Hard pass on universal paycuts. That's a similarly bad idea to universal raises & promos - hiring & comp decisions should be made based on performance.
As an EM, I would much rather get the opportunity to prune under-performing engineers than to have to tell every member of my team I'm cutting their comp, knowing that the best couple will leave quickly afterwards.
As an EM, why do you have under-performing engineers on your team in the first place? Either your hiring bar is low, you are not giving enough feedback to improve or you are afraid to cut your losses. None of this needs you to wait for an opportunity to prune under-performers.
An EM is not a king. The process for shedding an engineer is typically long and arduous - a quarter for coaching, then another for a "soft performance plan," and then another quarter for a PIP are not uncommon standard HR practices. God help you if your under-performer is based in, say, Germany.
Regarding a hiring bar, typically an EM may have gotten some say in some of their people, but for the most part not. The suggestion that an EM "giving feedback" is sufficient to improve all employees to a high technical bar is hilarious.
An EM needs to understand the organizational, political, and HR climate of their org. Use what leverage you have to deliver the most impact. Often, that means not going out of your way to expel mediocre engineers, but rather using your resources to propel the rest of your team members to success.
Simple: Politics, optics, and pragmatism. Up to a point it's better to focus on growth and things you can actually fix rather than trying to trim the bushes.
As a PO, how do I tell my boss he hired the wrong person and needs to up his budget by 25% and delay development by 2 months while we hire and onboard someone better? The answer is I don't, because I like my job. Upping all the estimates takes much less energy and is much safer than fighting someone's inflated ego.
The universal cut benefits those who would have been laid off as they're likely the ones who would be most concerned. I've seen this once and the ones who liked it were those who feared losing their jobs knowing it would be hard to find another.
As an EM, I would much rather get the opportunity to prune under-performing engineers than to have to tell every member of my team I'm cutting their comp, knowing that the best couple will leave quickly afterwards.