JCI Coronavirus Cuts

By John Honovich, Published Mar 31, 2020, 10:57am EDT (Info+)

JCI has made coronavirus cuts, the company told employees in an email that IPVM has reviewed.

Inside this note, we examine the cuts made, the impact on JCI and contrast to Convergint's cuts.

Cuts ********

*** **** **** ** *** **** is **** ********* *** ***** ******** to **** **** *** ******, **** JCI **********:

***** ******* ***** ** *** *** levels, ********* *** ********* **** *** me. *** *******, ** ***United ****** all salaried employees will participate in two ***** ** ****** **** ***, either through a furlough or reduced pay for reduced work. Similarly, the United Kingdom is implementing furloughs across the country. Every other country will determine how to implement in accordance with the local law. We will continue to assess demand in each market and take the appropriate actions as needed. [emphasis added]

*** ************* ** **** *** ****** time *** **** ** ********* **** the **** *** ****** **** **** the ***** ******* ** *** **** down *** ** ****.

**** ******* ****** ***'* ******* ********** including ****-********** *** / **-**** **, JCI *** ************ ********* **** ******** Products (*****, ******** *****, ***, ***.).

** ********, *** ** *********** ************* spending, ********** ***********, ****** ******* *** pay ******, ***.

Contrast ** **********

*** *********** *** *** ******* ** security *********** **** **** **** ****, first **********, *** ***, *** ** even ******.

*** ********* *** ** ** *** those * ***** *** *** **** to **** **** *** ***** ****. With **********, ******** ********* *** ***** working **** **** *** ***** **** 20% ****.

***** ** '******' ******* ** ** seen - *** **** *** *********** crisis ***** *** ******* *** ** Convergint ***** *** ******* ****.

Opportunity *** ******* *** ***********

** ** *** ** *********** *** smaller *** *********** *** *** *** be ** ******** ******** ** ******** to **** **** **********. *** *******,*******, *** ***/***** *** ** *** ex-Exacq/JCI ********, *** ** **** ** continue ** **** (**** **** *** expecting ******* ***** *** ******) *** gain **** ****** ********** ****** **** time.

Vote / ****

Comments (52)

Weird to see so many votes for 20% pay cut. 2 weeks off out of 52 is a ~3.8% loss of income, for one year. 20% pay cut is a 20% loss of income for the foreseeable future.

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The point of the 20% pay cut is that it supposed to be short term, but it’s not certain how short is short term, will it be two months, three months, four months?

The other thing is that when you’re furloughed you don’t have to do any work but with the 20% pay cut you still need to work 100% of time. I don’t know what I would choose.

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I voted 20% cut, since it is currently unclear or not whether during our furlough we can actually work and keep our accounts running. I'd rather keep accounts running, rather then be required to ghost customers.

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To your point John, if you are furloughed, there is no guarantee that you will actually come back in 2 weeks.

Agree: 14
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With 20% pay cut, you know company is obliged to you. With furlough, there can be an escalation - only 50% of furloughed workers can be taken back... etc.

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If you take these companies at their word, a 20% pay cut is a 20% pay cut for the length of time it takes to get this thing resolved.

Additionally, two weeks of unpaid time off is a 50% cut to income in a single month. For someone making a $50,000 salary to immediately go from ~$4,000/month to ~$2,000 in a single month is a substantial cut that many couldn't handle, especially if you consider that spouses may be in similar trouble or have lost their jobs.

On the flip side, if this thing goes for another 6 months and their business is impacted for that length of time, a 2-week furlough is not going to be enough and they are going to have to make further cuts at some point.

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50% less is better than 0. No one knows anything beside things will slow dramatically for x months. Anyone that still have a job and get some pay should be relatively happy.

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That is assuming that the cut will only be for two weeks. At least they provided a time limit that will most likely be extended into the unforeseeable future. 20% cut allows you to maintain your mortgage payment and put food on the table.

