Trends in Compensation and Benefits – The COVID Influence

# MindTalks

The pandemic that is raging around the world has had terrible and unexpected effects in all spheres of life. The way of life has changed and the new “normal” are being defined. On the economic front, the less said the better. COVID has wiped out many businesses and those that are still standing are apprehensive as to how they should take things from here.

Companies have initiated and executed massive layoffs and pay cuts and we are already into a recession. Some sectors like aviation, hospitality and start-ups have taken the brunt of the damage. Companies like Chanel, Hermes, Rolex have discontinued production. In fact the world’s luxury industry has been so badly hit that they have stopped production completely. 15 retailers have filed for bankruptcy including companies like J. C. Penny, Aldo, Roots to name a few. Zara has closed down 1200 stores However, the good news is that the scene cannot get worse. It can only improve from here.

Till a few months back the apprehension and expectancy of every employee was whether she (or he) would get a good increment and variable pay, and in some cases, whether a promotion is impending. Now this has changed. People are happy to just hold on to their jobs even with no increment, or even with a pay cut. Promotions as a concept has gone out of the employees’ wish list.

Closer home, research shows that in India, reputed companies and their management alongwith HR have been extremely empathetic on the decisions they have taken with respect to compensation and employee benefits.

There seems to be a pattern in the way our Indian Corporate house managements are approaching the situation. Assuming that these companies represent the industry generally, we can briefly summarize as under:

·       Treatment to pay cuts : Most of the reputed Indian multinationals who are financially sound companies with healthy balance sheets have not introduced pay cuts. In the case of those who have, the cuts have been nominal and affect only those in the higher income bracket. There are some companies who have worked on the model of reducing fixed pay and increasing variable

·       Incentive/Variable pay-outs : Incentives have been affected. Some companies have decided to reduce the percentage payout. Some others have introduced a new quarter on quarter payout. There are some who have either deferred their decision depending on financial conditions with the hope that things will improve, while some others have decided not to pay at all

·       Increments: The percentage payout with regards to Increments have gone down comparatively and significantly. In some companies the picture is not clear and companies may skip or decide on a nominal increment

·       Promotions: With regards to promotions few companies are going ahead with promotions only in very selective cases with a marginal hikes. Some companies are deciding to give it a pass this year.

Under the weight of the new pandemic, if your company is still there and there are no pay cuts or layoffs please learn to be grateful to your Company for all that it is doing for you . As your counterparts in the unorganized sector and smaller organizations, are going through a lot of pain considering that they have no salaries coming in or have been laid off and are going through turbulent times. However one always lives in the hope of a better future and prospects….