Page 77 - DMGT516_LABOUR_LEGISLATIONS

Labour Legislations

"How widespread is the discontent, Nitin?" Coo Roy set the ball rolling.
"I have reason to believe that it is quite widespread," said Arora, "although only a handful
of people have taken it up with me so far."
"In that case, may be we are over-reacting," said Shastri. "We need to give the new system
more time. After all, it's just a year old."
"I don't think one can possibly over-react to such an issue," noted Behl. "The worst thing
that we can do now is to let the morale take a hit."
"I agree," said Arora.

"I couldn't agree more," added Sinha, Director of Marketing. "I just can't afford to lose any
of my men. And certainly not good men like Anil Mathur. I don't care if we have to pay
him more."

"That's not a good idea," pointed out Arora... "We cannot be seen as being selective in our
rewards. The whole idea behind variable pay was to motivate people across the board
with the promise of greater rewards for better performance. We cannot make changes
arbitrarily."
"Then, may be we didn't implement the new structure properly," bristled Sinha. "Or may be
we should simply revert to the old fixed system, which according to me worked just fine."
"You are right about poor implementation," consultant Kesaria said. "But it would be a
strategic mistake to bring back the old system. After all, the reasons why we introduced
variable pay still hold. The business environment is changing, and we cannot afford to
reward people based on the quaint notion of entitlement. Executives have to justify what
they earn."
"Besides," the Chief Financial Officer, Shastri, intervened, "variable pay is a great way to
control costs and improve productivity. Not to mention that such a system automatically
attracts high-calibre people."
"Yes, when the going is good in the market, there is no problem with variable pay," noted
Sinha. "But when the markets crash, like they have now, your profits shrink. Do you then
ask people to forget all the hard work they've done, and say 'sorry, can't give you any
increments because we've had a bad year'. Believe me, it will take less than six months to
clean out talent from this company. Don't forget that the next year is going to be equally
bad for FMCG companies."
"The IT industry is not only benching people, but asking them to take pay cuts," pointed
out Shastri.

"May be," retorted Sinha. "But how many code-jocks can join insurance, banking, pharma,
or any other industry as marketing heads or even CEOS? And asking people to deliver 15
per cent growth in a market that is shrinking is the surest way of losing them."

"Actually it is worth looking at what is going wrong with the system," said Behl. "As I
understand it, even shop-floor workers – whose variable pay is linked to productivity –
are affected since the company has cut back on production to liquidate dealer inventory."
"As far as I can see," said Kesaria, "it seems to be a problem of implementation. May be we
didn't communicate adequately, perhaps we need to tweak our measurement systems,
review them more frequently and reward people closer to the date of their achievements."

Contd...

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