Team-BHP > Shifting gears


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

Reply
 
Thread Tools Search this Thread
Old 12th April 2020, 13:32   #1
Senior - BHPian
 
blackwasp's Avatar
 
Join Date: Apr 2015
Location: Navi Mumbai
Posts: 2,839
Thanked: 24,813 Times
Default As an employee or a boss, what kind of salary cost-cutting are you okay with?

Once the lockdown is lifted, it is inevitable that cost-cutting would make its way into many businesses.

While those firms with stronger cash reserves and revenues might not need to change the way they work, the majority of the businesses will need some sort of drastic measures for survival. As an employee or a boss, what kind of salary cost-cutting are you okay with? I'm listing down some of them, please feel free to add more.

1. Salary cut: With fewer revenues or even absolutely no income in some businesses, there is a high chance the business could run out of cash to pay the employees.

2. Unpaid leave / furloughs: Companies can ask employees to go on unpaid leave for the duration of this lockdown or even longer in case business doesn't pick up.

3. Layoffs: Downsizing could be the only way to perhaps save the business. Run on a skeletal (or most essential) staff and hope for the best.

4. 4-day work weeks: This could help save on additional expenses for keeping the office open for less number of days in a month. In fact, this could also lead to an increase in productivity like Microsoft discovered back in 2019 at their Japan office.

5. Lower salary to continue work-from-home: Give employees an option to keep working from home, albeit at a lower salary. Travel costs would reduce which could be reduced from the salary.

6. No bonus for a foreseeable future: Companies pay off bonuses typically based on performances. But it is possible that the bonus amount was spent to keep the business sustained during the lockdown. Hence, some companies could hold the bonus payment until they stabilise.

7. No increments: A new year means an increment in salaries. Due to the pandemic, this could now be on hold.

8. Reduction in perks (company cars, allowances etc.): Perks offered to employees could be curtailed. Examples include company car, fuel allowances, travel allowance when on outstation trips and so on.

As an employee or a boss, what kind of salary cost-cutting are you okay with?-6.jpg

Last edited by Rehaan : 12th April 2020 at 14:41. Reason: Adding some bold formatting! :)
blackwasp is offline   (29) Thanks
Old 12th April 2020, 14:09   #2
BHPian
 
Join Date: Nov 2017
Location: Roam a lot
Posts: 124
Thanked: 390 Times
Default Re: As an employee or a boss, what kind of salary cost-cutting are you okay with?

I am an employer now and was an employee once upon a time. I have voted as per my discussion with my employees.
They are fine with 4 day weeks, no bonuses, no increments for the near future and a drastic cut in perks.

I am not in favour of a salary cut since the salary pays most of the bills. At least they will be able to continue working with a sense of security that they are not going to be let go.
Other than the 4 day week, i have told them to work from home and if needed they will be called upon to work all 7 days if there is pressure to get some work done. No one is coming to office for any reason whatsoever save the peon who stays in the same campus; he will do the cleaning so that is taken care of.

Its a small organisation and no one is losing their jobs here.
N33raj is offline   (69) Thanks
Old 12th April 2020, 14:21   #3
Distinguished - BHPian
 
Join Date: Mar 2011
Location: Gurgaon
Posts: 4,364
Thanked: 13,993 Times
Default Re: As an employee or a boss, what kind of salary cost-cutting are you okay with?

As a senior employee, I have to decide for some of my colleagues. No Diwali bonus and No Increments in 2020, rather as a stop go arrangement we have gone back to one previous salary (last increment salary) until the lockdown.

Going forward, there are chances that we may have to close certain low sales/ profit branches. Most of our high salary staff are in marketing and they have to visit customers. I don't think it will be easy to get appointments from Industrial customers in near future as everyone would like to be safe. Will be a challenge to give them any meaningful work to do from office.

Last edited by Turbanator : 12th April 2020 at 14:51.
Turbanator is online now   (19) Thanks
Old 12th April 2020, 15:25   #4
Team-BHP Support
 
Rehaan's Avatar
 
Join Date: Feb 2004
Location: Bombay
Posts: 23,243
Thanked: 29,511 Times
Default Re: As an employee or a boss, what kind of salary cost-cutting are you okay with?

It might sound harsh, but companies should err on the side of EXTREME frugality:


1) Plan for the long-term:
The lockdown could go on much longer - so companies need to think in terms of sustainability for multiple months/quarters (rather than just "till May 15th" for example).

Earnings will be significantly reduced, even if your workforce & productivity stays @ 100%.

