Freezing salary is not the good way to manage a firm or business

Money gives the greatest power in the capitalism, and we are living in the capitalist economy. In the economic recession period, many firms lay off their employees, and freeze their salaries. I read a Jon’s article (http://enterpriserisk-jonf.blogspot.com/2009/02/salary-freezes.html) that he said freezing salary is the one of best ways to make a firm or business secure. However, I think the freezing salary would not make any difference. In the economic recession period, many firms focus not to lose their profits, and want to keep their assets. It means many firms prefer security in the economic crisis. There are three actions the firm should take in the economic crisis, and those are promoting employees, recruiting new employees, and preparing for an economic boom.

First, it is hard for firms to increase their employees’ salaries, and most firms freeze their salaries. However, incentive system is the one of best ways to overcome current period. If a firm promotes certain employees, and increases their employees based on accurate evaluation, the incentive system encourages other employees to work better and harder. The incentive system is needed, especially in economic recession period.

Second, this is time to recruit new qualified employees and think about to lay off unqualified employees. Most of the time the firm and current employees refresh themselves with new qualified employees. Thus, the new qualified employees could give positive effect on the firm in economic recession period. Nevertheless, the unqualified employees could affect negatively to firm, so economic recession period could be the good time to recruit new qualified employees.

Last, economy goes up and down periodically, but people do not know when the economic crisis will end. In addition, it is hard to take an action, such as starting a new project. Thus, firms should be prepared for an economic boom. To be prepared, the firms should scout for new talent. As I talked about earlier that recruit new qualified employees is the important factor in the economic recession period. Thus, the firm should train them well, and be ready to take an action in economic boom.

http://www.onlinebusadv.com/?PAGE=176
http://dhanil.blogspot.com/2008/10/how-to-overcome-economic-crisis.html