Nintendo's CEO reduced his salary by half to help prevent layoffs and it's a lesson in leadership

Having a great leader goes a long way when it comes to creating an environment where teams can thrive. In the company of a good leader, individuals become part of the company fabric and equate the establishment's success with their own. This is what Nintendo's Satoru Iwata managed to do with his one step, which brought the company back from doom. His selfless call of halving his own salary to prevent layoffs after a horrible product launch showcased his trust in the employees, who did not disappoint him by bouncing back with some of the most successful projects the company has witnessed in its lifetime, as reported by CNBC. The present situation in the USA has put Iwata's step again into the spotlight with people asking why the executive branch of a company cannot lower their salary to help the team keep their jobs. 

The USA is going through a major economic upheaval, the impact of which is the hardest on the working class. They are facing layoffs left, right, and center. As reported by Forbes, 305,000 employees were let go in 2023 with more in tow. This has caused social media to buzz with the hefty salaries CEOs are taking home and assumptions about how reducing these salaries could help with the current situation. Many are pointing out Iwata's example and the returns it provided for the company. 

Iwata worked as the CEO of Nintendo, a Japan-based video game company from 2002 to 2015 until his death. In 2013, they released the Wii U console, as a successor to their previous release Wii. The expectation was that the console would break sales records and follow up on the profits its predecessor provided to the company. But that didn't happen, and instead, it proved to be so unpopular that it dealt the company massive losses. The damage was so huge that the board began to look into layoffs to recuperate the money that had been lost.

As reported by Game Developer, Iwata had to address the board directly and emphasize his decision to not let personnel go out of their jobs. He stated, "At Nintendo, employees make valuable contributions in their respective fields, so I believe that laying off a group of employees will not help to strengthen Nintendo’s business in the long run." To reach a compromise, Iwata proposed halving his salary halved to protect his team's job. He acted as a true leader who took responsibility for failures and not just credit for the successes. 

"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," Iwata said regarding layoffs. This thought process worked wonders for the company. Seeing their leader put so much trust in them made them work with more devotion towards the company. Soon they released Switch, which changed the gaming industry forever. By 2023, the company sold 139 million Switches all over the world. Unfortunately, Iwata was not around to see that success with his own eyes. The fact that such idealistic measures turned in huge profits is a great example for executives to look at while dealing with the current scenario. It is a lesson in leadership that CEOs all around the world could follow in such trying times.