[V.Narayan]

https://www.thehindubusinessline.com...gn=Newsletter#

Given the unprecedented nature of the CV-19 situation no law on the books covers for payment of wages in a lock down. The closest there is, is a clause under the Industrial Disputes Act that in case of a natural calamity without notice or permission an employer can lay odd employees with a 50% compensation. I assume this means 50% of all terminal dues owed to the employee.

Most Govt's of large economies, including smaller ones like Malaysia are providing relief to both employers and employees. Some State Govt's putting out circulars that all employees should be paid indicates both a lack of knowledge on what is legal and a lack of comprehension on how lakhs of small & medium enterprises operate on modest cash reserves with only limited support from the vast banking system.

My advice to businesses I am associated with is to do in one go whatever is needed - usually a combination of tiered pay cuts for top & middle management + some lay-offs across the board to support a reduction of business + close down real estate you can live without. The only exception is a large social impact organization that skills, trains and creates jobs for the youth in the hinterland. Here all shareholders came together to say don't cut any job we'll invest more equity to tied over.

[ninjatalli]

In my previous firm (a Big 4 consulting firm); I see my partner taking a very smart move; the firm has taken a decision on zero promotions, salary hikes and new hires for this year; which was disappointing/considered wrong by the employees as they had a stellar year (march ending).

The partner has gone ahead with the promotion/appraisal discussions and the process has gone ahead as usual; and the folks that were expected to be promoted or top ratings have been appraised of the same. The entire team has been told that their roles & responsibilities (in case of promotions) would change accordingly; with the underlying point that the partner would try and push very hard for mid-year promotion cycles as soon as the firm-wide decision is revoked later during the year.

I spoke to a few ex-colleagues; this seems to have given some levels of satisfaction; also the situation is such that they don't have any other options in the market to jump to, so I guess that will have to work!

[alpha1]

1) Reduced pay rates - since the overall productivity of the firm has declined
2) Reduced work days (including furlough) - since the customer is also in the same boat, and not enough work available to conduct the business
3) Of course no increments or bonus - would defeat the whole purpose of above two measures - if your firm has a star performer, but he doesn't understand the dire situations, then he is not a team player, perhaps your firm doesn't need him (unless your firm works on single man champions and rest of the teams are just supporting staff)
4) I am not in favor of lay-off because of the market condition. No one will employ anyone new, and rising unemployment only leads to worsening crime rates

[Warwithwheels]

I have a friend who is closely associated with educational institutions. They are impacted in a big way. They were one of the first sectors to close down, even before the official lockdown was announced.

This is the crucial period for them in terms of admissions and other activities like summer camps and competitive exam coaching. All the revenue streams are completely dry now. The early education segment has also been badly affected since parents are now very apprehensive of sending children below 3 years to play schools/ day care.

The employees on roll have already been paid for nearly 1 month without any work. Big institutions with the bandwidth might be able to do so for next 2 months max. The smaller ones will have to ask their employees to forego most part of their salary for the next 2 months.

Sad! But thats the only way to stay afloat.

[Night Raven]

I work for a Christian mission hospital in a semi rural area as a consultant. The arrangement in our place is that in each specialty only one consultant should come daily, taking turns. My department has three consultants, so effectively I will be working only 10 days a month. Other days will be considered as leave without pay. My income becomes a third of what it used to be, still it's better than laying off people I guess.

[Malyaj]

For affected firms, salary cuts across the board are probably the best bet. It so happens that this crisis has coincided with annual performance reviews in most Indian companies so this will see more layoffs than planned. High performers who have expectations of bonuses should probably pause and think if they can exist without the organisation. As an employer, I would consider a demanding employee who insists on getting a fat bonus (if he/she is already well paid) in these times unfavourably. These are extraordinary times and require empathy from employees as well as employers.

Applicable for very small companies, fledgling startups:

Companies which are on the verge of shutting down may want to stay in a sort of suspended animation for a few months. It takes a lot of time and effort to build high performing teams. Shut shop or disband, and it will take a lot of motivation to start all over again. Alternatively, if your team is ok working with low salaries or even no salaries for some time, explore the option. Of course you should be ok with them looking for a job change during this period.

I am in a small minority who think this crisis will end sooner than expected. Brick and mortar companies can resume operations faster but services companies who have let go off a large chunk of their workforce will struggle to get back to market. Hence key is to retain staff to the extent possible.

[StarrySky]

My organisation has been implementing a cost-cutting plan for some time now (unrelated to the pandemic), so many avenues for cost-cutting have already been explored, including layoffs and real estate closures.

Other than the company-leased car, phone and the health centre, I don't use many perks. It won't hurt too much to let the car and phone go.

Unlike India, increments are generally low, so cutting increments will also not hurt too much financially. Bonus for this year has already been announced. I do not plan any big expenses with the bonus in mind. So if the company decides not to pay it, I can take that too.

Unpaid leave, 4-day work weeks, lower salary to work from home are all some sort of salary cut. A salary cut will be acceptable but to what extent it will hurt depends entirely on what portion is cut.

