Ruchi Challu
Many Indian firms across the board are seeing top managerial wage rationalisation as a cost cutting solution.
Be it firms like Jet Airways or Amtek Auto, which recently announced a slash in their top management’s compensation, more and more firms are resorting to this method Moderation is not a bad term. This is a realisation that is dawning upon India Inc. And given the current recession, many Indian firms are now thinking of moderating the salaries of the top brass instead of down sizing. “With one eye on cost economisation and another on enhancing internal parity, organisations are looking at compensations cuts as a cost efficiency tool,” informs Surabhi Mathur-Gandhi, GM, permanent staffing, TeamLease Services.
“We are seeing this trend across various sectors like IT, BFSI, ITeS, Consulting etc,” adds Gandhi. “There has been at least a 20 per cent drop in the top managerial salary within the IT/ITEs sector,” informs a senior HR manager of a Hyderabad based IT firm
By doing this, a firm not only saves jobs of many but also keeps the brand image of the firm intact. “In India, we are not comfortable with the idea of firing people. Employers see this as a threat to the company image,” notes the senior HR manager. “If, on one end, I’m firing and on the other, I am scouting for talent, it puts me in a tight spot. Insecurity seeps in and good talent doesn’t come your way, even though those open positions may be secure and budgeted for,” he explains.
Thus, to avoid ‘hire and fire’ image, firms are abstaining from cutting jobs and looking at this as a cost-cutting tool. Moreover, the employee morale goes down leading to a dip in productivity in times of retrenchment. “On an average, an organisation reports 7-10 per cent drop in employee productivity when job ambiguity creeps in,” confirms the senior manager of the IT firm. This makes it imperative for firms to look at top management compensation all the more carefully.
Even sectors which are continuing to grow are seeing this as a future strategy for cost-cutting . “We are ramping up in a big way but this is something that we are looking at seriously,” notes Rakhi Sharma, VP – HR, Unitedlex, a Delhi based LPO. “Cost management is a focus area for most of us,” she adds. Some also feel that it is top management’s responsibility to give up some of their own privileges to save jobs of many.
“When the market is infested with uncertainties, it is the onus of the top management to support their organisations by shedding some of their privileges,” opines Shoba Saji, HR manager, Empower Research, a Banglaore based KPO. “This has to be a collaborative effort, wherein the decision to do so should be engineered by the decision makers themselves,” he adds further.
So what are the compensation elements that are likely to face the axe in course of wage rationalisation? “It’s a combination of all factors, and is dependent on the organisation and its strategy, capital flow and management which determine the components that would be reduced,” says Gandhi. “Ideally, reimbursement is the real waste of resources and should be curbed,” feels Saji.
“Increments most organisations have already put on hold till things look up. Bonus is mostly part of the CTC components that is promised to the employee, so I believe that should be untouched,” she adds. The one question that remains to be answered is how well would the top managers take this trend? “Every one at that level realises what’s happening in the industry right now. Thus, people are not averse to this,”
Source :
http://economictimes.indiatimes.com/quickiearticleshow/msid-3817104.cms
