HR Manager's Pay cut - plan in variable pay, fixed pay mode due to global recession

Dear All, As mentioned earlier I work for a 10Cr turnover IT company.
My boss owns the company and has decided for a cutback in my pay and has asked me to come out with a plan in variable pay, fixed pay mode due to global recession. Please advise me upto what % can I reduce. I completely understand the fact that it depends on my financial commitments etc. but i needed to know how to structure it.
Before I conclude , my company never announces profits U know .. :-) Secondly across the company there has been a wide range of pay cut from 10%-50%.
Please help me with your thoughts.
Regards
Sherry

Sherry,
You could probably look at Variable Pay depending on performance targets payable at the end of every quarter or half- yearly...Try to reduce the fixed components.

Thanks suja,
However I never had any performance targets for my role. it was never discussed. Though a part of my ctc is based on performance. Its 1 year now and i am suppossed to get my variable pay and an appraisal etc ... but in the mean time this cropped up....
Net net- no performance targets , never had kra's ......
regards
Haripriya

Hi Sherry,

I am really surprise to see that being a part of Management, your Boss made a pay cut 10-50% which is totally unacceptable. While planning the restructuring of the salary you should have done the market survey & impact it had to your industry due to global recession.

You need to speak to Finance and Operation about the ongoing projects, contract value and the duration of the contract. If you see that your contract is valid to 2 more year then I don't find why pay cut has to be implemented.

But if ongoing projects r stopped or going to be stoped, in that condition you need to propose a salary structure which is minimum for all the employees where they can have a normal living condition. You can't force employee to come down heavy . The 50% salary cut will totally demoralized the employee productivity.

You need to look for some sort of insurance coverage where they cover employees salary to be paid in case of global crisis. Where management and employees pay a part of the premium.

Saji

Dear Saji,
I always appreciated your prompt responses which supported most of the members.

Coming to my situation- its a 150 member company, The couple owns the company. Except for PF there is no benefit provided to the employees.
There is no structure followed, infact, 50% cut is also something i got to know while i was preparing teh pay slips. Being an Hr I was never involved in these discussions. I was not even informed about the pay cuts happenned for certain employees. Initiations, negotiations, decisions etc happened among the couple and the respective employee.
When I tried to ask, they said its not required for me to know. hence i didnt have a choice.

its a 10 yr old compant and not even a single policy is in place.. be it leave, travel, exit etc... 10 hrs might have strived to bring this in place but sorry it was never approved. They are not willing to spend atleast Rs.2000/- a month for R&R ...

Coming to the survey etc.. i have done that and presented to the team which they never bothered to look at it or suggest something.
People with high salary bracket were asked to leave if they were not accepting the pay cut.

This is reality and no offence to my company or management. Everyone has their own working style but I need help in facing this.

Regards
Sherry

Dear Sherry,

I am surprised to know that without policy and systems you are managing 150 employees. You are facing a really tough situation. From your inputs i could understand that your boss couple is not having trust/faith in you which is very sad. Management should trust HR if they are interested in the real development of employees and the organisation. Your boss may feel insecure that if policy/systems are brought in place, they may lose their relevance and Line managers and HR may play active role. That is the reason they are talking to the employees directly bypassing HR and line manager.

Make a self introspection and find out if any improvement has to happen from your end to get the confidence of your boss. You can also propose policy and systems but emphasis that your boss's authority is not eroded. They need to change their outlook. You can take this as a challenge and proceed with definite plans. Lot of mental calculation and plans required.

Coming to your variables, I suggest keep it 10% which is reasonable. But more than %, it is the scheme for payment of variables is important. Have a transparent scheme so that variable should not be a pay cut.

Good luck.

Bhavan

If you choose variable pay.. your productivity could increase.,. but people think that they are not getting value for their work..
Pay cut is worst idea in my view...
Instead they could go for job cuts...
I may be rude but... think for a while..
Keeping all the unsatisfied employees and decreasing your productivity...
Or
Sacking some of them and keeping other with satisfied salary but.. they work hard to keep them alive in present job... your productivity increases.,.
But i accept.. here there is problem of job security issuses,,
That you can increase once your company becomes normal..:roll:

Hi Sherry,
You can use following way to reduce the impact of paycut on your employees
1) Identify critical , non critical employees.
2) Also make a list of employees which are not on the project
3) Devide a part of salary and name it as Performance based incentive. As per the ratings of Team lead give it in 40%, 60% , 80% or 100% slab.
You can save a lot by this measure also it will be performance improvement measure8)
Do Not deduct anything from Employee Benefits as it will have bad impact.

If the management is closed you are not left with much option.

You take the legal view. Basic and statutory benefits cannot be reduced.
Rest look at the salary structure. There would be monthly reimbursement, annual LTA, performance bonus etc. You can work on these.

Look at how the structure of employees whose salary has bee reduced.

Nice now I am happy that you will feel the pinch, its good that HR managers too are getting pay cuts, because they most of the times are only cutting the pay of other hardworking employees. 8-)8-)