The century-old Hindustan Unilever's (HUL) people policies have over the years become industry standards. Not only does the company take pride in giving India Inc its best leaders, its various employee-friendly policies have made the FMCG major one of the best Indian companies to work for. HUL has pledged Rs 100 crore to help India fight the pandemic. From donating two crore cakes of Lifebuoy soap and handwash
to setting up isolation beds and working with municipal corporations across the country, the company is leaving no stone unturned to fight the pandemic. Anuradha Razdan, Executive Director (Human Resources), HUL, says that though its 18,000-strong workforce has expressed pride in being part of a company that cares for the society, in an uncertain environment like this, pay-cuts are there in everybodys mind.
With over 70 per cent of HUL's revenue coming from the sale of essentials, a major disruption in its business is unlikely. But business disruptions caused by the outbreak across the country and sectors such as aviation and hospitality announcing large-scale pay-cuts and job losses, have created an environment of uncertainty among employees everywhere. A recent CMIE report says that as of last week of March, the rate of unemployment in India is 23.8 per cent, with urban unemployment at a staggering 30.9 per cent. "We are continuously communicating to our employees that while this is not 'business as usual' we are committed to do what's right for both employees and the business. Our focus is to ensure that our company is healthy, viable and growth-focused. In fact, we are proactively honouring our commitments - as of April 1, 100 summer interns have joined the company," says Razdan.
Prepare for the worst and hope for the best, has been the narrative of companies across India Inc, even in sectors such as retail and hospitality, which have come to a grinding halt. Companies across the board may be thinking about scrapping increments or deferring salaries, about the leadership team taking pay-cuts and redeploying their existing talent pool, but most are careful not to talk about job losses or pay-cuts, at least for the time being. There are of course exceptions such as Indigo Airlines, SpiceJet and GoAir, which have announced 10-50 per cent pay-cuts across the board and even layoffs, but as of now it is mostly the senior management of most companies that are either forgoing salary for a few months or taking a steep pay-cut.
MakeMyTrip founders Deep Kalra and Rajesh Magow have written to their employees that they would be foregoing their salaries for the next few months, while the senior leadership team has also offered to sacrifice 50 per cent of their pay. Similarly, OYO Rooms Founder Ritesh Agrawal has announced that he would forgo his salary for the rest of the year and that the senior leadership will take a minimum of 25 per cent pay-cut. Other than India, the company has also put thousands of its employees in the US and the UK on leave and on furlough for up to three months.
Stores of value fashion retailer V-Mart have been shut for over three weeks since the lockdown began. Lalit Agrawal, Chairman of the company, says his message to his 7,600 employees has been to take care of themselves and their families. "Around 85 per cent of my workforce works on the shop floor. On an average they earn Rs 10,000 per month. I have announced that there will be no pay-cuts for them. While I won't be taking home a salary for the next three months, I will try to protect my senior and middle managements' salaries for as long as I can. They may be working from home, but they are putting in a lot of effort. I don't want to penalise them."
The challenges that businesses are facing are unprecedented. "At the same time, standing with employees is vital and an acknowledgement of how critical they are to the vitality of an enterprise," says Amitav Mukherji, Head of Corporate Human Resources at FMCG major ITC. "My advice would be for all of us to make sacrifices in the spirit of collective responsibility while ensuring there is minimal or no long-lasting impact on employees or businesses. We have to have faith that the situation will return to normalcy though it will take time. In the meanwhile, we have to get accustomed to a new reality and accept that our ways of working are up for a change," he adds.
At a time when people are getting an overdose of bad news on the employment front, the least that employees expect from their employers is transparency. Razdan of HUL, says that all the businesses in her company have regular virtual meetings where the leadership team gives updates on the health of the business. "These meetings are extremely effective, outcome-focused and at the same time help to create empathy and connectedness."
Communication across channels is key to keeping all employees informed. "Our CMD (Ramesh Ramanathan ) writes detailed mails to all employees, laying out how we are visualising the future, what is happening, how is the organisation reacting. We have also created WhatsApp groups for people who are at home and might not have email access at home, so, communication is happening across different channels," adds Jacob Peter, CHRO, Sterling Holiday Resorts.
Sandeep Aggarwal, Founder and CEO of online automobile marketplace, Droom, has been having regular virtual townhalls with his employees ever since his business has shut down. The townhall in the first week of April was followed by a five minute-long WhatsApp voice message in which he announced a pay-cut and also talked about his vision for the company. "Today, I want to ask each one of you for a sacrifice. From April 1, we will all take a 15 per cent pay-cut. This will be across all teams, functions, all levels... We are always nicely funded with a one-year runway. With all the measures we are taking, we are extending our runway to two years. That will also mean money will never be the reason Droom will be out of business. I am very sorry for this sacrifice that we are asking each one of you to make but this is a temporary measure and as soon as things stabilise, everything will be okay," Aggarwal said in the voice message.
Whatever be the content of the message, HR experts say the need of the hour is to be transparent rather than beat around the bush. "The leadership teams need to acknowledge that their industry is going through challenges and disclose their plans to employees. Just saying that they are in charge of the situation may not fly well," says Aditya Mishra, CEO of HR services firm, CIEL.