If the current situation was more predictable and you were confident that the furlough would only last two weeks, that would be an easy decision. But does anyone really think this will only last two weeks and magically everything returns to normal... businesses start spending money they no longer have?

I sense a slow return to where we were just before the bottom fell out. Sales folks are still closing deals but I believe that new deals will trickle back in. With that said, companies will ramp production back up at the same speed.

My fear is a second wave. All eyes on China i suppose. That will change all business predictions.

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With the furlough, they can make your position permanent, as they may evaluate you are not needed and become dead weight.

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This depends on which country you reside in, some governments have a job retention scheme and other measures to still pay employees if they are put on a furlough. in the UK you can get 80% for 3 months if on Furlough but nothing if you continue to work.

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This depends on which country you reside in

Agreed. This is likely why they were specific about the weeks in the US but not specific in other countries.

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Also, a furlough lets you keep your benefits. The key is these are tough times and we all might take a hit. The US gov't is working well to help people who get put out and offering forgivable loans to companies who do not have layoffs.

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A note about the forgivable loans, they are only being offered to SMB companies with 500 or fewer employees, so JCI will not qualify.

Is The Government Really Going To Pay My Employees Wages? (Paycheck Protection Program)

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In light of this, what appetite will companies like JCI have for doing ISC West in a few months? Tomorrow is April 1st and the rescheduled event is close approaching.

RecallJCI dropping/ slashing their booth was a key factor in pressuring the show to cancel/ postpone.

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The ISC West considerations are interesting. There is a chunk of money that is already spent, but obviously there would be need to be more spent in order to participate in the show. However, if you don't participate you miss out on opportunities that are presented at the show. (Assuming the show actually happens.).

That's a tough call. I think I would scale down participation significantly, but still send some folks.

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We were just talking about ISC West in our office and advised our team that, while we were booked to attend in March, we will not be attending a rescheduled ISC event in 2020 regardless of when/if they take place.

Our decision was based on focusing all of our available funds on keeping our team 100% on payroll, which is an impact we expect to be dealing with financially over the foreseeable future (next two years, we are expecting).

Rather than cutting salaries, hours, or payroll we are cutting spending on attending conferences, trade shows, etc over the next 18 months. We will see how this pans out for us.

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Can a company legally decide to reduce 20% Pay for a salaried employee?

I have received legal advice that this may constitute grounds for a constructive dismissal and would normally require the company to provide a package generally equal to 2 years pay.

not sure how this would play out in a court of law in the times we are facing

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I'm sure there are different laws in different countries and in the US it's different state by state. I'm in Texas - and here an employee can quit whenever they want and an employer can fire someone whenever they want, without cause. Some companies choose to offer termination benefits, but it's not required by Texas law.

So, in this scenario, it's perfectly legal, in Texas, to tell someone that they're getting a 20% pay cut, as long as you inform them before they do the work. In other words, I could say - Starting tomorrow you get 20% less pay. What I can't do is say - here's your paycheck for last week - I took 20% off of it. I'm not saying it's the right thing to do, just what my interpretation of the law is.

(for the record, I'm not a lawyer and I did not stay at a Holiday Inn Express last night either)

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Constructive dismissal only holds up when an employee resigns as a result of the employer creating a hostile work environment. Cutting salaries across the board, or following another documented method that is free from any type of discrimination, is not grounds for quitting your job under the claim of constructive dismissal.

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Well, I guess the employees can decide if they want a 20% payroll deduction or no job at all. A lot of these large companies were in investment mode and were extremely leveraged already. They, along with many smaller companies, were not prepared for a total shutdown of the economy.

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I don’t think having associated polls on “what you would rather have” are appropriate at a time when people’s livelihoods and actual existence is being challenged because of COVID-19.

As an employee of a large integrator myself, I am proud that my organisation is doing everything it can to come out of the other side of this pandemic with the same number of employees that it entered it with. Although I have not yet been furloughed or asked to work part time, I am preparing myself for such a scenario however...

