Dell Halts 401(k) Matching, Pay Raises, Hiring to Preserve Cash

"Our job is to prudently manage our business so that we’re in a strong position on the other side of this situation.”


May 21, 2020

2 Min Read
Michael Dell, 2013
Michael Dell, 2013Justin Sullivan/Getty Images

Nico Grant and Ian King (Bloomberg) -- Dell Technologies Inc. has suspended some employee benefits, signaling that the computer hardware giant is cutting costs to contend with the weakening global economy.

The company will discontinue contributions to employees’ 401(k) retirement plans under a matching program, beginning June 1 and continuing at least until the end of the fiscal year, Dell Chief Operating Officer Jeff Clarke wrote to employees in a recent memo, citing the contracting economy and estimates of shrinking spending on information technology.

Dell has also frozen external hiring, internal promotions and raises for the rest of the fiscal year, a person familiar with the matter said. The company suspended an incentive program with so-called “inspire points,” which let employees translate commendations from managers and colleagues into prizes that included gift cards, grills and toys, said the person, who was not authorized to speak publicly. Dell hasn’t yet conducted mass layoffs or cut the salaries of rank-and-file employees.

“While it’s difficult to predict the shape of the slowdown and a recovery, our job is to prudently manage our business so that we’re in a strong position on the other side of this situation,” Clarke wrote in the memo. “Given the economic uncertainty that continues, we’ve made another tough decision to maintain the strength of our team and future of our company.”

Related:Cisco CEO Tells Staff Jobs Are Safe, Urges Others to Avoid Cuts

Round Rock, Texas-based Dell has 165,000 employees around the world. The maker of personal computers, servers and software entered the Covid-19 pandemic with some existing challenges, including falling demand for data-center hardware, computer component shortages and a massive pile of debt stemming from its acquisition of EMC Corp. Chief Executive Officer Michael Dell has agreed to take a pay cut during the coronavirus crisis, temporarily forgoing most of his salary as a gesture of solidarity with his employees.

“Like all companies right now, we’re constantly evaluating our business to plan for resiliency in the current environment and to support our team members, customers, and community in a way that sets us all up for success on the other side of this pandemic,” a Dell spokesman wrote in an emailed statement.

Dell hasn’t reported results since February, so it’s unclear how high a toll the pandemic has taken on the hardware maker. Software maker VMware Inc., which Dell owns more than 80% of, also reportedly cut salaries, executive pay and 401(k) matches in response to the faltering global economy.

Related:Stress Test: The Data Center Industry and the Pandemic

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