Usually, this time of the year sees increments. Therefore, communication on this is also needed. Ashwajit Singh, MD of development sector consulting company, IPE Global, says, "We don't plan to lay off people, but we are telling them how difficult the business environment is. Though we have initiated the appraisal cycle, we have told our employees that there is no commitment on increments."
Wait and Watch
Since it is not clear what the coming weeks and months will hold, no one wants to specify if there will indeed be pay and job cuts. "If you react too quickly, then you are seen as a bad employer. If you are too late, then you are not conserving cash. So, the question is what is the appropriate time to do it and what is the balance between the two," says Navnit Singh, CMD of consulting firm Korn Ferry India. Most companies are waiting to see for how long the lockdown continues and if it will be extended till end of April, and whether containment efforts will work or not. "Companies will also be in wait-and-watch mode because they want to see what the government is doing from an economic standpoint and whether it will give a stimulus to industry or not," adds Singh.
Several research reports indicate that the IT sector's pain will continue well into the first half of FY21. But "layoffs, appraisals and salary cuts are not a point of discussion yet", said an HR executive of a leading IT firm requesting anonymity. A report Emkay Research warns that while the situation is still evolving, "we see a hit to client decision-making/new project starts, at least in H1FY21, if not longer". Industry experts say that companies may take talent-related calls later in the first quarter of FY21.
Some companies are taking a more forward looking approach and are making business plans for the next few quarters. Kavi Mishra, CEO of apparel company House of Anita Dongre, says they have started work on the next collection. "We are not talking about pay-cuts. Our focus now is on how to hit the ground running once the lockdown is lifted. In the new normal, our focus on e-commerce has to increase, so we are trying to figure out how to sell more fresh merchandise online at full price."
McDonald's India is using the lockdown to train its employees. Seema Arora Nambiar, Senior Vice-President (Menu, Marketing and People Rescource) for the company's West and South regions, says, "For an organisation like McDonald's, which mostly employs young first-jobbers, it's imperative to keep employee morale up and make sure that these young people stay home and at the same time remain motivated and productively engaged. We have therefore introduced a unique 'Work From Home' programme. The objective is to help them use the free time constructively and ensure continued learning and upskilling for a strong comeback as soon as normalcy resumes."
Anubhav Gupta, Director, Deloitte India, says that companies are using the lockdown to find ways of conserving cash. "There are other strategies to conserve cash like better working capital management through better cash collection, revisiting vendor payment philosophies, avoiding cash discounts and cash-backs, etc. Whether pay-cut is a last resort or not depends on what options one is left with and also one's overall positioning on compensation vis-a-vis the market."
Preparing for the Worst
With the lockdown likely to be extended by a few more weeks, large-scale pay-cuts and loss of employment seem inevitable. "The more senior you are, the greater brunt you will have to bear," says K. Sudarshan, Managing Partner, EMA Partners. He says that while many companies are not formally stating the worst, they have activated the message through informal channels.
Corporate India has not seen this kind of situation before, says Suresh Raina, Managing Partner, Hunt Partners. "There is an expectation that it will be a V-shaped recovery (and not U-shaped because that would mean a prolonged recession), and so we will be out of this situation in 6-9 months. Most companies are trying survival strategies for these 6-9 months and then plan to get back to normal. But, if that doesnt happen, companies will not be able to manage with 20-30 per cent pay-cuts, there will have to be layoffs."
Like Droom, many companies have already embarked upon the journey of reducing salaries. Bangalore-based self-drive car rental company ZoomCar has announced a three-month salary deferment for some. "There will not be pay-cuts for employees. I will defer my entire salary until June and the senior leaders (VP and above) will defer by 50 per cent, the next level will defer by 25 per cent and the junior-most employees will defer by 10 per cent until June. This is not a salary cut, but simply a temporary partial deferment. The ground staff is the backbone of our business and their safety and wellbeing are a priority for us. Hence, we will not defer any salary for fleet executives and customer care executives given their present economic realities," says Greg Moran, CEO and Co-founder, ZoomCar.
Similarly, digital film distribution company, UFO Moviez, has announced that while none of its 1,300-odd employees would be laid off, the leadership team, which has 28 people, would be taking a 50-60 per cent pay-cut, and the middle management would take a 10 per cent cut in salaries. "It will take at least 6-9 months for the cinemas to regain their glory, therefore salary cuts became inevitable in order to stay afloat," says Kapil Agarwal, Joint MD of UFO Moviez.
Vishwanath P.S., CFO of staffing company Randstad India is hoping that the government will take measures that could help companies save costs. "The Payment of Bonus Act mandates 8 per cent bonus to be paid to employees (up to salary bracket of Rs 21,000) irrespective of whether a company makes money or not. If there is clarity that the employee can forgo the bonus for the next one year, as long as his or her job is saved, it will be immensely useful for companies."
Since the near future is uncertain, some employers are not taking a call. "We have not made any decision yet because we dont know when the lockdown will be over. Once the end is clear, we will have a better understanding of its impact and then we will take a call," says Vishal Kamat, CEO of Kamat Hotels. "If we decide now, it might be an ad-hoc decision that we might have to revisit again very soon."
As more companies try to come to terms with the new normal, many employee-related announcements are expected in the coming days. That the lockdown will have a huge economic impact is inevitable but how companies respond to it and make preparations remains to be seen.
With inputs from Rukmini Rao@ajitashashidhar, @sonalkhetarpal7