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View Poll Results: As an employee or a boss, what kind of salary cost-cutting are you okay with?
Salary cut 179 30.65%
Unpaid leave / furloughs 97 16.61%
Layoffs 14 2.40%
4-day work weeks 124 21.23%
Lower salary to continue work-from-home 153 26.20%
No bonus for a foreseeable future 319 54.62%
No increments 327 55.99%
Reduction in perks (company cars, allowances etc.) 278 47.60%
Other (please specify in your post) 17 2.91%
Multiple Choice Poll. Voters: 584. You may not vote on this poll

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Old 15th April 2020, 20:40   #76
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Default Re: As an employee or a boss, what kind of salary cost-cutting are you okay with?

I voted for everything but salary cuts.

Since our expenses are about 40-50% of our income, temporary salary cuts would not be catastrophic. But, they would certainly deliver a psychological punch if rolled out - affecting my morale, savings rate and any future discretionary consumption. Towards our collective interest to help the economy recover faster, I think that regularly budgeted consumption should not be affected. Holding the fixed income part of salaries steady would contribute towards this. We have rented out our property to a small educational setup. That agreement may not hold steady through these times, causing a further dependence on a steady income.

But, if the choice is between salary cuts and widespread layoffs or significantly lower capex/opex of the company in the future, the former chooses itself.

I work in computer networking, and thus far, there have been no reports of any changes to the compensation structure.

I would be happy to take a cut in the variable components - bonus, stock options, leaves and hikes - to lower the burden on the employer.

Our maid, driver and cleaner are on paid leave during the lockdown - their salaries have not been affected.
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Old 15th April 2020, 22:00   #77
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Default Re: As an employee or a boss, what kind of salary cost-cutting are you okay with?

My wife runs a Pre-school and Education industry is one of the most impacted industries due to the COVID-19 situation with ZERO revenue and almost all the OPEX (Rent, Salary, Utility Bills, Maintenance etc.) intact. We are not laying off any staffs however planning for 50% reduction in Salary from the time School was closed (Mid-March) till the time it re-opens.
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Old 15th April 2020, 22:44   #78
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Default Re: As an employee or a boss, what kind of salary cost-cutting are you okay with?

I am an entrepreneur and have been in similar situations before be it 2000, 2001, 2008 and so on. We work in a sector that has completely shut down i.e. the travel sector. What we have experienced in the past is that salary cuts in a smaller organisation kill the productivity and breeds negativity since it affects everyone's day to day expenses. People dont want to live with the uncertainty of how long the cut will last. We have taken the approach of figuring out our cash flow and letting a few people go (but making sure to give adequate notice/compensation and continued medical insurance till they need it), making sure that the people who are there have no challenges with their salaries and letting people clearly know what our cashflow and runway looks like so that they know how and where we are placed.

I know that the letting go is an unpopular path but unfortunately you cant make everyone happy all the time.
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Old 15th April 2020, 22:49   #79
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Default Re: As an employee or a boss, what kind of salary cost-cutting are you okay with?

Quote:
Originally Posted by VJ05 View Post
My wife runs a Pre-school and Education industry is one of the most impacted industries due to the COVID-19 situation with ZERO revenue and almost all the OPEX (Rent, Salary, Utility Bills, Maintenance etc.) intact. We are not laying off any staffs however planning for 50% reduction in Salary from the time School was closed (Mid-March) till the time it re-opens.
Really testing times for the eduction industry, the early education sector in specific. What is your estimated timeline for the normalcy to be restored and the kids to get back to school?
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Old 15th April 2020, 23:13   #80
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Default Re: As an employee or a boss, what kind of salary cost-cutting are you okay with?

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Originally Posted by Warwithwheels View Post
Really testing times for the eduction industry, the early education sector in specific. What is your estimated timeline for the normalcy to be restored and the kids to get back to school?
It all depends on Virus. As soon as it's there in the Country, specially in Maharashtra, Govt. won't allow schools to open. However, per the current situation, we are estimating around June for Schools to re-open.
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Old 16th April 2020, 00:40   #81
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Default Re: As an employee or a boss, what kind of salary cost-cutting are you okay with?

I voted for almost all options except layoffs. I work with a US Healthcare IT company. We have already had our increments, which were to be effective 1-Apr, deferred indefinitely. No salary cuts as yet but it could come. I am comfortably placed and a 10-20% salary cut would not impact me much, that may not be true for many others, however would still be infinitely better than a layoff, especially at this time where hiring is practically frozen.
Our company decided to go forward with the promotions, but only the revised titles were effective. Corresponding promotion hikes were deferred.
Bonuses should be the first to go, unless they are performance linked. Same for perks. Conserving cash to sustain the downturn should be every company's primary focus. Though the harsh reality is that many companies are going to take this opportunity to streamline workforce which could not have been executed earlier, as it could have created negative publicity.
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Old 16th April 2020, 10:39   #82
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Default Re: As an employee or a boss, what kind of salary cost-cutting are you okay with?