2) Harsh pay cuts:
It's better to give an employee a much harsher pay cut right now, and manage to keep them employed for the next 12 months, rather than give a minimal cut now, but have to lay them off 3 months from now because of lack of cash.

In these times, everyone at home needs to adjust their expenses too. Focus on the essentials only.

3) Layoffs are 10x as bad in these times:
Do everything you can to avoid layoffs.

An incredibly harsh pay-cut can always be made up for later. A layoff cannot.

There's also a severe psychological impact caused by layoffs, especially when the person is a provider for a family in these already hard times.

In addition to that, a layoff right now is 10x harsher than in any other situation - as it will be near impossible for the laid off employees to find a new job at this time.

4) Re-calibrate, there's a strange positive:
This is advice for Employees & Business owners alike : you're not alone!

We're used to thinking of unemployment, insufficient earnings, lack of business -- all in isolation. Like it's something we'd go through on our own whilst everyone else was doing fine.

That can be incredibly stressful.

One unique advantage of this situation is that it is a UNIVERSAL PROBLEM.

Re-calibrate your perspective & stress-levels to the situation.

In any other context, if you couldn't pay your rent, your landlord would kick you out.

In this situation -- he wont. He'll probably be more than happy to settle for a fraction of April's rent (especially if it's a commercial property).

Huge expenses that had to be met (eg. Rent, EMIs, etc) have a ton more leeway now. They aren't all make-it or break-it like they were before.

Everyone is going through the same thing, worldwide. So keep that in mind when you think of these otherwise incredibly scary things like "not having enough money for rent".

5) Remember the basic cost of living:
A harsh percentage pay-cut might make sense for your higher-level employees with some savings to fall back on, but might not be sustainable for the lower level employees, especially those living hand-to-mouth.

Keep this in mind. Think absolutes, not percentages.

Last edited by Rehaan : 12th April 2020 at 15:56.
Rehaan is offline   (41) Thanks
Old 12th April 2020, 16:09   #5
Senior - BHPian
 
rrsteer's Avatar
 
Join Date: Dec 2008
Location: 144022
Posts: 1,111
Thanked: 1,872 Times
Default Re: As an employee or a boss, what kind of salary cost-cutting are you okay with?

The priority in these times would be to preserve the company/business' status as a going concern. Its but natural that employee costs which are a big component of the P/L statement would have to be trimmed. But where possible, I'd propose a staggered approach. So in the first wave the C-Suite & Upper management take a cut, in the second wave the middle management and thereafter the employees at the base. And i would propose the harshness of the overall percentage cut in employee pay/ take home to be lesser in harshness as we go down the management levels. Layoffs aren't out of the consideration, but should be the last resort.
rrsteer is offline   (5) Thanks
Old 12th April 2020, 16:18   #6
Team-BHP Support
 
SmartCat's Avatar
 
Join Date: Jun 2007
Location: Bangalore
Posts: 5,229
Thanked: 28,723 Times
Default Re: As an employee or a boss, what kind of salary cost-cutting are you okay with?

Quote:
Originally Posted by Rehaan View Post
It's better to give an employee a much harsher pay cut right now, and manage to keep them employed for the next 12 months, rather than give a minimal cut now, but have to lay them off 3 months from now because of lack of cash. In these times, everyone at home needs to adjust their expenses too. Focus on the essentials only.
Living expenses of all individuals too would have crashed during this lockdown period. That's because people will buy only what is needed - no fuel expenses, no eating out, no shopping expenses etc. Those who have large EMIs have the option of pushing it forward.

Quote:
Originally Posted by Rehaan View Post
A harsh percentage pay-cut might make sense for your higher-level employees with some savings to fall back on, but might not be sustainable for the lower level employees, especially those living hand-to-mouth. Keep this in mind. Think absolutes, not percentages.
If I look at my own March expenses, it is down 50% to 60%. But the fall in expenses might be not be that drastic for "lower level" (as you put it) employees.

Last edited by SmartCat : 12th April 2020 at 17:12.
SmartCat is online now   (8) Thanks
Old 12th April 2020, 16:43   #7
Distinguished - BHPian
 
Hayek's Avatar
 
Join Date: Jul 2011
Location: Bombay
Posts: 1,316
Thanked: 7,724 Times
Default Re: As an employee or a boss, what kind of salary cost-cutting are you okay with?

In our line of business, base salaries typically account for less than 50% of the total comp - so the first thing that suffers is bonuses. However, you would have some star performers whose bonus cannot be cut if you want to retain them (even in a bad year like this one may end up being) - so what that will mean is having a tough conversation with everyone near the year end, and seeing who has performed to potential despite adversity and who has not. Companies will probably use this as an opportunity to weed out underperformers.

