Amidst the coronavirus outbreak, many companies are having to pay largely in terms of performance and downfall in their business profits.
Not just the GDP but also jobs and related parameters are getting affected due to this economic slowdown.
Amidst the hard times, in order to boost profitability to the company, the Tata group companies are mulling on salary cuts for senior management.
Tata Group to Cut Salaries for Higher Management Team
The Covid-19 pandemic has terribly impacted the economy of every country it has touched.
In order to glide over the impact of the economic slowdown on its businesses, the Tata group companies are pondering over the idea of cutting 15-20% salaries for their senior management employees.
This decision was taken at the Tata Sons’ board meeting on June 5.
Even though this decision was taken by Tata Sons, the holding company of the conglomerate, the order cannot be passed until individual boards and respective committees say ‘yes’, or pass the decision.
Cost Cutting Measures by Tata
As a company, Tata Sons has strength of about 200 employees, so the impact for the senior management to take 15-20% pay cut will be nominal.
The group companies, where the cost-cutting measures are needed and individual companies will have to get this passed through their remuneration committees and boards.
There are chances that the appraisals for this year and bonuses for Tata Sons and group companies shall defer. However, until now, we don’t have any forecasting of job losses.
Cost-cutting measures will be initiated across all verticals, including marketing, human resources and finance. Also, the company scrapped out the option of monetising their assets.
Other Cos Highlighted for Opting Cost Cutting Measures
These companies have been highlighting the cost cutting measures such as reduction in employee costs in their results announcements.
- In its FY20 annual report, the Tata Consultancy services (TCS) informed that managerial remuneration was reduced by 15%.
- TCS chief executive and managing director’s annual remuneration reduced by 16.5% from 2018-19 to Rs 13.3 crore in 2019-20.
- It also informed that there will be no increments. It will however be honouring the 30,000-plus campus offers.
- Tata Steel said a decision on pay cuts will be taken by the board’s nominations and remuneration committee.
- Tata Motors, after reporting losses of Rs 9,894 crore in the March quarter, shall turn to extensive cost cutting measures, including a 25% pay cut.