compensation across the board, consider implementing performance-

based adjustments that reward high-performing employees while minimizing the

impact on lower-performing individuals. This approach can help maintain a sense

of fairness and motivation within the workforce. Layoffs are a difficult decision for

any firm to make, and they may have a detrimental influence on both the

employees who are let go and those who remain. Some possible solutions are to

communicate firmly with the employees about the reason for the layoffs,

recognize and appreciate the employees who stayed, and involve every

employee in the recovery process.

3. Headcount Reduction while Retaining Less Efficient Staff

To be able to regulate employee exits by deciding upon headcount reduction,

thus retaining less efficient staff is to perform rightsizing. This is to transform the

size of the workforce according to the resources of the organization.

Ideal Course of Action:

27
Freeze Recruitment: According to Hitt et al (2005) companies should use their
human resources to achieve sustainable competitive advantage. One way to
perform rightsizing in a company is to reduce the number of employees,
reassigning roles and responsibilities of employees and to reconstruct the
organization. Freezing the recruitment could help the organization to cope with a
decline in demand, revenue, or profitability, and it could possibly limit its growth
potential. Gatyeni (2008) suggests that most companies maintain that their
employees are their greatest assets. Opеn and transparent communication with
еmployееs rеgarding thе nееd for compеnsation adjustmеnts is еssеntial. This
should includе еxplaining thе rеasons bеhind thе dеcision, thе potеntial impact
on еmployееs, and thе organization's commitmеnt to minimizing nеgativе еffеcts.
Employееs should bе givеn thе opportunity to ask quеstions and providе
fееdback.

4. Acquiring Highly Qualified Employees if the Current Compensation

Rates are not Competitive.

Employees are more prone to leave their jobs in search of better chances. Salary

is the primary reason people move employment, and the current labor market's

competitiveness gives workers more bargaining power when it comes to wages

and perks. They are less likely to be satisfied, engaged, and productive in their

work.

Ideal Course of Action:

Collaboration and consultation: Engage HR professionals, financial experts,

and employee representatives in the design of the revised compensation

package to ensure alignment with organizational and employee needs.

Companies should

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provide competitive and appealing compensation packages which include

salaries, bonuses, benefits, and incentives that exceed or meet the demands of

employees. To attract and retain high performing employees, the company

should be open and honest with the job offers, they need to be clear with their

expectations and the benefits they offer. Also, the company should ensure that

every employee is willing to promote the company itself, in this way, future

employees can determine whether the employees are engaged in the company

by spreading positive word- of-mouth among the others.

5. Damaging the Employer Brand

The employer brand is a company's credibility and image as an employer, and it

determines how existing and potential employees perceive the company.

Endangering the employer brand might have significant consequences. To avoid

negative outcomes, companies should maintain a positive employer brand which

reflects their values and culture.

Ideal Course of Action:

Communication and Training: Providе comprehensive communication and

training to managеrs and supеrvisors on effectively promoting and supporting thе
company. A good employer brand can help to Improve existing employee
happiness, engagement, and retention by making them feel proud, appreciated,
and inspired to work for the organization. Also, increasing the attractiveness and
competitiveness of the company will be easier for them to recruit qualified
employees. According to Heaven et al (2006) the majority of support for
29
implementing new behaviors falls to senior colleagues. Establishing mеchanisms
for ongoing monitoring and feedback to gaugе thе impact of damages on the
employer brand and organizational pеrformancе. This can involvе rеgular
survеys, onе-on-onе discussions, and performance еvaluations to gathеr insights
and makе nеcеssary adjustments to thе implеmеntеd measures.

6. Salary Reduction on Company’s Culture and Morale

It could have long-term impacts on the company such as lower employee

satisfaction, lower engagement, higher employee absenteeism, lower turnover,

and lower employee performance and cooperation. A solution for this is to reduce

the marketing spend to save costs and avoid cutting of salaries.

Ideal Course of Action:

Evaluation and Adjustment: Establish mechanisms for ongoing evaluation and

adjustment of the revised compensation structure based on employee feedback

and organizational performance indicators. To be able to generate more profits

and lower the company’s expenses is to reduce office spaces to reduce the rent

expenses. Also negotiating a reduction in employee benefits by communicating

clearly with the employees could help the company to avoid salary reductions.

