Voonik , an online fashion brand has deferred the payments for its 200 employees by 3 months. As reported by Money Control, Voonik’s CEO and Co-Founder Sujayath Ali said those who will quit the company will get a month’s salary as the severance package. He added the company “is currently one or two months away from EBITDA (earnings before, interest, tax, depreciation, and amortisation) profitability.
Subir Chatterjee, Compensation and Benefit Head says, ” Help me to understand this better. The founder deferred the salary to achieve EBIT? So far I know salary is part of operating expenses, don’t they have to book the salary as future liability? Operating Earning comes much before EBIT.”
Pratik Vaidya, MD Karma Management added, “Very few organisation understand the value of human capital & asset rather than treating as Operating expense. Audited Companies that defer salary and other incentive payables & sheepishly roll back in future when their employee leave”.
Subeer Bakshi, CHRO Bajaj Allianz reflects, “Agree that it’s going to be problematic, but it’s a well-intentioned alternative to lay-offs. That’s laudable, and I hope the employees buy in!”
What impact would this have on HR compliances to be maintained in the company. How would the EPF contribution, ESIC if any, other Retirals and tax deduction be managed by the employer in such a situation?
The frugality of the situation and their inter-changeability remains the driving force to strategy. Even though, it is defined, as a set of planned actions over a period, to achieve the desired result. Organization mirrors this, as the business target to reap the profit. The business goal percolates to every function, over arching with one organization goal. HR functions identify the people factors in this goal. The strategy set for the year drills down to individual functions connecting the business units. Connecting different requirements put the functions on the same page. For instance, the broad-banding of a strategy, such as building agility, would echo for recruitment with greater in-house expertise, where as payroll may require errors free, as its prime target.A case as shared as below in ‘Concern’, surfaces the tip of an Ice berg, with the challenges in Strategic HRM. This is a part and a parcel of talent management. Every organization aims to hire the best talent and retain them with best compensation. Hitherto, the gap between perception and reality edges employee dissatisfaction.
Concern: Recently we have hiked the salary of one of our employee after reviewing her overall performance. However, she is not happy with it. She is been expecting more. Every day she reminds to negotiate an increase in her salary. Please help on how to handle this situation.
The case facts:
The compensation planning allocated hikes to each grade and rank, attenuated by the performance standards.
The employee is presented with the hike , which do not match the expectations.
Ordeal of negotiations for another hike lengthens decision making.
Logical thinking coupled with practical situations brings in the solution. Three dimensions that attributes to strategy are as discussed below:
Goal Setting: The objective may be defined, as being the market leader by the next financial year. This is calculated in terms of business target. Mostly it’s an increase in the market share through either takeovers or increase in the production. This configures the goal setting for each function. HR functions for such a growing firm would strategise to designate responsibilities, to facilitate the expansion.
Budget Allocation: The sum total of the spending is divided into investment in terms of benefits and other operational expenses. Compensation is identified as the value returns on the services received from the talents. This is chiefly governed by the business requirement such as higher spending on research, leading to planning for larger markets share, amid higher supply chain. The HR budge would impact with an alignment to the market is weighed to offer a competitive compensation.
Leadership alignment: The backbone of the success to planning lies in the hands that delivers it. The leadership team designated to set the strategy and prepare budget are accountable for the business units. The talent planning may be chaired by a CHRO , however the insinuations are contributed by the business leaders. Communication overarching the environment balances the transparency, strengthening trust.
Judging a situation with logical findings would require a non-attached discernment. In our member’s case, different implications from three dimensions as discussed had lead to the dissonance. The disbursement of the hike matched the top-down judgement, but missed on the discernment.
Individual perception of performance and result: A contribution by an employee is valued. It results with rewards when they were aligned to the organizational goals. Dashboards and performance scorecards actualise with grades for each contribution, to ensure the alignment. However, the gap of expectations widen when the employee in question weighs every contribution for a material reward. A pat on the back received for managing an expert escalation would culminate to incentive, if that escalation results with client retention and revenue returns. The excellence of the employee would be best utilized by an higher level responsibility, when appropriate.
Communication: The guidance to an employee reverberates intently, with the shared views and thoughts from it leader with appropriate feedback. Transparency calls for its price. It pushes the leadership to share the confidential often sensitive information. This rings the choice to jump the boat or follow the captain.
Pen-ultimately, the priorities of choosing and aligning will glue the individual to the entity. Solution to the decision maker remains in acknowledging the human concerns with judicial treatment through strategies and communication. Employee championship is intertwined with business partnering through change management and administrative expertise.
If you have any HR Query or any query on Future of Work, Employee Engagement, Talent management, Women Empowerment, Retention or Business Strategy please write to me in here. Looking forward to learn more while finding solutions for you.
Nabomita is the Founder to Nabomita.com. She is the Top 100 Women Achiever Awardee, awarded by Government of India , TEDx Speaker, Quoted on ForbesUS, one of the Top 20 HR Influencer in Social Media as declared by SHRM India and one among the Top 100 Technology Influencer in India. Connect with her on @nabomita_smiles , Facebook Page and Google+
This article have been published on Business manager , October issue 2015. This issue covers different areas of Strategic Management.
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