Voted for No bonuses and no increments.

I work for a leading company in the data analytics and market research domain serving clients in APAC, EU and NA regions. While it is certainly a relief that we are one among the least impacted from this mess, my company also took a considerable hit by finishing at negative growth while actually being poised for a major leap in FY 19-20. Our client side has taken a much more massive hit.

Even then, my company has resorted to drastic steps including freezing hiring for the next one year, no promotions, bonuses and increments and a 100% cut in variable pay (affects only those in Sr. Manager and above grades). As per top management, taking drastic measures at an early stage should help us sail through tough times like these and doing this has also saved the jobs of close to 700 people as well. Lay offs will be looked at only as the last possible resort.

While it is certainly a disappointment, for the salaried class, I guess it is a blessing that there is atleast a job with regular pay in hand.

Fingers crossed and stay safe !!

Last edited by aswin ajith : 16th April 2020 at 11:00.
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Old 16th April 2020, 11:28   #83
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Default Re: As an employee or a boss, what kind of salary cost-cutting are you okay with?

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Originally Posted by m8002? View Post
Totally true. The same guy who used to job hop every year, will now play the socialist card of how companies are cutting pay or laying off.
Pardon me. But, I kind of disagree to that. People who are frequent job hoppers are actually more market ready and most know the tricks and trades of interview cracking and are armored with better negotiation skills. In an uncertain world they are most likely to survive better even if they play the socialist card.

I've been working for the same firm for nearly 6 years now, likewise there would be many here who had been associated to their respective firms for over decades. But during those rainy days, if need be the management could very well come to conclusion that each employee is dispensable. Loyalty hardly plays a role here.
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Old 16th April 2020, 12:22   #84
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Default Re: As an employee or a boss, what kind of salary cost-cutting are you okay with?

From a employer's perspective, I'd recommend a few things if you think you'd bounce back fully once situation normalises...

Ask for cost cutting ideas to employees, keep them engaged and heard
Provide them with a minimum salary for their basic needs, EMI etc (rest would be paid as arrears in instalments once situation normalises)
Communicate that bonus/variables would be paid based on individual and company performance, this would be reviewed during financial book closing time
Communicate clearly about the hardships that the company is facing, let them know they are all together in this and overcome in a united manner
Let them know that the company stands by them, the medical health benefits will continue. Ensure better sanitation when your unit starts operating
Employees are encouraged to share their feedback and problems to the managers. Ensure that those are heard
Renegotiate with existing vendors and clients, there is minimum 15-20% margin for negotiation at this time
Look for new vendors/clients, others are looking for business too, you may get better quality and better pricing than existing ones
Have your plan ready to operate at full scale within a day or two of lockdown opening, channelise resources accordingly

For employees...
Never love your company, you are just a replaceable resource
Family and friends are your real assets, keep them close
They will bail you out in the difficult times, read point 2 again
Always have 6-8 months of emergency cash in hand (do not touch that unless an emergency)
Always have medical insurance that covers yourself and your family
Have a term insurance to cover your liabilities
Learn something new each year, invest in yourself
Pursue your hobby, this is a great stress buster
If you are job hunting, showcase all your amazing skills and experience
Have a Plan B because times are changing. Bad time doesn’t come knocking !
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Old 16th April 2020, 12:23   #85
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Default Re: As an employee or a boss, what kind of salary cost-cutting are you okay with?

I selected the below 3 options:
1. Salary Cut
2. Unpaid Leaves
3. No increments this year

And in order to reduce costs, my organization has already announced these above three measures to contain cost and if the situation doesn't improve we will be staring at lay-offs, for sure.

We are taking a 25% salary cut for the next 3 months along with unpaid leaves for each of these next 3 months.

I, on the other hand have been living in the fear of job loss since November 2019 as I had been wrongfully been put under 3-month PIP program. My review was scheduled in March and my manager has extended it (PIP) by one more month. I had a review meeting with him yesterday and I don't want to have a feel that I will be through PIP, - partly because I have an extremely demanding boss who in some or the other way finds some or the other points in order to prove that the task given has not been completed successfully. Hence I have started to prepare for the worst since last 2 months.

As a precaution I have stopped making purchases and I am basically saving a lot on cash. Certain outflows like EMIs, Insurance premiums & tax savings SIPs can't be stopped.

1. EMIs: 3 months (Mar - May) of EMIs postponement isn't just enough for me, as I had already paid for March, hence I have decided let this outflow happen.
2. Insurance Premiums: LIC's annual premiums were already paid, by the time announcement for deferment of it came :(
3. Tax Savings Fund SIPs: they just can't be stopped.

As a thumb rule, I have savings for the necessary expenses for the next 6 months, but looking how fast the situation in India is changing, I believe one should have a emergency fund of at least a year. There are definitely going to be job losses irrespective of the government's appeal.