Carefully consider adjustments to benefits to reduce expenses without

significantly affecting employees' take-home pay. It is critical to handle benefit

adjustments with sensitivity and a focus on preserving a positive work

atmosphere.

30
 The recommended solutions align with the theories of motivation and

organizational behavior, emphasizing the importance of recognizing and

rewarding employees beyond monetary compensation. By incorporating non-

monetary perks and rewards, the organization can tap into the intrinsic motivators

of employees, fostering a sense of belonging, achievement, and recognition. This

approach also aligns with the concept of total rewards, where employees are

valued for their overall contributions to the organization, not just their monetary

output. Recognizing the potential adverse effects of compensation reduction on

employee retention and organizational performance, the plan of action offers a

proactive and strategic approach to maintaining employee engagement and

organizational productivity.

V.B. CONTINGENCY PLAN

1. The company may construct a salary reduction contribution plan that will

allow the employee to reduce their taxable income by investing for

retirement. The employer deducts a percentage of their salary and

deposits the funds in a retirement savings plan so the money can grow tax

deferred. The employer can invest it into a Personal Equity and Retirement

Account (PERA) or other investment vehicles other than the already

required government contributions deducted to the employees’ salaries.

2. Reduction of top executives’ salaries provides HR with the opportunity to

strengthen employee morale and retention during a period of salary

31
 reduction to lower-level employees. These salary cuts help executives

prove that they are striving to strengthen relationships with those they

oversee by working alongside them, not just above them. It signals to

employees that their leaders care about their staff and the success of the

company, so much that they’re willing to sacrifice their own pay.

3. Offer permanent remote work-from-home setup for employees who will be

affected by salary reduction. It creates greater flexibility in the day-to-day

schedule and decreases their expenses incurred outside the house.

Remote work provides wider opportunities for diversity and inclusion that

will improve job satisfaction and employee retention. A survey by Breeze

suggests that 65% of employees are willing to take a 5% pay cut to work

remotely. About 53% of the respondents said “yes” to an extra 10 hours of

work per week in exchange for unnecessary commutes. About 57% of

DevOps software engineers and other tech professionals from San

Francisco to London surveyed by Hired said they would not mind losing

perks such as free lunches and fitness classes in exchange for working

remotely full time.

VI. EXTERNAL SOURCING

32
Eide, E.R., & Showalter, M.H. (2010). Human Capital. International

Encyclopedia of Education (Third Edition) 282-287.

https://www.sciencedirect.com/topics/economics-econometrics-and-

finance/human-capital-theory

Lowe, R.A., & Teece, D.J. (2001). Diversification and Economies of

Scope. International Encyclopedia of the Social & Behavioral Sciences.

(3574- 3578).

https://www.sciencedirect.com/science/article/abs/pii/B008043076704263

Rey, A. (2020). To ‘Prevent’ Layoffs, DOLE Allows Employers to Negotiate

Wage Cuts. Rappler Article. https://www.rappler.com/nation/261279-dole-

allows-employees-negotiate-wage-cuts-prevent-laying-off/

Gatyeni, L. (2008). Strategies for Retaining Talented Staff and Knowledge

Managers: A Case Study. South East Academic Libraries System

(SEALS). https://core.ac.uk/download/pdf/145048145.pdf

Heaven, C., Clegg, J., & Maguire, P. (2006). Transfer of Communication

Skills Training from Workshop to Workplace: The Impact of Clinical

Supervision. Patient Education and Counseling. (313).