When I look at my clients whose compensation structures tend to have a larger fixed comp element, they will have to take action. Have seen companies ask employees to take their paid leave during the lockdown period so that they are not eligible for leave post lock downs; but if this continues, forced furloughs or salary cuts may become essential. Lots of Indian companies seem to be underestimating the seriousness of the current situation - and are not prepared for a 3-4 month period of intermittent lockdowns and absence of consumption. When I look at companies outside India, everyone is taking drastic action to build cash - and they seem to be much better prepared for a long tough haul. Hope this ends quickly, because if it does not, lots of Indian companies may be in trouble
Hayek is offline   (10) Thanks
Old 12th April 2020, 17:05   #8
Senior - BHPian
 
Join Date: May 2010
Location: Bangalore
Posts: 1,080
Thanked: 3,942 Times
Default Re: As an employee or a boss, what kind of salary cost-cutting are you okay with?

Forget bonuses and perks, I'm willing to take a salary cut if it means it will help my company survive and if it will help us not lay off people. I've been in this situation before, 2001 my first job, we were a dot com company in the dot com bust Half the team was laid off one day. When the situation didn't improve even after a couple of months, we all got together as a team and decided that whatever payments we collected, the employees with children would get paid first and those of us who could afford it (like me since I was still staying at home with my mom and anyway I was getting paid hardly anything at the job ), agreed to defer for a month or two longer.

BUT coming to the present situation I expect my present org to also cut costs. Like shutting that ridiculously expensive office we moved to a couple of years ago. And not having to hire a fleet of cabs to ferry employees there. Especially now that we've proved we can all effectively work from home, it will be wrong if we keep spending on those while laying off employees. Let's see what happens.

Last edited by am1m : 12th April 2020 at 17:09.
am1m is offline   (17) Thanks
Old 12th April 2020, 17:20   #9
NPV
Distinguished - BHPian
 
NPV's Avatar
 
Join Date: Oct 2009
Location: Namma Bengaluru
Posts: 6,449
Thanked: 7,931 Times
Default Re: As an employee or a boss, what kind of salary cost-cutting are you okay with?

Quote:
Originally Posted by blackwasp View Post
Once the lockdown is lifted, it is inevitable that cost-cutting would make its way into many businesses.
From an employee's perspective, having a job and a regular source of income to take care of basic living expenses and paying bills and EMIs would be of utmost importance.

From your list, I think #2 (unpaid leaves/furlough) and #3 (layoffs) would be quite bad, hope and wish employees do not have to go through them.

All the other measures definitely seem like those that employers will take (or be forced to take).

#8 (perks, allowances) may not be applicable to many folks at mid/lower positions as these have been done away with over the last few years and now almost all components in the pay are taxable. This will probably impact senior management and executives who would also probably give them up voluntarily in these circumstances.

#4 (4 day work week) is almost unheard of in our country, I don't think too many employers will be receptive to this idea (much like how WFH was viewed few years ago).

Last edited by NPV : 12th April 2020 at 17:22.
NPV is offline   (7) Thanks
Old 12th April 2020, 18:12   #10
BHPian
 
Thermodynamics's Avatar
 
Join Date: Aug 2017
Location: Bengaluru
Posts: 759
Thanked: 3,707 Times
Default Re: As an employee or a boss, what kind of salary cost-cutting are you okay with?

This is the hardest voting so far in Team-bhp because it costs nothing to vote in other polls but this one directly affects our conscience. I understand financials of a company and the need for survival of both employer and employee. So reduction in salary is justified but I am also afraid of impending inflation. Everything is going to get costlier in order to compensate for the losses. It is going to be a double whammy.

Last edited by Thermodynamics : 12th April 2020 at 18:14.
Thermodynamics is online now   (11) Thanks
Old 12th April 2020, 19:08   #11
BHPian
 
Join Date: May 2014
Location: Pune
Posts: 105
Thanked: 262 Times
Default Re: As an employee or a boss, what kind of salary cost-cutting are you okay with?

Except for layoff, everything is fine for me in these difficult times.
It's easy for me to say as I don't have any loan ( I live on rent). but I know people in friends and family who are paying big EMIs for their home loan and will not be able to sustain more than 25% of pay cut. Also, I am not sure if big firms have ever done pay cuts, they prefer layoffs.

