The Problem with ESOP’s
February 12, 2025
Let us highlight some common mistakes managers make in knowing and managing employees: Do not expect your team members to know everything. How can an individual perform each and every task with perfection? Key responsibility areas should not be designed just for the sake of it. Responsibilities should be delegated as per capabilities, specialization and […]
The Dotcom Boom and Irrational Exuberance For those who started their careers in the late 1990s and early 2000s would remember the Dotcom boom when the internet and software based businesses were expected to drive the future economic growth in the United States and elsewhere. Named because companies with a .com address were projecting high […]
Is Something Wrong with the Millennials/Gen Zers, Slacking Out of The Workforce Anybody who is somebody would have heard of The Great Resignation, the trend of American and Canadian Millennials and Gen Zers quitting their jobs en masse for no apparent reason, other than to make a “statement”, driven by tech driven viral events. While […]
Career, as a series of upward moves of income, status, power and security has died long back. In 21st century, career is seen as continuous learning and changes in identity due to experience and personal learning along with upward moves in income, status and power. Employees, these days want a fulfilling career and organizations need […]
Motivation is one of the most important concepts in HRD. In most organizations, it is common to hear the refrain that a particular employee is not motivated and hence his or her performance has taken a backseat. This is the reason companies spend humungous amounts of money in arranging for training sessions and recreational events […]
The previous articles in this module had discussed the various facets of rewards management and the factors that determine monetary and nonmonetary rewards. This article discusses the impact of the ongoing economic crisis on the quantum of rewards both monetary and nonmonetary that are being actualized across the world. To start with, except for Wall Street and the Bankers, salaries have taken a hit in almost all sectors. Indeed, it can be said that the quantum of the pay hikes has been substantially lower across all sectors and everywhere in the world ever since the great recession has started.
Further, many organizations have scaled down on their budgets for fun and entertainment as well as cut down on the nonmonetary rewards like perks and benefits. The implications of the recession on rewards management have indeed been dire and gloomy.
In this scenario, the challenges before the HR function and the organization to retain quality talent are many. For instance, employees might seek employment elsewhere if they are not being rewarded for their contribution.
On the other hand, the employees might find that getting jobs elsewhere is a challenge as the available opportunities in a slow growth economy are few. Hence, there is a cat and mouse game being played here between the organizations and the employees as both sides try to engage in a conversation about hiking pay and the lack of alternatives.
Of course, as mentioned earlier, quality talent always finds opportunities and hence, the HR function and the line managers often take recourse to hikes for only outstanding performers since they are afraid of losing these employees.
However, for the vast majority of the employees, the choices are stark as they cannot leave the current employer and have to put up with no or less salary hikes.
On the nonmonetary front, the biggest casualties are the perks and benefits. Across the world, organizations are reducing their outlays for nonmonetary rewards like providing for subsidized food and the provision of company transport.
Indeed, as the experiences of multinationals in recent years shows, they are removing these and the other benefits like reimbursing children’s education and withdrawing allowances like sponsored vacations.
Moreover, organizations are also resorting to curtailing their budgets for fun and recreation as well as awards for recognition. Indeed, the situation has become so dire that organizations are cutting down on the availability of coffee and other beverages that are provided free along with snacks in the breakout areas.
Finally, the fact that both the employers and the employees cannot remedy the situation until the market improves means that the best way out would be to accelerate one’s performance. However, this is easier said than done as the competition for scarce resources intensifies as well.
Hence, the implications of the ongoing recession are such that the rewards structure would need to be rethought to ensure that employee morale and motivation do not sag. This would be discussed in detail in subsequent articles along with the impact of industry wide trends on rewards management in the context of the ongoing recession.
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