33
https://www.sciencedirect.com/science/article/abs/pii/S073839910500245

34
 MICHAELA BEATRICE ABELLA

CAREER OBJECTIVE

● To seek a fitting position and opportunity where I can apply

my knowledge, develop my professional persona, and
utilize my skills for impactful contributions in a dynamic
work environment.
● To utilize my strengths effectively to contribute to the
success of my employer and community, with the
overarching goal of progressing towards a leadership role
while upholding values important to me.
PROFILE

● Adaptable, competent, organized, resourceful, committed,

collaborative and confident to handle diverse challenges
Mobile: 09304380125 and contribute effectively to the success of any team or
project.
Address: Mavalor, Rosario, Batangas
ASSETS AND CAPABILITIES
Email address: micahabella30@gmail.com
▪ Proven dedication to working collaboratively with diverse
WORK EXPERIENCE:
teams, fostering a positive and productive work environment.
▪ Laundry Hub Cashier ▪ Technically proficient in Microsoft Word, Excel, and
Rosario, Batangas PowerPoint, ensuring efficient and effective utilization of key
Poblacion E, Rosario, Batangas
April 2020 – June 2021 office tools.
Part time Job ▪ Demonstrated ability to organize, prioritize, and excel under

EDUCATION PROFILE: extreme pressure, heavy workloads, and tight deadlines,

showcasing resilience and effective time management skills.
▪ Graduate Studies: ▪ Developed strategic thinking and planning capabilities through
Saint Joseph College of Rosario Batangas
Inc. the creation of a comprehensive management plan, showcasing
Accountancy, Business and Management
(Senior High) an aptitude for strategic decision-making.
2021 - 2022 ▪ Demonstrated effective communication skills by tutoring pre-
▪ Tertiary Education:
Batangas State school students in complex concepts, highlighting the ability to
University convey information clearly and facilitate understanding.
Rizal Avenue Extension, Batangas City
4200, Batangas ▪ Played a pivotal role in coordinating event preparation and
Bachelor of Science in Accountancy program implementation, underscoring strong organizational
and teamwork capabilities.
CERTIFICATION:
CHARACTER REFERENCES
 Completion of HP Life Online Mr. Mark Zenky Duenas, CPA
Course (Strategic Planning)
Strategic Management Plan – 2023 Canon Makati, Accounting
 Alison Core Excel Skills Supervisor 0927-710-8157
for Accountants and
Financial Professionals
Information Technology - 2023
 Mary Mildred Roallos
PERSONAL DETAILS: Secretary General
Roallosmary7@gmail.com
Gender : Female
Date of Birth : January 30, 2004
Place of Birth : Fabella Memorial Hospital
Civil Status : It’s Complicated
Citizenship : Filipino
Religion : Roman Catholic
Language Spoken: English and Filipino
(Tagalog)

ORGANIZATIONAL AFFILIATIONS:

▪ YES-O, Youth Organization

(2016-2020)

▪ Junior Philippine Institute of

Accountants – BatState-U
Chapter Since 2022

SEMINARS ATTENDED:

 “LIDICSA Training Program”

Via Zoom meeting, Lipa Archdiocesan
Catholic Schools Association
November 29, 2021

 “KAIROS: Conquering the War

Within” Accounting Convention
Gov. Feliciano Leviste Gymnasium,
Batangas State University – Main
Campus I
March 28, 2023 I hereby certify that the above information are true and correct to
the best of my knowledge and belief.

Michaela Beatrice C. Abella

Applicant
 SOPHIA MIKAELA A. AGUSTIN

CAREER OBJECTIVE

● To contribute to the success of a dynamic and innovative

corporate organization by leveraging my excellent
analytical, problem-solving, and communication abilities.

● To maximize my latent potential and consistently improve

my abilities in a dynamic and demanding work environment
where I can contribute to meaningful initiatives and leave a
lasting impression.
PROFILE

Mobile: 09452656942
● Adaptable individual who is comfortable working in different
Address: Poblacion 021, Batangas, City environments, flexible, versatile, competent, and always
eager to take on new challenges
Email address: sophiaagustin30@gmail.com
ASSETS AND CAPABILITIES
WORK EXPERIENCE:
▪ Proficiency in relevant software applications and tools
▪ Accounting Trainee
Batangas II Electric Cooperative, Inc. ▪ Ability to develop creative and effective solutions in
Antipolo Del Norte, Lipa City workplace problems.
November 9, 2015 - March 9, 2016
▪ Capable of organizing, prioritizing, and working under great
EDUCATION PROFILE:
pressure, heavy workload, and deadlines.

