This reminds me of a story I'm hearing more and more now.
Richmond, VA is the home of Capital One Credit Cards. Years ago Cap1 would give a card to just about anyone. They were a decent company as far as cc companies go. Paid well. Kept their people on during good and bad times. A good corporate citizen.
About ten years ago they started laying off folks left and right. Word on the street was that you could work there but layoffs would happen so jump ship the first chance you got. Subsequently, they had retention issues with talented people. They solved that issue by paying everyone top dollar. Their employees still have a mercenary mentality. If you can get more someplace else, you leave Cap1 at that very moment. So they lose they're most talented folks quite often.
Now, in these times of the credit crunch, they're jacking everyone's interest rate through the roof. A friend has worked there for 13 years. He has stellar credit. Not a blemish. They "repriced" the interest rate on his card up 10%. He had an 8% interest rate. It's now 18%. He's lucky. He doesn't revolve credit. He pays it off monthly. Other folks are now caught. When they could afford the lower interest rate, the one on the initial contract they agreed to, maybe now they can't. So they will get socked with over the limit fees, late payment fees, we're-screwing-you-and-you-can't-do-a-thing-about-it fees. On the face of it it appears unfair as well as taking advantage of these tough economic times. A guy could've been in great shape but this may push him over the edge while also ruining his credit. Now with ruined credit the guy can't get as good a job as he had before. His car insurance costs more. He can't rent as nice a house for his family. This, on a massive scale, has an effect on the nation ultimately. In that we are all effected.
I know I'll never have a Cap1 card because of the layoffs and this new interest rate hiking strategy. If they pull that crap now they're only going to do it again whenever the environment allows them too. It's dirty pool in my book. I can't help but think people will remember this and treat them accordingly when times are good again. I'm not saying this will drive Cap1 out of business but it can't help them in the future.
After typing all that I'm thinking "Maybe the morale of the story is if you take advantage of people during the bad times will people take advantage of you during the good times? Once the power dynamic is back on the side of The People are they then going to thumb their noses at you while you cry?"
In a way I kind of hope so. After all, we're in this together. If you're not a friend, or straight dealing business partner, in bad times then what kind of friend/business partner are you?
I'm not advocating "Screw the man!" here. I'm saying that if you enter into an agreement with an entity or person, and they change the terms midway through, how can you trust them to deal straight again? You can't. You learn your lesson and leave those guys behind. It probably makes good business sense to pay someone the least you can get away with. But does it make long term business sense to do so? I have no idea. I do know that Cap1 won't get my business ever. If a company didn't pay me what I considered myself to be worth I'd leave first chance I got. Is it worth to pay a guy low now knowing that in the future he'll leave you for someone who will pay him better? After all the training, indoctrination, and investment you've put into him for the duration of his employment to you? Depends on the employee I guess. If he's not worth squat then watching him leave won't matter. If he's a key player you'll rue the day you were able to bull him into a lower tax bracket.
It's always a trade off or a risk I guess. I don't have an MBA so what do I know?