As for how JCI’s decision affects ISC West, does anyone really care at this current time???

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Well said and very true.... its a horrific time when many people have lost their lives or have had to sit first hand watching their loved ones go through hell and back with some not making it through. 2 weeks unpaid leave is nothing in comparison and if anyone is in any doubt about the longer term implications of this situation and believes that we wont all go through similar cuts they are very mistaken. This is only going to get worse with many more people going to lose their lives and a horrific situation for all. If any company can afford to keep paying tens of thousands of staff to sit at home whilst they make little to zero sales then they are doing very well and I look forward to their next recruitment drive.

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I don’t think having associated polls on “what you would rather have” are appropriate

Imagine you are an employer, like myself, or many IPVM members that are or may have to evaluate this. Knowing what people prefer would help. That is the spirit of that poll question.

As for how JCI’s decision affects ISC West, does anyone really care at this current time???

Well, the 800 exhibitors who have already paid $10+ million and have many millions more to spend if they actually show up, care. That is the point of this point.

I agree with your broader point. This is a very serious and risky situation. The more cuts that occur the more it becomes a vicious cycle making it worse for all.

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In fairness John if an employer needs to refer to your straw man poll to make a decision of what to do then they shouldn’t really be running a business that employs people.

As for ISC West - fair point - however I would urge IPVM to use their significant influence to now apply more pressure on REED to refund the exhibitors when they need that cash the most - NOW!!

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I would urge IPVM to use their significant influence to now apply more pressure on REED to refund the exhibitors when they need that cash the most - NOW!!

Funny you should mention that. Over the weekend I suggested that to SIA CEO Don Erickson when he mentioned helping association members conserve their cash:

In retaliation, Don Erickson blocked me from following him on LinkedIn.

We will increase attention on the fate / cancellation of ISC West July 2020. Right now, with ISC West still 3+ months away and lots of things happening each week, we are keeping focus on more immediate matters. However, as the show gets closer, we will increase attention.

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Good to see you are applying pressure already behind the scenes John.

They are acting like modern day highwaymen!!

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We will increase attention on the fate / cancellation of ISC West July 2020. Right now, with ISC West still 3+ months away and lots of things happening each week, we are keeping focus on more immediate matters. However, as the show gets closer, we will increase attention.

John - Assume for a moment that the virus threat has subsided in June. Continuing with ISC West in July as planned, just past the health and economic devastation that our industry is already facing, is a horrible idea.

As stated before, even in ideal economic conditions, the heat and mid-summer vacation period is not the time to have any event in Vegas.

Now however, considering the layoffs, pay cuts, cutbacks, closures and more that is occurring now, only 2 weeks into this national emergency, who do they think will attend? As this gets worse (which we know it will), the devistating impact will deepen, even with the Federal Stimulus.

My prediction is that nearly 50% of the potential attendees will still be hesitant or down right afraid to come and the other 50% won't be able to attend, due to financial restrictions.

The only people at ISC West will be lonely exhibitors who cannot bear, giving hundreds of thousands of dollars to Reed, Freeman and others and not showing up!

The Public Relations damage from holding their Exhibitors hostage, will do more long term damage to the show than they can possibly imagine. They must perceive that we need ISC West? We don't! If held hostage, we may make this our last ISC West event...

On the positive side, Reed could gain tremendous amount of support and positive PR from doing the right thing, refunding the money to Exhibitors in this time of need. Holding the prices the same as 2020 for exhibitors to reinvest in a 2021 ISC West! Bigger, Better and Stronger. Exhibitors and attendees will be hungry to attend by 2021...

Surely someone at Reed is smart enough to realize the obvious. If not, maybe some other group, could create a show to replace ISC West. If a new show were to emerge I would wager all of your money, that it would be wildly accepted!

