Problems with slashing salaries in your firm ?

In this uncertain economic environment, employers have been busy with slashing salaries. Sounds like an easy solution to tackle rising costs...right? But there are problems with slashing salaries:

1. There is a mismatch in the salary and the expectation of employees: Any employee would like to earn the maximum that its employer is willing to pay. However, every employer would always like to pay the minimum that the employee is willing to work for. This mismatch gets even more clearer/evident/realistic in such uncertain times. Employers sometimes by slashing salaries reduce the salaries to a level that is below the min expectation of the employees. Employees in such situations may/may not leave in the bad times but will certainly leave their employers when the times become better. Employers in a way will always risk loosing employees at the turn of the tide

2. Employee motivation/commitment goes down
Salary slashing always brings along with it motivation/commitment slashing. Not a difficult concept to understand right?

Here is one "courageous" solution for the employers-

a. Ask every employee to bid for his/her salary. Essentially, ask every employee to indicate a salary corridor that he/she expects from the firm in such uncertain times
b. Tell the employee that the company has already fixed his/her salary, but it will not reveal it.
Rules- If the employee indicates a salary that is 20% to 30% more than what the firm has fixed, then the employee should be asked to leave the firm. But, if the indicated salary corridor is less than or equal to the salary fixed by the firm, then he/she should be paid that much

This sounds like a simple solution, but it addresses the real challenges that the companies face-
1. It filters out people who have high expectations. Anyways, these people either would have left immediately after a salary cut or would have left later when the economy would have bounced back. Clearly, firm will get rid of people it thinks have high expectations
2. Due to fear of getting fired, employees will always be a bit conservative in their bids. This will not only lower the overall payroll bill, but will also make the employees feel that they are getting paid in-line with their expectations
3. No one will blame the firm for slashing any salaries. People will be in a way negotiating their own salaries. ( I am sure that Milton Friedman would have been very happy to hear of such a solution- A solution that gives the power to the people)