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Anonymous
9

Hi , Hr professionals,

I would like to discuss a case:

"When the company had been following a strategy of giving increments yearly. But suddenly the strategy changes without any information to the employees. Since it is decided by the management they are unwilling to conduct any appraisal. The HR doesn't know any details regarding the same as the management is not providing any updates on the same with HR. The employees are pressuring on HR in this situation"

In the above case, I would like to bring out a few questions:

1. Is it necessary to inform the employees of the changed strategy?

2. If you are the HR how will you handle the situation?

3. How to retain stressed employees?

4. Is it normal in a startup?

Looking forward to hear from you.

From India, Kochi
PROFESSIONALS AND BUSINESSES PARTICIPATING IN DISCUSSION
Madhu.T.K
Seasoned Ir Professional
Vmlakshminarayanan
Agm - Hr&admin
Pocket HRMS
Human Resource Solutions
KK!HR
Management Consultancy

KK!HR
1530

This looks like an assignment given for academic evaluation. yet the responses are as follows:
1. Any employer interested to maintain long-term relation with employees has to involve the employees and communicate clearly the reasons and the likely date for resoliving the issue. No employer can keep the employees guessing on such a vital aspect of employment.
2. First, is to have a clear understanding with the management on the prospects of resolving the matter and then communicating clearly to the employees,
3. Communication, Trust and openness hold the key. If the management has a credible image among the employees, then its words will be taken seriously otherwise the repercussions could be serious.
4. Start-ups being relatively small enterprises there is a lot of clarity on such matters, however if the organisation has remained opaque, then be sure the days ahead are going to be very tough for its very survival itself.

From India, Mumbai
Madhu.T.K
4193

Salary increment is not a right of an employee unless there is an incremental pay scale. Incremental pay scale means a scale of pay which contains an annual increment in it. But at the same time, if by custom you have been following allows you to give increment every year, then changing the same is unfair and without taking the employees in to confidence you should not introduce it.

There are two things with salary increment, one compensating the cost of living and second rewarding the performance of an employee. Both should have a monetary value. If you are paying dearness allowance based on consumer price index, you are said to meet the former, ie, compensating the cost of living increase. Rewarding the performance is to be done by conducting performance appraisal only. That should be transparent also. Dropping altogether the same is unfair and will demotivate performing employees.

As an HR person, it is our responsibility to communicate the decisions of the Management to the employees. Now the management has taken a decision to drop the system of paying annual increment. This should also be communicated to the employees. But before a final call is taken please educate or just inform the management of the consequences, the demotivation, attrition, absenteeism etc. What you have to submit to the management is the importance of salary increment, ie, linking it to increasing cost of living and rewarding performance.

From India, Kannur
Anonymous
9

Thank you for your insight on the issue.

Unfortunately, the management has replied as it is not necessary to inform the employees and it is the system kept in MNC too.

As a solo HR I was bit confused and felt stressed in the situation and I thought of taking suggestions from HR team.

From India, Kochi
vmlakshminarayanan
919

Hi,

I hope you are that HR who is facing pressure from employees !

Annual performance appraisal followed by increments are based on performance of the Company for the period under review. In normal course many Companies follow April of every year for performance appraisal. April being start of financial year it would be easy for HR/Accounts team to calculate employee wise Income tax as well.

With fluctuating economy especially after covid many industries are facing sluggishness in their respective business and obviously increments cannot be assured on time.

If the performance appraisal are carried on regularly, on yearly basis, employees will have confidence over Management and in the absence of increment without any update employees tend to move for other offer. Though it is not mandatory to inform employees if the Employer's plan is to sustain their business and to retain their employees then some communication should be passed on to employees.

If you are getting frequent questions from employees document it escalate the same to Top Management and await for their reversion. Top Management if they want to retain employees will surely direct you how to tackle the situation whether to give some commitment with future date etc.

In the absence of increment to certain level you may retain employees by counselling them about the sluggish market situation but will not be able to manage if competitor with similar business are offering better pay.

You need to check Top Management's pulse.

From India, Madras
Madhu.T.K
4193

I don't think that MNCs have the system of keeping the employees away from the policies but they are more vibrant with regards to 'communication' and the major role of HR executive in such companies is to communicate the policies of the management. Moreover, an MNC does not require any special treatment with regard to implementation of HR practices. You may write to Management of the consequences of not giving annual increments. You can use the same wording that we have shared here like employee morale, cost of living, chances of losing good employees, attrition, rewarding performance etc and in the meantime take the employees in to confidence that the management will be responsive to their apprehensions. If the management is interested in continuing the unit, I am sure they will give a favourable reply.
From India, Kannur
Raghunath Sabat
20

1. It is indeed necessary to inform employees of any changed strategy that directly affects their compensation or benefits. Transparency and open communication are key in maintaining trust and a positive work environment. Changes in salary increments can significantly impact employees' financial well-being, and therefore, it is crucial to provide them with timely and clear information about such decisions.

2. As an HR professional in this situation, I would take the following steps to address the issue:

a. Communicate with Management: I would initiate a conversation with the management to understand the reasons behind the sudden change in the increment strategy. It is essential to gather relevant information to effectively communicate with employees.

b. Develop a Communication Plan: Once I have the necessary details, I would design a communication plan to inform employees about the revised strategy. The plan should be transparent, empathetic, and clearly explain the reasons for the change.

c. Organize Town Hall Meetings or Q&A Sessions: I would arrange meetings or sessions where employees can openly express their concerns and seek clarifications. This allows for two-way communication, building trust, and addressing any misunderstandings.

d. Employee Support: Recognizing that employees may feel uncertain or stressed due to the change, I would ensure that HR is available to provide support and address individual concerns. This could involve offering counseling services, facilitating discussions, or providing resources related to financial planning.

3. Retaining stressed employees can be challenging, but there are several strategies to consider:

a. Open Dialogue: Encourage employees to express their concerns and actively listen to their perspectives. Validate their emotions and provide a safe space for discussion.

b. Employee Assistance Programs (EAP): Offer resources such as counseling services, stress management workshops, or wellness initiatives to support employees' mental and emotional well-being.

c. Flexible Work Arrangements: Explore options like flexible schedules, remote work, or reduced hours to help employees manage their stress and maintain a work-life balance.

d. Recognition and Appreciation: Regularly acknowledge employees' efforts and achievements to boost morale and motivation. Recognize their resilience during challenging times.

4. While changes in strategies can occur in startups, it is not necessarily "normal" for the management to withhold information from HR or employees. Open communication and transparency are vital in any organization, regardless of its size or stage of development. It is crucial to foster a culture where decisions are communicated effectively and employees are kept informed about any changes that impact them directly.

Remember, every situation is unique, and it's essential to adapt these approaches based on the specific circumstances and organizational culture.

From India, Mumbai
Pocket HRMS
8

1. Is it necessary to inform the employees of the changed strategy?
- Yes, it is necessary to inform employees of any significant changes in company strategy, especially if it affects their compensation or performance evaluations.

2. If you are the HR how will you handle the situation?
- As an HR professional, I would gather information, establish communication channels, organize employee meetings, and advocate for employees' concerns with management.

3. How to retain stressed employees?
- To retain stressed employees, I would focus on open communication, recognition and appreciation, work-life balance, career development opportunities, and implementing employee support initiatives.

4. Is it normal in a startup?
- While strategy changes are common in startups, maintaining open communication and transparency with employees is crucial to building trust and engagement.

Hoping the answer helps.

From India, Dombivali
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