Page 286 - DCOM404_CORPORATE_LEGAL_FRAMEWORK

Unit 12: The Factories Act, 1948

includes rural awareness programmes, adult literacy classes, participative management,
etc.

9. It is also responsible for the social security and welfare of the working laborers through
certain Acts like the Workmen's Compensation Act, 1923, the Employees State Insurance
Act, 1948, etc.

Case Study Variable Pay

N itin Arora was wrapping up for the day, when his phone rang.

"Hi, Nitin, Anil here. Can I pop in for a few minutes?"
"Yes, if you can be here in two minutes flat" Arora said.
"You got it," the other man said and hung up.
Anil Mathur was a Brand Manager at Care Soft, a large fast-moving consumer products
company. In fact, it was Arora who had, as the Chief of HR at Care Soft, recruited Mathur
from a medium-sized company in Mumbai. Over the years, they had built up a good
rapport. In any case, Arora was known to be one of the more friendly top executives in the
company. He had to be; he was after all the HR guy.
Arora had a vague idea of what Mathur might want to discuss, but he decided to frame his
replies as he went along.
As promised, the 36-year-old brand manager was in Arora's room in less than two minutes.
"When was the last time we had a semi-formal meeting like this one?" Arora asked his
guest.
"I don't remember, may be six months ago," Mathur replied.
"8:30 on a Friday evening, you've made me stay back. So this had better be important,"
Arora pretended to threaten his colleague.
"You are darn right, this is important," said Mathur. "I am unhappy with my pay hike for
last fiscal."
"But you got your letter a month ago, why are you bringing it up only now?" Arora asked.
"I have been thinking about it, and trying to find out if I am the only one feeling let down
by the new variable pay scheme," said Mathur.
A little over a year ago, Care Soft had decided to replace its fixed compensation system
with variable pay. In fact, the whole exercise was done in three months flat, and implemented
with little advance notice to the employees, who were not altogether surprised since the
word had gotten around as soon as the HR consultancy was hired to draw up the new
compensation structure. An article in the in-house magazine and an e-mail from the CEO
announced the scheme.
The company, which had a turnover of 1,200 crore the previous fiscal, hadn't yet moved
to stock options, but it had introduced a profit-sharing plan. The variable component,
usually paid out annually, was linked to the performance of both the individual and his
Contd...

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