The panic due to the further spread of the Covid-19 outbreak is quite apparent among people and businesses as well. Consequently, companies have reportedly started working on the strategies to freeze pay hikes and cutting bonus in a bid to recover faster from the slump – which is quite apparent now.
Experts, however, from various industries believe that it will be an absolutely wrong move on the part of those companies. They are suggesting the top executives sitting that the top of the pyramid to reevaluate their rationale and then approach this sensitive matter in a more humane way.
Rumours have started making rounds that from the next month several companies are planning pay cuts or at least freezing pay hikes. On the other hand, due to a lockdown of plants and other commercial establishments, contract-based workers in the manufacturing sector are already losing out on earning their daily wages.
Now, companies are being asked by experts to retain their maximum existing staff members and provide them with a sense of security as it is highly unlikely that no other company will be hiring fresh candidates any time soon.
These experts, listing publicity budgets among the “most unnecessary” expense heads, want to make the companies aware that there are other areas in which they can cut their costs to ensure that their employee budgets remain intact. They also mentioned that with travel, hiring and training costs going down it should be even more of a viable option.
With India’s GDP growth now expected to slow sharply in at least for the first two quarters of 2020, a report by UBS Securities mentioned that India is being towards a “severe pandemic” scenario by the factors such as increased risks of a global recession, mobility restrictions and social distancing measures.
“The challenge for India, compared to its peers, is starker if infections spread rapidly considering the higher density of population per capita and weaker health infrastructure,” it said.
“The possible multi-week shutdown to slow the spread of COVID-19 will entail a near-term economic cost. Consumption will likely remain weaker for longer and possible job losses mean the recovery will be delayed,” said the report from UBS analysts.
When it comes to rationalising expenses as job and pay cuts, several business consultants and HR experts said that in this scenario, companies need to tread carefully as it could further worsen the situation by delaying the recovery.
Cut Down On All Non-Essential Expenses: Experts Suggest
Aroon Kr Aggarwal, the Managing Partner of Bradford Consultants LLP said that this is an equally challenging and unique situation for both the employees and employers. Therefore, employees and the staff of all organisations should be viewed with a sympathetic and rational lens.
He too suggested that travel, variable pay/bonuses, training costs should be considered for the rationalisation of expenses as these cuts can save 5% to 6% of HR costs which can then be further utilised to avoid any kind of pay cuts as well as also ensure a reasonable pay hike for the fiscal year.
Rohit Sarin who is the co-founder of the Investment advisory firm Client Associates mentioned that any and every “nice to have and not just to have” non-essential costs should be slashed which could include new hiring, marketing initiatives, internal and external events and travel.
The founder of TalentART Partners, Juhie Sinha pointed out that in these trying times it is crucial that organisations show that they hold their employees and staff as valuable and care for them.
She suggested that it is time companies embrace technology as a replacement for conducting time-consuming and expensive activities such as corporate travel and conducting training programmes.
She also added that companies could further boost productivity by increasing working hours for a few weeks while limiting hiring to essential positions only.
“People may welcome this, especially after tasting ‘joys’ of being home for so long. Another very vital idea would be to use executive consultants more effectively and creatively for hiring while the internal managers can focus on keeping employees motivated,” she said.
Anup Sharma, an independent consultant, believes that all industries will now be adopting and investing in automation more quickly to reduce overheads.
Neha Pant, Senior knowledge Advisor at the Society for Human Resource Management (SHRM), on possible layoffs and pay cuts, said the hit the hardest hit will be taken by the services industry and it will be hard to avoid downward revision to hiring and pay hikes without any economic incentive.
Actor and writer Shreya Narayan commenting about this situation remarked that faster adoption of AI tools due to this pandemic would only worsen the human condition companies and companies need to find a way to strike out a proper balance. She too suggested that hiring should be delayed to retain existing staff.
The HR Head of Hero Future Energies Bhawna Kirpal Mital said that as of now, her organisation is completely up for providing their employees with all types of necessary support whilst focussing on maintaining a timely communication channel with them.
No Layoffs And Job Cut Plans To Be Undertaken: Top India Inc Leaders Promise
On Friday, several leaders of Indian conglomerates such as Rajiv Bajaj the managing director and chief executive officer of Bajaj Auto, Tata Sons Chairman N Chandrasekaran, HM Bangur, managing director, Shree Cement and more reportedly promised that they weren’t considering cutting salaries of their staff or layoffs in the wake of this breakout.
The news of the assurance from India Inc top leaders came after huge pay cuts for the senior management were announced by India’s largest airline IndiGo. The other companies also made the move by announcing 25% cut in the remuneration of Onkar Kanwar and Neeraj Kanwar, promoters of Apollo Tyres.