Amidst Layoff Wave, Netizens Remember How Nintendo CEO Took Salary Cuts to Protect Employees

Layoffs hit the tech sector hard in 2023, as giants in the industry significantly slashed their workforce with Amazon laying off 27,000 employees, Accenture firing 19,000, and Microsoft laying off more than 10,000. As layoffs are again picking up the fire in 2024, game enthusiasts are citing how Nintendo’s former CEO, Satoru Iwata saved the livelihood of his entire staff by cutting down on his salary by 50%.

Nintendo’s challenging period

Nintendo is one of the world’s largest video game companies with its headquarters in Japan. The company was started in the late 19th century and in the 1970s it entered into electronics market. In the late 1980s, the company became a huge hit with the launch of the Game Boy and Nintendo Entertainment System and set the benchmark for other gaming companies. In 2002, Satoru Iwata joined the company and led the company till 2015. The company became a global leader in the video game industry, but in 2013, Nintendo released the Wii U console which was a huge failure and led to massive losses for the company.

To save the jobs of its workforce and make up for the losses, Satoru took a bold decision to take only 50% of his salary. That decision ensured that none of the employees lost their jobs and Nintendo continued to work with the same staff count. At that time, Satoru said in an official statement “If we reduce the number of employees for better short-term financial results, employee morale will decrease, and I sincerely doubt employees who fear that they may be laid off will be able to develop software titles that could impress people around the world,” The big move taken by him years back, is now being appreciated by netizens who are criticizing layoff decisions being taken by Microsoft and Riot Games.

What led to Satoru Iwata's Decision?

Satoru had strong faith in his employees and felt that if all his employees stuck together they would be able to bounce back from that tough time and once again turn out to be profitable. He knew it was the same workforce that had released other successful products in the past, and letting go of such a talented workforce could affect the company in the long run. His decision boosted the morale of the employees. Retaining talented employees was part of his vision to build and deliver more successful products in the future. Eventually in 2017, Nintendo released Switch which has sold more than 139 million units across the globe till last year making it a huge commercial success.

Another reason why he might have taken this call is the cultural influence. Japan has a concept called “hansei” which asks the believer to self-reflect on the mistakes, be apologetic, and come up with a proper plan that can help avoid such mistakes in the future.

Can cuts in executive salary still prevent layoffs?

Cutting down on the salaries of executives can only help avoid layoffs if higher costs are the reason for the loss. But if there are other critical issues to address, probably trimming down the salaries of executives is not going to help. Sometimes companies in their progressive growth strategy hire numerous candidates for the same job, which leads to duplicate roles being created, and more people on board than needed. In such cases, companies might need to lay off some of the employees. But an executive's willingness to trim down on individual income in dire situations that can save some jobs can turn out to be quite encouraging for the workforce.