The Problem with ESOP’s
February 12, 2025
Employee development activities help employees to enhance their skills and upgrade their existing knowledge for them to contribute more effectively towards the success of an organization. Trainings and employee development activities make individuals reliable resources for the organization and motivate them to deliver their level best. Regular trainings prepare employees for unpredictable changes in the […]
Most of training is either technical or behavioural in nature, but there are still other trainings that are neither. These fall under the ambit of special training programs and are conducted with an agenda of smoothening the work process within the organisation. Workforce diversity can be both positive and negative for the organisation. Positive in […]
Training is an expensive process not only in terms of the money spent on it but also the time and the other resources spent on the same. The most important question therefore is determining whether or not a need for training actually exists and whether the intervention will contribute to the achievement of organisational goal […]
An organisation is a collection of individuals who come together and work towards the realisation of a common objective. Larger the number of people working together, larger is the size of the organisation and vice-versa. However, for an organisation to flourish it is important for the employees to operate at their full potential, which unfortunately […]
Management systems are of strategic importance to organizations. HRMS and ERP systems are used these days in the administration of basic human resource data such as payroll, compensation, time management etc. Talent management systems are similarly used to offer strategic gains to an organization in the achievement of long term goals vis-a-vis the human capital. […]
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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