As the COVID-19 crises continues around the world, the United States continues to see economic fallout. While restaurants, bars, gyms, and other service sector employees had to layoff employees during the early days of the pandemic, now, many white-collar employees are also feeling the pinch. Many universities have had to furlough employees, and recently, even the computer industry is taking significant cost cutting measures. Specifically, Dell pauses employee benefits to cut costs.
The Cuts Dell Is Making
Beginning June 1st, Dell is making cuts to several of their many employee benefits.
Dell will not be contributing to their employees’ retirement funds for at least the remainder of the fiscal year. (Dell’s current fiscal year ends on January 29, 2021.)
Dell typically matches the employees’ 4% retirement contribution the first year of employment, then bumps that amount to 5% the second year, and 6% the third year of employment or up to a $7,500 a year match.
However, in an effort to preserve cash, Dell will temporarily halt this benefit.
Internal Promotions and Raises
Also beginning June 1st, Dell will temporarily stop internal promotions and raises. Once again, these actions are expected to last at least through the end of the fiscal year.
Dell has an internal employee incentive program where employees can earn “inspire points” that they also paused. With this program, employees receive commendations from bosses and colleagues and can use the points to buy gift cards and other items.
The Cuts Dell Has Not Had to Make
While Dell is signaling that they are proactively protecting their cash with these cuts, there are some significant measures they have chosen NOT to take.
Unlike many companies, Dell is currently NOT furloughing employees. All employees have kept their jobs.
No Pay Cuts
Many companies and industries, such as higher education, have had to cut their employees’ pay. Thus far, Dell is avoiding that. While employees won’t be eligible for promotions or raises for at least the next seven months, they are not, so far, getting their pay reduced.
Employees Aren’t Alone
Dell pauses employee benefits to cut costs isn’t the first cost-cutting measure implemented by the company. Effective the second quarter, which began May 2, 2020, Dell Technologies CEO, Michael Dell, forfeited his base pay, estimated to be approximately $950,000 per year.
Dell and his wife also have donated $100 million to coronavirus relief.
Take Aways from Dell Pauses Employee Benefits to Cut Costs
Dell is just the latest of many white-collar companies that have faced decreased revenue thanks to the COVID-19 pandemic. As a result, Dell employees must make some sacrifices to keep the company in good financial standing.
If your company has not been affected yet, be prepared financially. Likely before this pandemic is over, your company (and your pay) will be affected. Take the time now to make your budget leaner. Also, now is a good time to forego unnecessary spending and funnel more money to your emergency fund.
As a nation, as a world, we will pass through this time of difficulty, but it likely won’t be as soon as we would like.