▪ Tertiary Education: ▪ Proficient in writing clear and concise documentation.

Batangas State
University ▪ Problem analysis, use of judgment and ability to solve
Rizal Avenue Extension, Batangas City problems efficiently.
4200, Batangas
Bachelor of Science in Accountancy ▪ Technically knowledgeable in Microsoft Word,
2022-Present
Bachelor of Science in Accounting Excel, PowerPoint, and Internet applications.
Management
2014-20 ▪ Ability to adapt fast and easily to new conditions and
▪ Secondary Education: environments.
Occidental Mindoro National High
School - Senior High School
CHARACTER REFERENCES
Brgy. Payompon, Mamburao,
Occidental Mindoro
Accountancy and Business Mrs. Agnes N. Castro
Management
WIth High Honors Senior High School Adviser
2020-2022 Occidental Mindoro National High School

Occidental Mindoro National High 09977205289

School - Junior High School
Brgy. Payompon, Mamburao,
Occidental Mindoro
2016-2020 Mrs. Amie Magramo
With Honors
 Grade 6, Public Teacher
CERTIFICATION: Mamburao Central School
▪ HP Life Online Course - 09605393587
Strategy Management - 2023
Mrs. Agnes A. Perez
▪ Core Excel Skills for Accountants
Head Teacher III
and Financial Professionals - 2023
Mamburao Central School
09177889293
PERSONAL DETAILS:

Gender : Female
Date of Birth : January 30, 2004
Place of Birth : Tanay, Rizal
Civil Status : Single
Citizenship : Filipino
Religion : Roman Catholic
Language Spoken: English and Filipino

ORGANIZATIONAL AFFILIATIONS:

▪ Junior Philippine Institute

of Accountants – BSU
Chapter (2022-Present)

▪ Sulambi Volunteers
Organization Student Auxiliary
(2023-Present)

SEMINARS ATTENDED:

I hereby certify that the above information are true and correct to
the best of my knowledge and belief.

Sophia Mikaela A. Agustin

Applicant
 JENNELYN ALCOTAS ALBES

CAREER OBJECTIVE

● As an organized and adaptable student, I am eager to gain

practical experience and develop valuable skills in a
professional work environment.

● Seeking an entry-level position that allows me to apply my

academic knowledge, learn from experienced colleagues,
and contribute effectively to the success of the organization
while fostering my personal and professional growth.

PROFILE

Mobile: 09297568331 ● Have passion for numbers, financial acumen, and a

commitment to excellence in academic pursuits. Poised to
Address: Emmanuel Cuenca, Batangas leverage the strong analytical skills and theoretical knowledge

Email address: albesjennelyn@gmail.com to contribute effectively in the field of accounting.

ASSETS AND CAPABILITIES

EDUCATION PROFILE:

● Tertiary Education: ▪ Ability to prioritize tasks, meet deadlines, and manage multiple
Batangas State
University responsibilities effectively.
Rizal Avenue Extension, Batangas City
▪ Strong mathematical and numerical skills.
4200, Batangas
Bachelor of Science in Accountancy ▪ Ability to take initiative, guide others, and assume leadership
2022- Present
roles in group projects or professional settings.
● Secondary Education
Cuenca Senior High ▪ Competent in using software such as spreadsheets, financial
School Brgy. 2 Cuenca, modeling tools, and accounting software for data analysis and
Batangas Accountancy,
Business and Management reporting.
2020-2022
With High Honors ▪ Capable of having good communication with other people.

