Dear Sir,
I am working as an HR Officer, due to a downfall in business the management had changed the designation and restructured (decreased) all our salary.
So what is the correct process?? Should i reissue all appoinment letters or, just a letter stating that change in designation and salary??
Please advice.

From India, Kochi
Dear Sneha,

Your post is silent about whether the application of the austerity measure is only in respect of supervisory and managerial personnel or in respect of all in the organization including workmen. I hope it would not be so in the case of workmen for obvious reasons. When the decision itself seems to be basically wrong from the perspective of the contract of employment, how could you expect the implementation part to be right so as to correct the wrong? Designation of an employee may apparently be just a name of the post held but deep down it connotes the responsibilities attached to it. Is not the mere change in designation together wuth corresponding downward restructuring of salaries at the instance of the Management a unilateral modification, of course a violation, of the contract of employment? Salary, being the monetary consideration for the accomplishment of the responsibilities, can be a subject-matter of renegotiation and restructuring with mutual consent in turbulant times beyond control. It may be unconventional but conventionality is a matter of commonly agreed practice. Hence, my suggestion would be that of a temporary reductiion in the current salaries befitting the present business reverses without change of existing designations.

From India, Salem
Senior management grade staff designation/ functional Role can be decreased to Lowest and salary reduction as per designation/role. Request seniors to adve.
From India, Bangalore

Talk to all employees about the problem.
Enlist their cooperation.
I do hope the management is doing this only as a temporary measure to overcome present problems??
Or is it a problem which is perpetual??
Reduce salaries but no point downgrading appointment
Calling a senior manager as manager over night is quite humiliating indeed.
One needs to take human angle into account.
If someone wants to quit,give them free exit.

From India, Pune
GOOD TIME / BAD TIME are part of some business/enterprise/factory. If business demands; due to persistent losses, Salary can be reduced after taking employees into confidence after Proper Notice to all Concerned.
THERE IS NO NECESSITY TO CHANGE DESIGNATION of the employees nor any new Apptt.order to be issued. If the designations are changed or lower designations are given, it will humiliate / de-motivate the employees to work which will not be the case for reducing Salary for valid reasons- to tideover the temporary crisis. Tomorrow; situation will change & improve and normalcy will restore; So; if U attempt to demote and again promote later; it will lead to lot of heartburning for the HR. Hence, safer to leave the Designation un-touched as suggested by seniors.
Let us hope; the temporary crisis will be over & Management will restore employees salary once situation improves.

From India, Mumbai
I doubt, that is it legal? Under witch law/act we can reduce wages/salary of all staff? Dear Seniors - please let us know.
From India, Chandigarh
Reduction in Designations is seen as punishment and should not be done at any cost. If GM is reduced to a mere Manager, why should he still perform GMís tasks?

If you have to do it stick to reduction of salaries by way of curtailing allowances and not basic pay. Still better method would be to retain salaries instead of reducing salaries. Such retention can be released when company performance improves. Reduction or retention should be after concurrence of the affected employees.

But basic question that should be given a serious thought to, is whether it is worth its while to reduce/retain salaries at all. What amount are you going to save every month by doing this? Will it amke a big difference? How will it affect the employees? Can you not find out what are the real problems that the company is facing and such problems should be attacked appropriately. A good internal auditor can find several leakages of revenue which can be plugged that can perhaps save an equal if not larger amount than reduction in salaries.

From India, Pune
Dear Sneha,
Your post lacks information needed to provide you with better advice.
You have mentioned that due to downfall in business management had changed the designation and the salary :- On this it seems like your management have not discussed about the downfall to the employees and directly decided for change. which is so unprofessional and it shows your company does not value their human resource which is why they even operating in their bad time.
Secondly what difference will it make by changing designation? An employee is designated at particular position is due to his experience and skill he poses and not because of his salary package or anything.
Your management measure of changing designation and reducing salary without consulting the employees itself is a wrong process.
Kindly correct the actual process rest will automatically be taken care of. All you have to do is to take your employees confidence and issue new letter of change in employment terms.

From India, Pune
Dear Sneha, All seniors feedback and suggestions and more valuable. See if you can take them back to ur management. But i can see that decission already took place as you did not ask whether doing ia right or wrong. You just asked how to communicate formally to employees. You don't need to give fresh appointment letter. You can just give change in designation letter and updated salary letter. Please ensure Basic is not going to be reduced to be Complaint with statutory regulations. Hope thia helps

From United States, Ogden
Hello Sneha Rajesh,

Hope you are tracking the responses of the members for your Posting.

The reason you mentioned for this step by the Management is 'due to a downfall in business'.

What has THIS got to do with any change of Designation in the first place? Revision of Salary--Yes, but what's the Company achieving by changing the designations? And why should they?

Like AS Bhat mentioned, designation is more viewed as a punishment vis-a-vis performance than any other issue.

The moment you touch the Designations, you are giving scope to the employees [Levels DON'T matter here] to think that there's something ELSE here & begin to look out rather than lend a helping hand to the management--UNLESS THAT'S the prime Motive of the management.

And, like other members pointed-out, take the employees into confidence on the WHY of the decision EVEN FOR salary cuts. But be also CLEAR on the least approxly......before you begin this exercise.

In such situations, IF you take a 'take-it/leave-it' stand, then don't be surprised IF the employees take their own decisions based on THEIR understanding of what's being done by the management. And the very same management will then begin to say 'the employees ditched the company'--have seen such situations earlier.



From India, Hyderabad

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