How to Address Employee Concerns About Minimal Salary Hikes During a Recession?

Hello Friends,

We are a small-sized software company. Half of my employees have their appraisals due in Jan. Seeing the current market scenario, my Director wants to convey to the employees that we are not in a position to give a significant salary hike, maybe just a single-digit increase, in 2009.

Kindly help me with how I should proceed with this. I would like to arrange a counseling session for the employees on the current recession. Please advise on the points I should include in the session.

I don't want to lose my current employees as they are very competent and hardworking.

Kind Regards,

Vishal G
Asst. Manager HR
vishalg@winjit.com

Vishal, don't worry. The market is bad outside. Forget about giving a hike; employees should be happy that they have a job. You won't have such a situation where employees will leave you, since it is very difficult to get a job outside now. Some employees will expect a hike, but they should also understand the current situation. :)

Vishal,

I do agree with what Sonia has stated. The employees will be aware of the situation, and first, you should assure them that even in this recession, the company is ensuring to protect everybody's job. To ensure this, the company may have to take some hard steps, such as holding/limiting the increments for some period. That's how we can also reciprocate our belongingness to our company.

I do hope that this should work.

Best wishes,
Dr. Hemant Modak

But, yaar, they are working, and they are not animals, so give them a proper hike. Because once you lose the trust and enthusiasm of your employees, you will have to incur more losses. In this recession period, you won't find such hard-working employees; all will be lazybones, like I am.

Hi Vishal,

I believe that in this time of recession, companies are implementing salary cuts or layoffs. Your director is still generous enough to provide his employees with a single-digit salary hike.

Even I have implemented a 30% salary cut in my organization, and I genuinely don't feel bad about it. Instead, I am grateful to the company for bearing our costs. In today's situation, if anyone changes his/her job, there is no job security; you might be the first on the layoff list.

Let's take it positively. At this time, you will come to know who is loyal and sincere to the company, who is with you, and who is not. In the future, when the market picks up, you will have a clear vision of whom to promote, who has potential, who supported the company during critical times, and which employee can sustain and work under pressure.

So, the first step is to normalize this situation for yourself and stay positive, then counsel others. Remind them that on Monday, January 26, 2009, when we were celebrating Republic Day, more than 75,400 people in the US lost their jobs, and it was termed as "Bloody Monday." Therefore, be thankful that you are not one of them.

The market situation may worsen further, so we need to be prepared for that as well. Just work to the fullest, and everything will turn out fine.

Well, your company's employees need to feel happy about even a single-digit salary hike. There are many companies that are implementing salary cuts :( I hope they understand the current situation.

Regards, Vineet Singh Timesjobs.com 9999 105631

Hi,

I don't look at them as employees; first, make them feel like a family member. They are human beings and understand the markets. Put across honestly to them that we are facing tough times, where all the employees are receiving pink slips, and we would not like to do that. To avoid the same, we would like your suggestions. Put the ball in their court—meaning, ask them what they would prefer:

1. A hike in salary and have a few employees fired.
2. Or wait for better times, hold on to hikes, and offer a bonus.
3. And other good options.

Let the people vote on the decision for you. Cheers. Don't stress; it's about employees. Let them decide their future. You only need to facilitate it for them. Thanks, Sumeet

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Hello Friends,

We are a small-sized software company, and half of my employees have their appraisals due in January. Seeing the current market scenario, my director wants to convey to the employees that we are not in a position to give a significant salary hike, maybe just a single-digit increase in 2009.

Kindly help me with how I should proceed with this. I would like to arrange a counseling session for the employees on the current recession. Please advise on what points I should include in the session.

I don't want to lose my current employees as they are very competent and hardworking.

Kind Regards,

Vishal G
Asst. Manager HR

Hello Friends,

We are all engrossed in our own jobs, but let's also consider those on the other side – those who have lost their jobs. If you have been affected in this way, please share your thoughts here. By doing so, we can gain a clearer understanding of the situation.

Regards,
Deepankar
Email: diipankarsrigyan@yahoo.co.in

Hi Vishal,

As job security is more important than giving hikes during this challenging time, as an HR professional, you should explain to employees about the current situation and clearly convey the message about job security in your company. It is crucial to address concerns about potentially losing proficient employees.

Counselling may not be necessary as employees are likely already aware of the situation; therefore, effectively communicating the message is sufficient.

