Saturday, June 13,
2020 /04:25 AM / by CNBC / Header Image Credit: The Economic Times
Tough times call for tough measures. The Indian arms of the four large auditing firms, Deloitte India, KPMG, EY and PwC are assessing the impact of COVID-19 and planning for how best to counter it by trimming employee costs. Deferment of increments, staggered pay out of bonuses and voluntary pay cuts are some of measures being taken.
Global household names that shape our lives: On the tip of billions of tongues, the world's most powerful brands enjoy incredible global reach and near-universal recognition. For better or worse, they impact our lives in a profound way. From Zara and McDonald's to Facebook, here are the 50 brands that rule the world.
While all have refrained from giving increments this year, Deloitte India is the only firm that has given out promotions to 10 percent of its employees and increments of up to 20 percent have been given to those promoted. KPMG and EY are yet to decide about the promotions or increments.
In a conference call to all employees this week, Deloitte India announced its strategy to combat the COVID-19 pandemic period. The company said it will be paying performance bonuses to staff for FY20 and the distribution will start in September 2020 as usual.
"We will have cash flow challenges this year, and with a view to conserve cash flow, we plan to pay the performance bonus in installments for levels up to managers. We hope to pay it in two installments, i.e. September 20 and December 20."
"For senior managers and directors, we hope to pay performance bonus in six monthly installments starting September 2020. The decisions are based on our current visibility of cash flows because no one is really certain about how long this uncertainty will last. We hope to live by whatever we have recently committed," said the company executives in the conference call.
There will, however, performance related separations implying that low performing employees will be asked to go. The company although indicated that removal of low performing employees is something that the company undertakes every year. The employees that are in the last two grades of performance, G7 and G8 (performance grades post appraisals) will see a pay cut of 10 percent and 20 percent respectively.
The company will also give out performance related bonuses for F20 but it will be given out in installments to conserve cash. The company has also given promotions for the year to 10 percent of its employees that are in the highest performing brackets. The employees that have been promoted though will not get a pay hike of over 20 percent on their existing pay. The company has elevated 30 partners in the company.
"There will be no other increase in fixed pay this year, this is in line with our strategy outlined last year of moving towards a performance based pay. To the extent possible, we will be increasing the quantum of performance pay provisions for the year. This is to ensure we reward high performers. Performance pay for FY21 will be now based on a combination of three factors: performance of the individual, performance of the business and the performance of the firm," the company said in the call. The company also said it will reassess its position if COVID-19 related situation continues for an extended period.
When contacted a Deloitte spokesperson said, "As part of the annual performance review, which was completed as scheduled, Deloitte India will reward and compensate our people per our internal assessment criteria. Even in these times, we will go ahead with promotions and performance pay in a prudent manner recognising the performance of its people and their commitment to serve."
The company is still in the process of reviewing the situation and deciding on what has to be done with respect to promotions and increments. For now, increments for FY21 have been deferred and no promotions have been given out for FY21. However, sources said senior partners have taken a voluntary pay cut of between 15-20 percent.
When contacted, a spokesperson from KPMG India said, "Like every other business, we are watching the situation closely. Our aim is to emerge stronger from the uncertain business environment and our decisions continue to reflect the needs of our business. While we expect our partners to make bigger sacrifices, we are committed to ensure that our rewards are competitive for all our people. We will evaluate and decide on the best possible options around the timing of increments, promotions and bonuses."
It has deferred bonus for FY20 and increments to all employees in India for FY21. However, partners and executive directors have taken a voluntary pay cut of up to 25 percent.
The company has indicated to employees that it is studying the situation and will decide on what needs to be done in the days to come.
When contacted PWC referred us to its chairman, Shyamal Mukherjee's comment in April. Mukherjee had talked about the impact of COVID 19 on the company in a linked in post, "We at PwC India have initiated proactive measures that will help navigate the uncertainties, keep all employees safe and make our organisation more sustainable."
"We have worked out some interim measures which includes deferment of promotions, increments and bonus till a point in time one gets certainty around business. I am sure this will hold us in good stead. We will continue with all our efforts to keep our employees safe and engaged in this difficult period. We are very proud of our people for their understanding and support," he added.
The company, meanwhile, has had a similar story. No decision has been taken with respect to increments and promotions as the cycle starts by September for the company. It will be giving out the variable pay component to all employees over a period of time. Senior partners have taken a voluntary pay cut of up to 20 percent. When contacted, EY India did not comment on the story.
The post Deloitte, KPMG, PwC, EY defer pay hikes, bonuses; partners take pay cuts first appeared in CNBC on June 11, 2020