Cuenca National High

School Bungahan Cuenca, CHARACTER REFERENCES
Batangas 2016-2020
Conduct Awardee
Mrs. Estelita M. Aquino
● Primary Education Accountancy, Business and
Emmanuel Elementary
School Emmanuel Cuenca, Management Cuenca Senior High
Batangas 2010-2016 School 09104151282
5th Honor

Mr. Cenon Mauleon

AWARDS AND ACHIEVEMENTS:
Barangay Captain
Emmanuel Cuenca,
▪ With High Honors (2021-2022) Batangas
 09561464040
▪ Business Mathematics
and Immersion (2022)
▪ With Honors (2020-2021)
▪ Conduct Awardee (2020) Mr. Alexander Magpantay
▪ Most Trustworthy Student Cuenca Municipal Mayor
▪ Most Diligent Student Poblacion 3 Cuenca, Batangas
▪ 5th Honor (2015-2016) 09178342693
▪ 4th Place- Slogan Contest (2015)
▪ 4th Place- Science Quiz Bee (2015)
▪ 4th Honor (2013-2015)
▪ 3rd Place- Feature Writing -
Filipino (2013)
▪ 5th Place- Sabayang
Pagbigkas (2013)
▪ 3rd Honor (2012)
▪ 4th Place- Group Math Quiz
Bee (2012)
▪ 2nd Honor (2010-2011)

PERSONAL DETAILS:

Gender : Female
Date of Birth : January 23, 2004
Place of Birth : San Pablo City, Laguna
Civil Status : Single
Citizenship : Filipino
Religion : Roman Catholic
Language Spoken: English and Filipino
(Tagalog and Bisaya)

I hereby certify that the above information are true and correct
to the best of my knowledge and belief.

Jennelyn A. Albes
Applicant
 JUDE EIRON G. AMPONIN

CAREER OBJECTIVE

● As a well-organized and adaptable student, I am eager to gain

practical experience and valuable skills in a professional work
setting.
● Seeking an entry-level position that will allow me to apply my
academic knowledge, learn from experienced colleagues, and
effectively contribute to the organization's success while
fostering my personal and professional development.

PROFILE

● Possess a strong interest in mathematics, sound financial

Mobile: 09559422402 judgment, and a dedication to achieving academic

success.
Address: 178 Brgy. Pansol, Taal, Batangas ● Well-positioned to use theoretical knowledge and strong
analytical abilities to make an effective contribution to
Email address: judeeironamponin@gmail.com
the accounting field.
ASSETS AND CAPABILITIES
EDUCATION PROFILE:
● Ability to efficiently manage several responsibilities, prioritize
▪ Tertiary Education: work, and adhere to deadlines.
Batangas State
University ● Strong numerical and mathematical abilities.
Rizal Avenue Extension, Batangas City ● Capacity to take the lead, mentor others, and assume
4200, Batangas
Bachelor of Science in Accountancy leadership positions in professional or group projects.
2022-Present
● Capable of conducting data analysis and reporting using
accounting software, financial modeling tools, and
▪ Secondary Education
Taal Senior High spreadsheets.
School ● capable of engaging in effective interpersonal communication.
G. Marella St., Zone 2, Taal
4208, Batangas
Accountancy, Business & CHARACTER REFERENCES
Management
2020-2022
With Honors Mrs. Mary Jane Corteza
Licensed Professional Teacher
Taal National High School
I. Ilagan St., Zone 1, Taal Irukan Kalayaan Elementary School
4208, Batangas 09758535067
2016-2020
With High Honors
Mrs. Teresa Baleros
▪ Primary Education Church Leader
Irukan Kalayaan Elementary School
Irukan, Sta. Teresita God’s Glory Church - Iba
4206, Batangas 09757176864
2010-2016
1st Honorable Mention
 Mrs. Abegail De Castro
PERSONAL DETAILS: Licensed Professional Teacher
Carmino Biscocho Memorial Elementary School
Gender : Male
09657544039
Date of Birth : June 15, 2023
Place of Birth : Pansol, Taal, Batangas
Civil Status : Single
Citizenship : Filipino
Religion : Born-Again Christian
Language Spoken: English and Filipino
(Tagalog)

ORGANIZATIONAL AFFILIATIONS:

▪ Junior Philippine Institute

of Accountants – BSU
Chapter (2022-Present)

I hereby certify that the above information are true and correct to
the best of my knowledge and belief.

Jude Eiron G. Amponin

Applicant
 ATIENZA, CLARISSE JOY L.

CAREER OBJECTIVE

● To leverage my skills and expertise in this industry to make

meaningful contributions within a dynamic and growth-
oriented professional environment.