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For all the reasons you give, I suspect they will cancel the show soon. Again, I am going to give it a few weeks, if they don't cancel by the end of April, it's an issue worth re-focusing on as it gets closer.

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I a saddened to hear of so many friends and partners struggling in this pandemic. Not surprised, but certainly saddened. I fear we are in for at lest another 6 months of this assuming we do everything right. I hope not.

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Your employer will do what is in the best interest of the corporation, its shareholders , its executives, management and employees. IN THAT ORDER.

Yes these large corporations are run with the ultimate goal of doing what is best for the corporation. That includes layoffs when it affects profitibility and share value, closing of plants and operations to lower cost countries etc.

I'm not proud but that is the reality.

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Maybe that is the case in most cases however my large corporation has stated to all employees that their list of importance at this current time is:

1. The employees

2. The business

3. The shareholders

IN THAT ORDER.....

We are living in unprecedented times so I guess it’s time for unprecedented action.

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Proof is in the deeds and not the words. So far both Convergint and JCI have both furloughed or reduced their employee wages.

I have yet to see a company put out a press release to their shareholders to let them know that they will be last in the priority list.

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1. The employees

2. The business

but, if you lose #1 and #2, #3 loses regardless, no?

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Employees are the first to be praised as invaluable assets.- and I agree, but the first to hit the chopping block with layoffs and cuts.

The unfortunate reality in a publicly traded company is that CEO's and shareholders are rewarded when cost cutting measures are put into effect.

Please keep that in mind when you are laid off for 6 weeks then to find that your loving CEO has gotten a massive pay increase.

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The unfortunate reality in a publicly traded company is that CEO's and shareholders are rewarded when cost cutting measures are put into effect.

Owner's of private companies can benefit as well, no?

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Our CEO put out a message that although not stating a priority - it will very much be seen as that:

1. Clients

2. Employees

3. Supply chain

4. Financial situation

5 Self help for employees

I pretty well agree. It may be very PC to put your staff first - but in putting the client first ensures the best long term prospects for your staff by securing continued works. No customers = no staff.

Every company will have its own take on the situation based on real metrics. Staff need to be involved to understand why decisions are made and to be consulted. They may not like some of the harder decisions - but at the end of the day, company owners large and small will want the company to survive, which is in everyone's best interest. Shareholders, like them or loathe them, are an essential part of a company, so they are stakeholders too - without whom there would be no company. But they must share the pain equally to achieve the long term survival of the companies and it's best assets.

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I’m not sure all companies in a time of such crisis will put shareholders first and in the immediate term that is pretty difficult.

Smart companies will be looking at the medium and longer term future of the business.

Those that operated ethically and morally will come out swinging especially having done the right thing by supporting their employees.

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Feel terribly sad for all the employees impacted at JCI and indeed across the entire industry globally.

I believe we will come out of this the other side bigger and stronger - with more organizations realising that security tech is more than a grudge purchase and can make a real difference to support those folks still working out there on the frontline.

Is there anything we can collectively do to help? For instance, I’m aware of projects in the critical infrastructure space where SIs would normally utilize contractors that are now displaced and in lock down or for health reasons can’t work.

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Money aside the logical choice in the best interest of the general populace would be to send everybody home for 2 weeks and keep them out of the workplace where they could potentially contribute to the further spread of the virus. The sooner everybody gets back on their feet the sooner this turns around for all.

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UI #13

2 Weeks is a pipe dream. The US is just now ramping up with testing. "Business as Usual" timeline will be late May, most likely June, if we keep our physical distance (which apparently everyone has an issue with).

Our industry, "small and large" in the US will be decimated. The Government can't bail out everyone. It will come back, perhaps even stronger and more resilient, but I can't fathom the nuances on the rebuild side.

Be Safe everyone!

