Paycuts or Layoffs during Covid-19

by Elias Moses

‘An unreflected life is not worth-living’, this saying of Socrates may apply to today’s organisations/companies that are thinking of closures and layoffs.

Are Companies reflecting on performance based pay or  pay-cuts or mere Layoff?

Mere Layoff is not ideal

When the tough times set in, tough people must rise to the occasion.

What we are witnessing around the industries, during Covid situation, is more alarming and baffling. Most of the companies  are simply laying off their employees with a focus on now. 

‘Today is an incredibly sad day’: Uber India lays off around 600 employees. Parameswaran, the president of Uber India, noted that the reductions are part of the previously announced global job cuts this month.

The country’s largest homegrown ride-hailing unicorn Ola  laid off over 1400 employees following a 95% decline in its revenues during March and April as most parts of India were under complete lockdown to curtail the spread of coronavirus.

Most of the companies have eventually closed their curtains on account of non-reflection.  The quick fix solution to arresting issues in covid situation is a mere lay-off to cut the cost. Can it help the cause on a long run?

But this cannot be an ideal  option. Strategies are the key, as we have spoken about in tour earlier write-ups.

Performance Model  must Precede Layoffs

Just as the way we had proposed  financial options and strategies to deal  with crisis situations, it is important to set performance expectations to all related stakeholders,  for the organisation to excel during covid times.

Here I wish to differ from individual appraisals that aim at promotions and individual career growth.

I am looking at an overall renewed and renowned performance of a company during this crisis moment, covid-19.

A healthy organisational performance review Model set at the start is a way of reflecting back on  yearly performance as a team/as an organisation.

what are we doing with it as leaders in a company? Putting money in different baskets may be a start, but 80% of success depends on how leaders motivate their employees to abide by, and adhere to new performance models and systems during these chaotic times.  Laying off could demoralize the rest of workforce. 

It is time to move from individual appraisal models to Performance Review Management models that assess organisations  and their performance on the whole during adverse times such as this.   

it is quite baffling for me to see that leaders or to be leaders approach me personally to have a higher rate of return as increments either for themselves or for some members in their team, sometimes at the cost of their own and the company’s performance even during these troubled times, when millions are going hungry.  What an agony?

The reason is performance is often a misunderstood or misspelt word among the workforce today. That even during tough times, employees think and talk about promotion and increment.

This has  made me realise that we are merely thinking of our petty individual  and short term gains, then the long term vision of the company. 

Thus it is important for me to bring to you the importance of  performance Review as a Management system, that must become part and parcel of a company’s life line. And no body should be outside its purview in the company.  This need is very critical to enhance performance in the post Covid Era.

Re-defining performance Review

A performance review is a way/method through which the overall performance of the employee +employees + the company is periodically measured and evaluated.

Let us think much broader here.

Regular performance reviews help us create a corporate culture that promotes personal and organisational success  along with collaboration. 

Individual employees need the reinforcement (MOTIVATION) of knowing that their contributions are valued by upper management.

We must never forget that the review process offers several benefits organisationally, generating an atmosphere of excellence on a longer run. 

Performance Reviews allow management personnel to establish guidelines for compensation increases, find our areas of success and failures, assess  performance indicators for future growth specially during these troubled times.

On the whole, they help do a health check on the company by assessing each of the performance areas (Business Operation, Value Creation, and People engagement) and their Key performance factors.

They are very important if we have to see the light of another day, and all the more important, if we have to be successful on the new verticals of business in the highly volatile business scenario. 

Now you will know why they are vital during these covid times for organisations /companies to sustain themselves.

importance and Significance of the Performance Review Management Systems (PRMS)

The aim of PRMS is not to measure and monitor each individual’s performance for increment or promotion, but to assess the individual and collective performance of the company for its sustainable future.

Through a meticulous study of the performance, PRMS achieves the following

1. Help in decision making and measure progress towards business goals
2. Create meaning and purpose at all levels of organisation
3. Provide visibility  into the performance of business year on year
4. Understand whether the organisation is on track or not
5. get more investment for expanding our business

Pay-Cuts vs Lay-offs

Most of the time we give Performance Review a simple miss, as they have an impact on our organisational and personal behaviour and patterns. We give it a miss, as human nature resists feedback and change.

But times have come, where organisations have to take the importance of PRMS very seriously. Performance has to be the key to succeeding in covid times, and they have to be measured differently.

The best strategy is to think of partial pay-cuts instead of lay-off

TVS has initiated a pay cut for its employees “The company has chosen to rollout a salary reduction across different levels for a period of six months, starting May 2020 to October 2020.

Company’s variable/flexible pay/Fixed pay need a through reconsideration and an overhaul in future to ensure that companies move from survival mode to sustainable mode quickly during these tough times.

Introduction of various schemes and programs and projects should be the way to motivate employees to go thru most trouble-some moments of times such as covid-19

Here is an example to state how Pay-cut cab be streamlined vs lay-off.

Setting the limit for salary will be the sole prerogative of the Corporate and the Management based on the overall performance of the company and the business requirements. 

That must be made clear to the workforce at the very start of the year, that unrealistic expectations are removed at the start of the quarter of financial year 2020-21. 

Times such as this, requires so much consideration from employees and management to see the big picture for productivity and growth, in stead of operating on survival.

The move should be from ‘survival to sustainability’ not mere lay-offs and closures.

True growth does not lie in what on can get out of the company, but what one gives (back) to the company. 

Elias Moses is a Senior Business Strategist, Consultant Researcher, Corporate and Leadership Trainer, Orator, Columnist and an Entrepreneur. He is the Founder and Managing Director of  a growing reality firm in south India. He is also the founder of Managing Next, an Online portal for knowledge share. 

The author can be contacted@ 
email: elias@manovsis.com,  linkedin:  www.linkedin.com/in/eliasmoses