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Why some people don’t mind pay cuts

Unlike the previous recession, where sentiments ran high against management for salary and job cuts, employees seem to be more accommodating and understanding towards their employers this time

Like most employees in corporate India, Deepak Pandit was eagerly awaiting his appraisal in March. Pandit, 31, who works with a multinational, had been told he’d get a promotion and an increment. Then covid-19 hit India, and a nationwide lockdown was announced. He’s got neither a promotion nor a raise and has instead taken a pay cut. He’s disappointed, but not resentful.

“With everything closed, the company hasn’t earned any revenue for weeks. Even after the lockdown is lifted, we won’t be able to meet this year’s targets," says Gurugram-based Pandit, a mid-level manager who has taken a 10% pay cut. He says he consoles himself by reflecting on the fact that others in the industry are in a similar predicament or worse.

Unlike the previous recession, where sentiments ran high against management for salary and job cuts, employees seem to be more accommodating and understanding towards their employers this time. “During the 2008-09 recession, employees had many questions; they felt something was happening behind the scenes and they were kept in the dark. But this time, it’s interesting how people are reacting. Barring a few sectors, employees can see no work is happening, and there is no way out. So, they understand the need pay cuts even if it hurts," says organizational behaviour professor Kavita Singh from faculty of management studies, Delhi University.

There is a sense of acceptance, of gritting one’s teeth and bearing it, says Keith D’Souza, who teaches organizational behaviour and human resource development at SPJIMR in Mumbai.

And it’s a feeling shared by employees across the organizational hierarchy.

The job market is shrinking, but any hiring that is taking place now is mostly for junior positions. “The absence of job options is felt by mid-level management, who feel that having a job itself is good enough. Salary cut figures lower than their current need for job stability," says Ashutosh Dabral, CEO and co-founder of Hush, a community for employees to discuss career and workplace issues.

While companies are investing in employee engagement activities to keep morale up, it’s not enough. Besides transparency and clear communication, organizations need to give some kind of psychological support to employees by providing reassurance. “Layoffs and pay cuts are expected even after the lockdown is over. But firms need to create hope. Bosses can do webinars to give team members a virtual pat on the back and say ‘don’t worry’. It helps to hear that," Prof. Singh says. “People with experience have the maturity to understand that this phase is going to pass. The young employees have ambition and aspiration that characterises youth, and they need reassurance."

A lasting change coming out of this crisis will be the mindset change, where the organization reflects on the role of business in the society, believes Prof. D’Souza. “Earlier organizations were about profit maximization, excessive growth and unbridled exploitation," he says. “Now, they are beginning to realize there is a limit to everything, including growth, and are reconciling to that fact."

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