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Pay cut is the logical solution. It keeps account managers and sales engaged with end users and keeps the mind busy. But having said that, in my case the company has gone for a graduated pay cut - the CEO 30%, SMT 20% and those above 40k, 10%. Commission and bonuses have been suspended indefinitely. The heft higher earners cuts cover the lower earners who remain on full pay. Naturally all dividends should also be stopped.

I think an employee opting for furlough in place of a pay cut (assuming it's reasonable). is probably demonstrating less commitment to the company - but I expect people will shout at me for saying that.

Out of all this will come opportunity and that will be in the laps of those who remained committed and engaged - not those returning after an extended break.

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20% is viable.

2 weeks off = not working.

Keep those that work for 20% pay reduction, release those that already chose to sit home. Work from homers also have expectations of full pay once and if they return which is not going to be real in the near future.

Now is a good time to work for a small integrator, let the big guys lose their ASSets.

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Funny

You guys missed big time on your math, JCI is a 3.8% wage cut but will be supplemented with state unemployment compensation + an additional $600 Fed CARE per week off for up to 39 weeks. So the 3.8% cut is really more like <2%.

There is no state UC or CARE when taking a 20% salary cut and asked to work the same amount of hours!

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If your crisis compensation plan mathematics involves you securing an overall <2% wage reduction based on a clouded 39 week forecast did you account for further wage deterioration? Instead of counting your bennies and pennies first, instead try proofing your calculations on viable comparatives that include worst case scenario overreaction probabilities to sum up a more accurate equation driven forecast. As the vice tightens there is no guarantee for employee wages to be sustainable.

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These type of moves are indicative of when companies are protecting the return to their shareholders before protecting the livelihood of their employees.....sad but true.

Well ran, privately held integrators will protect their people at all cost including profits.

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Determining who should come first will largely be determined by who is making the call. In most cases you do not need to look beyond the people seated at the board of directors level. Most all are occupied with representatives from the VC groups that have fed many millions into these companies. They are there for one purpose, to protect the investment.

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Why not do a 20% salary cut AND reduce work hours by 20%?

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One could but what you mean than is essentially one day off weekly unpaid, right?

My bigger concern is a one size fits all policy across a big company. For example, surely JCI has people working on longer term R&D projects. If those projects viability remain the same, those people should continue to work as, without interruption, since those are intended for 6 months, a year, 2 years away.

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My understanding is that the UK Government is paying 80% of pay to furloughed employees, up to a point, so a JCI employee in the UK taking 2 weeks off unpaid is still getting 80% of their pay via their government bailout. whereas a US employee is just not getting paid. I could be mistaken but that's my understanding. I'm not a lawyer either.

The UK’s coronavirus furlough scheme, explained | WIRED UK

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under the COVID19 Cares Act, the furlough option would also allow you to collect unemployment immediately and the $600 stimulus per week. Furlough also means you still can get healthcare benefits. So, it could end up being the better option short term. Both options have the risk of being longer term or permanent.

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20% pay cut does not guarantee anyone's job moving forward it s also the same for those with reduced work week. We all better hope this is still a short term 2-3 month issue before we can get people back to work. If we are looking at much longer time period then of course everyone's job and health is most likely in jeopardy. If your company is doing nothing in terms of cost shedding either you have very deep pockets (probably private) or your Co. is grossly mismanaged.

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Worst case scenario risks spread evenly to the majority of integration companies large and small. There will be some niche companies with essential customers that will keep target income close to or even surpass normal forecasts.

Security Industry Companies should unite as a think tank to birth solutions that benefit all parties post Covid-19 along with a new creative security industry ready to serve the needs at hand. Manufacturers, Distribution, Integration Companies and even IPVM forum theory crafters.

If all the brain power clams up, fresh ideas do not flow or manifest. Right now is the perfect time for our creative culture to persist, work out the problems and help the set attainable goals for a new future using technology. If we cannot harness technology to aid us then we are just as vulnerable as the past pandemics in human history, biological or financial.

Heals are needed.

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