Before the lock down, I was in discussion for a job in Singapore, we were discussing salary and other benefits. This discussion has stopped suddenly now ( because of COVID-19), and I don't expext I will hear from the firm this year at all.

Few pay cut examples I am aware of:
My wife's uncle is partner in a design & construction firm, they are already doing pay cuts by 25% for anyone earning more than 15k. and senior guys and directors are taking cut by 40%-50%.

Another friend's friend has been asked to go, he has been given 3 months notice by the company.

Last edited by SDP : 13th April 2020 at 06:06. Reason: Typos
INJAXN is offline   (6) Thanks
Old 12th April 2020, 19:37   #12
Senior - BHPian
 
Axe77's Avatar
 
Join Date: Jun 2009
Location: Mumbai
Posts: 2,351
Thanked: 3,877 Times
Default Re: As an employee or a boss, what kind of salary cost-cutting are you okay with?

I would be for anything that cuts salaries with zero cut of cashflows (i.e. salary cut instead of layoff or forced leave without pay).

Everyone needs a job right now, and everyone needs flowing cash. Expenses for many people are in any event reduced to some extent. I think its cruel to lay off if you can help it otherwise. Let everyone take home a little less vs some taking nothing at all.
Axe77 is offline   (4) Thanks
Old 12th April 2020, 20:10   #13
Senior - BHPian
 
dailydriver's Avatar
 
Join Date: Feb 2017
Location: KA - IND
Posts: 1,092
Thanked: 3,715 Times
Default Re: As an employee or a boss, what kind of salary cost-cutting are you okay with?

As a Karnataka state government employee, I am looking at the following possibilities:

Deferred Pay

30% pay cut - in line with my political bosses

No pay for at least a quarter

Tragically, our long due raise in pay (7th Pay Commission) was just a table or two away from being passed when the corona crisis forced closing of government offices.

The last time we had a raise was in the year 2011 .

Unlike in the private sector, we get an annual increment which isn't linked to performance. Plus, we get an increase in Dearness Allowance twice a year. I suspect that we might have to bid goodbye to the 7th pay as well as to the DA.

Coming back to the question of salary cut, I would be happy to go with any of the three options listed above. Although, I feel that the government would force us to take a pay cut of 30% at first, like the elected representatives: then defer the salaries by a month or two until the economy picks up.

Even before the lockdown, we hadn't been receiving our salaries in time - a few of my colleagues are yet to see their February pay; few others (including me) have yet to get paid for March.

The only solace is that we will not be laid off. There could of course be some restructuring and increase / change in our work loads and profile due to cost cutting, but we will live on to fight for another day.

With a small EMI, rent, school fee and such other expenses, I can run the show without pay for at least a year. So can a majority of my colleagues.

However, even among permanent government employees, there are several who lead a hand to mouth existence; not to forget the lakhs of daily wagers and contractual staff who are a vital cog in the wheels of the state and yet will be the first to face the axe.

Difficult times.
dailydriver is online now   (15) Thanks
Old 12th April 2020, 20:37   #14
BHPian
 
Join Date: Jun 2012
Location: Gurgaon
Posts: 130
Thanked: 222 Times
Default Re: As an employee or a boss, what kind of salary cost-cutting are you okay with?

I remember during 2008 crisis our company skipped salary hikes for year 2009 and we were fine with it.
This year fortunately we had our hikes before covid situation in March beginning and we got the hikes and bonuses as usual.

I am able to work from home and will have project at least till end of year as the contract has been signed already with customer.
The real impact of covid situation on companies bottomline would be felt later this year which may impact next year's hikes and bonuses.
This is just beginning and it really depends on recovery situation in coming months. Even if we overcome the virus , the economic fallout would be significant and would take some time before situation normalizes

Last edited by born_free : 12th April 2020 at 20:38.
born_free is offline   (6) Thanks
Old 13th April 2020, 02:56   #15
BHPian
 
gururajrv's Avatar
 
Join Date: Sep 2017
Location: KA 01-09
Posts: 803
Thanked: 1,378 Times
Default Re: As an employee or a boss, what kind of salary cost-cutting are you okay with?

As long as I have a job to feed me, I don’t mind losing out on bonus / increments for a long time to come. My hands should be engaged at all times than to keep it idle like our cars / bikes!

Last edited by SDP : 13th April 2020 at 06:10. Reason: Typo
gururajrv is offline   (11) Thanks
Reply

Most Viewed
Thread Tools Search this Thread
Search this Thread:

Advanced Search

Copyright 2000 - 2021, Team-BHP.com
Proudly powered by E2E Networks