After the government urged the companies to not cut jobs amid lockdown and economic slowdown, many leaders have stepped up and taken pay cuts to ensure a sowewhat fair distribution of cash and financial well being of all employees.
Latest to join the leaders who have foregone their salary is Mukesh Ambani from Reliance Industries (RIL).
In a note signed by Executive Director Hital R. Meswani, the leadership shared that the current challenging time has necessitated them to take some proactive decisions on their people cost as well.
An intitual set of measures the company has taken with effect from 1st April include:
1. The Chairman Mukesh Ambani to forego his entire compensation.
2. Board of directors including Executive Directors, EC members and Senior Leaders will forego 30-50 percent of their compensation.
3. Large pool of employees across hydrocarbons with compensation less than Rs. 15 lakhs per annum will have no reduction in compensation.
4. Employees in hydrocarbons with compensation in excess of Rs. 15 lakhs per annum will have a 10 percent reduction in fixed pay.
“The hydrocarbon business has been adversely impacted due to reduction in demand for refined products and petrochemicals. This has of course put pressure on a hydrocarbons business necessitating optimisation and cost reduction across all fronts. The situation demands that we maintain a razor sharp focus on operating cost and fixed costs and all of us need to contribute to make this happen,” wrote Meswani in the letter.
Additionally, RIL has deferred annual cash bonus and performance linked incentives, which are normally paid in the first quarter of a fiscal year.
As per the note, the pay cuts have only been announced for the group's hydrocarbon business.
The leadership will continue to closely monitor the economic and business environment, re-evaluate a response to the situation on a continuous basis and strive to improve the earning capacity of its business. Eversince the pandemic has begun business leaders have been on their toes. There is a new development almost every hour. Their priorities and focus areas have changed. While companies initially started by devising a plan only for the intitial lockdown, they eventually realized the long term impact of the crisis and started working to prepare for them. At first it was the employees safety and well-being that was a top priority, but now ensuring business continuity and keeping costs in check has also become critical.
The most difficult challenge all leaders face is to strike the balance between the two. But what has emerged has a viable solution is redistribution of income. The top leaders taking pay cuts so that the financial security of the staff at the bottom is not compromised seems to have been the go to solution to the problem. As the pandemic continues for how long this strategy works remains uncertain.