In a nutshell, I think layoffs are particularly hard in these times, so I should be happy if I can just keep my job.

[sridhu]

I am an entrepreneur.

In all the investor calls I have participated in the last 3 weeks, the message has been very clear: conserve your cash. Do not plan on getting any capital infusion until December, 2021! (That is not a typo. They are talking 21 months out)

So I am advising my customers (and also practice it in my business) to cut their burn drastically. Most people are making hard nosed decisions about what is, and isnt, a necessary expenditure. If they do not make this decision now, I think they will be forced to make it in less than ideal conditions.

Most people, including me, are looking at layoffs as the last option.

But, be very clear, it is an option. I believe people who do not directly contribute to a company's core will be let go; if not immediately, then in 3-6 months. There are a few initiatives going on where companies are looking at out placing their resources who may not be required immediately. I doubt their efficacy given the market.

I am taking an approach of cutting down committed salary but paying a higher percentage when the person is on a customer project, or a budgeted internal project. Otherwise, they get probably 40% of their CTC. When I get money on them, I cut my margin and pay them so that they get close to their monthly take home.

[AZT]

Originally Posted by ninjatalli

In my previous firm (a Big 4 consulting firm); I see my partner taking a very smart move; the firm has taken a decision on zero promotions, salary hikes and new hires for this year; which was disappointing/considered wrong by the employees as they had a stellar year (march ending).

A friend who works for one of these has also been assured that if there is need for a pay cut, it will start with the Partners and Directors and they will bear the highest brunt.

[phamilyman]

Convert % of fixed to Variable pay for people above 5L.



This means that if the company does well - they get the same as a bonus. Their headline package is not reduced either.


Its a way of saying friends, we are in it together. Its important to cut now for a longer runway for the startup - but if all goes well, we will make it all up to you.


Felt super fair to me.


Can it be included as an option!

[sridhu]

Originally Posted by phamilyman

Convert % of fixed to Variable pay for people above 5L.

This means that if the company does well - they get the same as a bonus. Their headline package is not reduced either.

Can it be included as an option!

That, basically, is my option. Seemed to be the best way to address the issue - aligning all the objectives.

In fact, the sales commissions would actually be higher than normal. And that is fair too - no sales, no nothing!

[GTO]

No layoffs - I have never laid off anyone due to cost-cutting & hope to continue this track record. If belts need to be tightened, I would opt for a salary cut, not just for my staff, but for myself also. I can see that just 30% of BHPians have voted for "salary cut" in the poll, but it's time to get realistic. We're currently witnessing the biggest emergency of our lifetimes and if revenues tank for the company, they will for employees too.

[motorworks]

I work for a Apparel Retail company in India and being a consumer facing business, the whole lock down scenario has meant that we have had literally zero sales from Mid of March. Although the organisation I work for is fairly healthy in terms of finances, nothing can make up for zero sales, especially in peak sale periods like April and May.

So, initial indications of cost cutting measures have been that we will have to use up our earned leaves in this quarter so that company can bring that provisioning back to the books, second is that there is surely going to be no increments, no surprises there. And third, although not really announced, I have a feeling that our yearly incentives which is due in June this year would be deferred indefinitely. Also on the cards could be reviewing contract based employees etc.

Surely some tough measures, but all this is still based on a positive outlook that we will end up opening our stores sometime mid May. If it goes beyond that, then would be time to discuss pay cuts and all that.

[adi.mariner]

My ship was all ready to proceed to KSA for a project but the client has delayed it because of the Covid 19 lockdown. The ship owning company has kept a skeleton crew onboard and the rest have been sent home. They would be called back once the project is given the go-ahead by the client. With minimal crew changes taking place, the crew on-board are stuck there for the foreseeable future and the same with the crew at home.

[1.2TSI7DSG]

I am in for No Bonus & reduction in perks.

The logical reason for this is there is no way in which we can achieve the targets of the annual operating plan this year (and a couple of years down the line). Increments are anyways decided on the organisation level and there is nothing much we can influence. If the Job market improves (highly unlikely) it will provide the opportunity to people seeking higher increments/increase in salary/packages.

I don't support reducing salaries as many of us would have the calculations and EMIs going on the basis of the current steady-state cash flows. No Performance-No bonus is a fair way to reduce the costs esp where 20-30% of compensation are bonuses. Also to reduce the load on the finances, perks such as cars, quarters, etc can be charged (nominally). With higher employee churn, you may be stuck with high car inventory which is anyways not great to liquidate at a profit. The depreciation may not help with low profits and reduced cashflow.



What is interesting is how people will re-engineer the workplaces based on the grand proof of the feasibility of WFH. Considering real estate costs and with even conventional companies working from home, we are pushing to reduce the office spaces across the board for sales, HQ & Corporate office. You can work with ~60% of the workplace without hindrance & some meeting rooms to handle the peak loads. This will also reduce shuttle/transit costs, electricity & cooling costs and obviously rent. This will also induce a discipline on the meeting times (esp the end times ) and weed out all useless meetings without agendas. I personally am looking for a much efficient workforce.