All I can say for now that the staggered opening up of economy should be there so that business at least earn some.

Apologies for the long post.
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Old 16th April 2020, 14:32   #86
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Default Re: As an employee or a boss, what kind of salary cost-cutting are you okay with?

I will categorize in two broad sections
A. Direct Personnel Costs
This covers reduction in salary, bonus, increments, other cash & non-cash expenses
Salary Cut, Lower salary arrangements, no bonus, no increments and reduction in perks. However, essentials like term & medical insurance should not be compromised on.

B. Reduction in workforce
As the section heading says, it is a permanent or temporary reduction in workforce
Layoffs - More than financial impact, such actions are morale killers - best avoided for as long as possible
Unpaid leaves/ furloughs - these create more confusion than anything unless there is a plan in sight when these employees would be called back.

Each business would have to make a call based on their unique situation.
Tip: Discuss with employees before making the call
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Old 16th April 2020, 15:54   #87
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Default Re: As an employee or a boss, what kind of salary cost-cutting are you okay with?

Thanks for the question, if there is something i have learnt is that, we can all work from home. As a finance professional and as an employee, my first preference to review for savings is an office space, the cost of real estate, add to the intangible cost and anguish of traffic, it really is point less. I would like start saving in real estate costs first. i do recognize there are lease contracts which are not flexible. But i will start looking at office related costs first.
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Old 16th April 2020, 16:31   #88
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Default Re: As an employee or a boss, what kind of salary cost-cutting are you okay with?

My missus runs her own business in the talent acquisition space focused on Banking & Financial service industry. After watching the issue for 3 weeks, we have now looked at how to reduce our outflow. We put this in 2 buckets

Personnel Costs - Salary, Bonus, Reimbursements (travel + mobile)
Opex Costs - IT infra, Real Estate, SGA costs

Luckily our model has been to work from coworking spaces and therefore no fixed costs as of yet. We chalked out the following plan

1. Give up real estate. This cost us approximately 25% of our overall costs and includes real estate, power, support services (admin), reprographics. That is a cool 25% savings over expenses. All people are working from home in a distributed manner

2. Reimbursements - Kept it same while increasing communication costs and reducing travel costs

3. IT costs have reduced by giving up laptops wherever required and asking staff to work on their own machines at home with a cloud environment. This has netted as another 10% savings

4. The bulk though is people cost. We have asked employees their wherewithal to go in for self imposed salary reduction for the next 2 months. After this, we now have our personnel cost reduced by about 40%. The only caveat we put for ourselves is that when the situation improves, we will look at compensating employees for lost salary for those 2 months

Thinking about this from an employer's perspective, i do see the pain that some of us are going through. While the Govt has indicated to the corporates that MSMEs should be paid on time and there should not be any dues, we still have invoices which are more than 60 days due. Alas the pinch is that we still need to pay GST and PT and there has been no waiver on this.

I look at some of our kirana stores who operate on rolling cash on a weekly basis. With the lockdown, i fear that the smaller shops with 3 to 4 days rolling cash will start slipping in a couple of weeks. They will have to let go of people first rather than salary cuts.

Tough times ahead
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Old 17th April 2020, 22:48   #89
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Default Re: As an employee or a boss, what kind of salary cost-cutting are you okay with?

Voted for 'No Increments'.

We got a communication from org management (IT Service based MNC) that compensation review that was to be applicable from April onwards has been deferred for an 'indefinite' period. That certainly means, there will be no hikes this year.

Though, it is a whitewash of all the good work we did last year, skipped certain opportunities for the ongoing work, I was expecting at least a single-digit review in terms of the hike.

I agree it is a global problem and all organizations are in the same boat. To conserve cash, No increments will definitely help them have some reserves for emergencies.

But I also believe that once the situation normalise and businesses are on track, there will be huge attrition. Employees will seek for a most suitable opportunity and take a switch to compensate for all this.
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Old 19th April 2020, 20:18   #90
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Default Re: As an employee or a boss, what kind of salary cost-cutting are you okay with?

Voted for no increments, which makes absolute sense considering the prevalent situation and lack of clarity on the business scenario. As a lawyer, we have advised few of our start-up clients to choose paycuts as against termination, however, considering the nature of their businesses (like- mobility/ transportation, hospitality, etc) and the extent of impact on their businesses, they had no option but take the difficult decisions and terminate employees as also their manpower service contracts. Some of them were ready and willing to deal with repercussions, if any, from the labour/ enforcement authorities as also media backlash at a later stage. While I personally feel for the employees, at the same time the fact that the threat to business continuity also cannot be ignored. Parties to most commercial contracts across sectors have been exploring and/or resorting to invoke force majeure clauses to terminate, suspend or defer performance under contracts. Hence, a natural trickle down effect.
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