Cheers,
Naresh

Hi,

I have been reading everybody's views on the recession for a long time. I do agree with Sumeet's comment. First of all, we have to build trust with our employees and make them feel like family members. As you mentioned it's a small company, you can request your MD to address a meeting with all employees regarding this challenging time. This will allow employees to clarify their queries and discuss future security directly with the boss. It will provide them with a clear understanding of job security and the reasons for not giving any salary hikes at this time.

If your MD believes it is possible, they can assure employees of future benefits once the market conditions stabilize. As Sumeet suggested, you can also ask employees for their input. I believe that participative decision-making leads to a sense of recognition and motivates employees by involving them in the decision-making process, especially during crises when teamwork strengthens bonds among people.

I understand that as an HR professional, we sometimes have to make tough decisions that we may not want to, but we also need to consider the situation from an employee's perspective.

Regards,
Charu

Hi,

Forward them this PPT and then declare the single-digit hike decision. I'm sure it will work.

Chetan

Hi, sonia_valley,

Don't worry. The market is bad outside, so forget about giving a hike. Employees should be happy that they have a job. You won't have a situation where employees will leave you, as it is very difficult to get a job outside now. Some employees may expect a hike, but they should also understand the current situation. :)

If they receive an offer from outside and seek a salary hike from our side, what should I do? Can you help with this?

Regards,
chakri

Hi,

Your doubt is 100% correct. In the same way, please consider others' views. Even if you have given a substantial increment in the past, employees from your company were still leaving. Therefore, do not worry. Consider that everything happening is for your good. This situation is not limited to India; it is happening worldwide. In Dubai, many well-established companies are sending their employees on compulsory leave, implementing pay cuts, and canceling visas. It is the right time for management to consider cost-cutting in the salary structure. Remember, this is only a temporary situation.

Best regards,

Raman Rajamanickam

Dear Vishal,

a) Keep the message brief and to the point - don't take a long time to set up the context, be gentle but firm. Don't be defensive (at least you have a job) or comparative (other companies are firing).

b) Listen (A LOT), empathize with their woes (EMIs) but don't be apologetic or feel guilty.

c) Offer to help in whatever way is possible within the organizational limits (check with your director beforehand on what can be done). Keep the door open. It would be good if there is an organizational communication from the very top beforehand, as it will reduce the rumors (that can build up and blow up) as well as make your task easier.

Best of luck,
Isabel

You have to handle the situation carefully without affecting employee morale. Following are the few steps:

1. A letter from the top has to be circulated to all employees explaining the business, its market, and present trends, keeping in view the economic meltdown.
2. It is time for all employees to sacrifice certain things/benefits that help the company stay on track.
3. It appears that your company has not retrenched or asked anyone to leave the job, which itself shows the greatness of the management. In such a case, performance rewards/increments do not come into the picture.
4. Instead of worrying, the employees should collectively invite the top management and express their commitment towards the organization. They should assure him of their support in facing the challenges and agree to sacrifice one year's increment.
5. In addition, they have to collectively put efforts into reducing costs wherever possible. If this is followed, there will not be any issues.

Thanks,
Patrudu

Hi Vishal,

I am completing my PGDM course but still I'm worried about my placement. So, employees in an organization getting worried is quite obvious. You can actually compare economies by telling them that some of the economies have a negative GDP. At least we have approximately a 6% GDP. We are lucky that the scenario is not so bad that thousands of people are losing their jobs. So, accepting reality instead of cribbing about the situation is the only appropriate solution at this point in time. Just keep your cool and try giving your 100 percent without expecting much; it could be the only solution at this point. I hope my suggestion would help you in some way.

Regards, Meenal Kelekar

Inflation is coming down, and market rates of all commodities are also stabilized to their real market worth. Due to abnormal and irrational economic growth in the last 5 years, the Indian economy has been artificially inflated. The IT and Banking Finance sector has further inflated market salaries, with unprecedented 500 to 800% salary hikes in the last 2 years.

Now, this artificially inflated mechanism has been exposed as financial engineering. It has been revealed that they were manipulating only figures that did not align with the actual money in circulation. Everything must now be re-evaluated to its real worth. Financial engineering through electronic money did not match with actual money (Satyam Funda). Artificial figures have now rendered the economy worthless, leading to frustration for high flyers.

Now is the time for not just a slowdown in the economy and inflation, but a deflation is very likely in the next two quarters. The value of money exceeds its circulation price tag. Money has become more precious and costly. Consequently, salaries will be re-adjusted in the next 18 months. Those who do not adapt to these changes will lose their market position and become obsolete.

Be careful,

BADLU