As businesses are gradually moving back to normalcy, some service firms and new age companies such as MakeMyTrip, Droom and BookMyShow that had announced pay cuts earlier this year are restoring the compensation of their employees to the original level.
MakeMyTrip Group restored the compensation for all frontline and mid-level employees effective July and for the senior executives from the month of September across its three entities: MakeMyTrip, GoIbibo and Redbus. "Pay adjustments were driven by volunteering in the firm where several employees had offered to take salary cuts. It was an overwhelming experience for us, so when we felt things are improving and we have a line of sight on the business, we reverted back to original salaries," says Yuvaraj Srivastava, Group Chief Human Resource Officer at MakeMyTrip.
"My estimate is almost 70 per cent of the companies have reinstated the original compensation of their employees," says Aditya Narayan Mishra, CEO, CIEL HR Services. Restoring the salary cuts is a big trend but many firms would be tight lipped about it, he says. Many companies did it from October and many more have announced to implement it from November onwards, says Mishra.
Organisations had cut salaries from 20 per cent all the way to 60 per cent. Sonal Agrawal, managing partner at executive search firm Accord India, says reinstatement of salaries has started happening but it is not across the board. "It is not a sectoral trend but a mixed bag. Companies with visibility on revenues and profitability are taking appropriate decisions."
She adds, "Everyone is in the same storm but not in the same boat. So, while some auto or consumer companies have reinstated employees compensation, many have not." Some firms are also reinstating in phases, usually starting with junior employees and gradually moving to senior executives.
Industry sources say BookMyShow also has rolled back salary cuts to a large extent as their online initiatives on virtual live entertainment has started generating revenue.
Online automobile marketplace Droom reinstated original salaries effective from October 1. "Towards the end of July we had announced to the employees that unless there is further recession and things go awry, we will end the paycuts which we had announced in April," says Sandeep Aggarwal, Founder and CEO, Droom.
He adds, "Giving an end date was important because it gives the feeling to employees that it is not permanent but a temporary phenomenon which helps to settle the anxiety might employees have."
In addition to restoring salaries, companies are also doing appraisals now as many had deferred the year-end appraisals that happen around March/April.
"Companies are now lifting the moratorium and doing their annual appraisals at the end of this calendar year. Usually, if appraisals are done later, arrears are effective from April but it isn't the case this year. Many are saying the new compensation will be effective from October/November due to Diwali," says Mishra of CIEL HR Services.
He says this trend is seen in largely the big firms and the growing companies, such as in grocery and ed-tech space that need to recruit people and keep their employees motivated. "In the environment with high unemployment and layoffs, companies need to keep the mood positive. Also, if employees see new hiring is done by the firm but hikes are not given to the existing employees, it induces a feeling of lack of equity and fairness in the organisation," says Mishra.
Droom has begun the process of mid-year appraisals which will be done in November "People will get arrears of their new salary from October," says Aggarwal. He says their business is at 80 per cent of the pre-COVID levels and they are already at Rs 6,500 crore of annualised run rate in annual transactions on their platform.
MakeMyTrip has declared to conduct its appraisals and give salary increments in the month of January.
In addition to restoring salaries, MakeMyTrip has announced a flat 50 per cent of variable pay to be given to all their employees. "This year, the business has been affected and still awaiting recovery so people wouldn't have earned variable pay at all. But understanding the financial pressures and the needs of the upcoming festive season, the organisation, has declared a flat 50 per cent pay out of the variable pay for Q2 and Q3 to all up to mid level," says Srivastava.
He adds, "It is a competitive environment for talent and while we continue to attract the best people due to the promise the travel sector offers, we recognise that we operate in a competitive ecosystem and have to match the market to retain our best employees."