Page 75 - DMGT516_LABOUR_LEGISLATIONS

Labour Legislations

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
team. Understandably, individual performance had a higher weightage than team
performance. That apart, there were peer incentives for team and individual performances.
These rewarded performance in kind – a paid holiday, gift vouchers, or gifts.
Since the concept of variable pay was new to Care Soft, it had decided to implement it at
only the senior and middle management levels, apart from shopfloor workers, leaving
out the junior management. The senior management – starting from a general manager to
the CEO – had a variable component ranging from 15-40 per cent. Those below had just
5-15 per cent in variable pay.

Mathur, as a brand manager, came in at the general manager level. And last year had been
particularly bad for the toothbrush division he headed. Volume sales had dropped by
5 per cent, and rupee sales by 15 per cent because of price cuts, promotions, and discounts.
Besides, a new toothbrush that had been slated for launch in the second half of last year
hadn't been launched. This was a low-end brush that was expected to rake in 1 crore in
sales.
Fiscal 2001-02 was the first full year of variable pay, and Arora could tell that the executives
weren't happy with it. Already, a VP and another general manager had made their
displeasure known to Arora. Mathur leaving would not only encourage the other two to
follow suit, but also impact the new pay plan.

Contd...

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