Apple tightens belt with bonus cuts and hiring restrictions

Amid fears of a financial slide, Apple is reportedly delaying bonuses for some corporate divisions and going for further cost-cutting in a belt-tightening measure.

In this process, the tech giant has joined its other rivals in Silicon Valley eyeing scaling down expenses. During Apple’s shareholder meeting last week, Chief Executive Officer Tim Cook spoke about his company's plan to reduce costs.

“We’re being very prudent and thoughtful on spending and we continue to be very deliberate when it comes to hiring,” he told shareholders. Operating expenses during the holiday quarter came in below guidance and grew more slowly than in the past, Cook noted. Still, he added that Apple continues to “invest in innovation”.

The move is expected to reduce the frequency of bonuses for a portion of Apple’s corporate workforce, Bloomberg reported quoting anonymous sources, who did not prefer to divulge facts privately as the plan hasn’t been announced publicly by the tech giant. 

At the same time, the firm is freezing hiring for more jobs and leaving additional positions vacant when employees depart. Such a move from Apple, which is known for doling out bonuses and promotions once or twice each year, is seen as a departure from its convention and underlines the overtly cautious approach of the tech giant.

So far, employees used to get bonuses in April and October. Now, staff won't get bonuses or promotions next month, and all divisions can expect payments only in October in case nothing more drastic happens.

The majority of Apple’s divisions are set for a once-a-year schedule for bonuses and promotions. This norm is applicable for software engineering and services provided by staff in operations, corporate retail, and other groups that were still on the outgoing biannual plan.

The world’s most valuable company began taking stern measures last July, after galloping inflation and recession fears spurred it to take a more cautious stance. 

The iPhone maker has, however, avoided mass layoffs just like most of its tech peers. It has reduced budgets, cut headcount goals, and frozen hiring across several divisions.

According to reports, employees would receive their full bonuses,  in one installment rather than two. It would be a setback for staff, especially because they often count on such bonuses for their personal budgeting. The move applies to engineers and other non-managers as well as mid-level managers, but not to senior employees at the director level and above. Apple’s highest-ranking employees typically see their bonuses paid quarterly. 

A sales slowdown has added pressure on the tech firm to keep its operations lean. Revenue declined 5 per cent during the holiday quarter, a steeper drop than Wall Street projected, hurt by iPhone production snags and sluggish demand for Macs and wearable devices. Sales are expected to fall by a similar amount in the current period.

The firm has curbed travel budgets and is now requiring senior vice-president approval. Earlier, Cook took a pay cut himself. In January, Apple announced that his compensation for 2023 would fall by more than 40 per cent to about US$49 million.