As economic uncertainty continues, many employers are still looking for ways to cut costs. Labor is a large cost, of course, but employers should not move forward with pay cuts without great research and consideration, says Ken Oehler, global engagement practice leader at Aon Hewitt, a human resources consulting and outsourcing firm in Chicago.

According to research by Aon Hewitt, pay is the No. 3 driver of engagement globally. Many employees have already experienced their share of bad employment news, such as layoffs, furloughs, benefit reductions, and pay cuts and freezes, Oehler says. Going through another round could destroy engagement and cause employees to start looking for other opportunities.

"Pay cuts are a pretty tough message to send," Oehler says. "A lot of companies have already gone through pay freezes and cut backs; employees have been through a lot. If keeping employee engagement, retention and morale is the goal, understanding where pay fits into that equation for employees is the starting place."