● To secure a challenging position in this industry

where my skills/experience can contribute to the
success of the organization while providing
opportunities for personal and professional

Mobile: 09550577202 growth.

PROFILE
Address: Lemery, Batangas

Email address: clarissejoyatienza@gmail.com ● A dedicated and results-driven professional with a proven track
record, combining strong analytical abilities with effective
EDUCATION PROFILE: communication to contribute to the success of the team and
organization.
▪ Graduate Studies:
Lemery Senior High School ASSETS AND CAPABILITIES
A, Atienza St., Bagong Sikat Lemery
Batangas. ▪ Adaptable and quick to learn, with a proactive
4209
approach to challenges, fostering collaboration and
▪ Tertiary Education:Batangas State contributing to overall team success.
University ▪ Demonstrated adaptability, a commitment to
Rizal Avenue Extension, Batangas City 4200, continuous learning, and a proactive approach to
Batangas challenges, contributing to a positive and innovative
Bachelor of Science in Accountancy work environment.

▪ I emphasize proficiency in programming languages,

project management expertise, and effective
PERSONAL DETAILS:
communication skills, showcasing a well-rounded
Gender : Female skill set for the desired role.
Date of Birth : October 03, 2003
Place of Birth : Batangas Provincial Hospital
Civil Status : Single
Citizenship : Filipino CHARACTER REFERENCES
Religion : Roman Catholic
Language Spoken: English and Filipino Ms. Leslie Caletas
(Tagalog)
College of Accountancy, Business, Economics, and
International Hospitality Management
Batangas State University.
https://www.facebook.com/leslietorinocalcetas?mibextid=2JQ9
oc
 Ms. Eunice Grace Mendoza
Lemery Senior High School
https://www.facebook.com/eunice.mendoza.566?mibextid=2JQ
9oc

I hereby certify that the above information are true and correct to the
best of my knowledge and belief.

CLARISSE JOY L. ATIENZA

Applicant
 JULIE ANNE M. MARAHAY

CAREER OBJECTIVE

● Aspiring professional looking for a position where I can use

my abilities to make a meaningful contribution, work with a
diverse team, and always learn and develop.
● To take on challenges, meet objectives, and strive for
excellence in a dynamic and collaborative work
environment.
PROFILE

Mobile: 09399840717 ● Effective communicator, adaptable, detail oriented and

self motivated.
Address: Eastern Libjo, Batangas City
ASSETS AND CAPABILITIES
Email address:
julieannemarahay22@gmail.com
▪ Capable of communicating concepts succinctly and clearly,
WORK EXPERIENCE: both in writing and vocally.

▪ Has a good impact on group dynamics and works well in team

▪ Waitress
Ichirinsha Japanese Restaurant contexts by encouraging collaboration.
Gulod Labac, Batangas City
June 22, 2021 - Up to Present ▪ Adapts quickly to new circumstances and surroundings, is at

EDUCATION PROFILE: ease with change, and is receptive to new knowledge.

▪ Organizes time well to fulfill deadlines and sets priorities.

▪ Tertiary Education:
Batangas State University
▪ Evaluates problems, comes up with workable answers,
Rizal Avenue Extension, Batangas City
4200, Batangas
Bachelor of Science in Accountancy flourishes in difficult circumstances, and finds workable
2022-up to present solutions.
● Dean’s Honor List Awardee
(2022-2023)
CHARACTER REFERENCES
PERSONAL DETAILS:

Gender : Female Mr. Raul F. Carrera Jr., CPA

Date of Birth : July 17, 2004 College of Accountancy, Business, Economics, and
Place of Birth : Eastern Libjo, Batangas City International Hospitality Management
Civil Status : Single
Batangas State University
Citizenship : Filipino
Religion : Roman Catholic 09177726849
Language Spoken: English and Filipino
(Tagalog) Joel Chavez
President of Joel Chavez Group of Companies
Barangay Chairman of Libjo, Batangas City
I hereby certify that the above information are true and correct to
the best of my knowledge and belief.

Julie Anne M. Marahay

Applicant