Problem - Mistakenly Increased Salaries far too much - Advice needed

[BristolFlyer]

One of our alliance colleagues has put a question forward where we could use some wise advice please.  He writes:

I thought I had low staff morale and I wanted to increase it a bit to improve delays etc.
I miscalculated and increased them too much, to a point where I am now not making a profit anymore.
I fear that lowering them back is going to destroy my image because of strikes and the morale of the staff will be worse than before.

So I thought...what if I fire everyone and then immediately hire back 100% at lower salaries... I mean...nobody can go on strike if I fire everyone, right? Morale should not be low if I am hiring anew?  What should I do??

I have advised against sacking anyone ever if at all possible as that's usually disastrous in my experience, and hiring them back immediately after will not undo the damage. So best advice please folk.... 

[Sami]

Decreasing salaries will always have side effects, but you can choose if you take a big leap and lower them in one step or bit by bit .. Not sure which is better in the long run but if the company is not profitable due to this then it's probably lower them quite a much to begin with. But just make sure the new salary level is at least the "suggested" level..

[BristolFlyer]

Thanks very much Sami

[qunow]

I have tried to lower their salary back to 100% as the suggested wage is reduced, staff morale are affected but I immediately give them some bonuses which help recovered part of those lost morale.

[MRothschild]

Personally curious-how big a drop in salary and how big a drop in morale?

[qunow]

....I have just set my company salary back to suggested level which reduced their salary by about 10%-ish, that result in morale drop from 100 to around 60-80 and my company image dived from 90 to 39

[MRothschild]

Ouch

[gazzz0x2z]

Hence the timeless advice : leave salaries automated. Ideally, leave the hiring process automated too. The 1% of margin you can earn from that is not worth the risk of a mismanagement - that can easily kill your company, and killed countless ones.