Tough times, tough measures

Expert view
Airlines have to deal with huge aviation fuel bills and that is their biggest cost. The payroll, probably, contributes to no more than 20% of the total cost. In this bracket, the salaries going to the top-level management make for a small percentage. Whether the salary being slashed is variable or fixed or if it is tied to stocks must also be considered. More than anything else, the Jet salary cut is a symbolic gesture meant to send out a strong signal. It says that instead of the earlier planned lay-off from among the
junior levels, the senior employees will readily sacrifice a small amount of their own salaries.

Subroto Bagchi, COO of MindTree Consulting, has written about how during the first dotcom bust in 2001, his company needed to pick out slow performers to lay them off. The seniors in the organisation then came forward and volunteered to take a salary cut of 5-20%. The economy had slowed down and they were worried that the youngsters would suffer a career setback if they were fired on account of their performance.

So when it comes to the values and culture of a company, it is important to stick to the ideals of fairness and transparency. Such voluntary gestures are a great way to live up to those values. When a company says that people are its most important asset it should want to put the money where the mouth is.

The idea of laying off expat pilots before cutting salaries of locals is reminiscent of the insider-outsider struggle in Maharashtra. It is a very union-oriented way of attacking expats. These pilots are simply using the opportunity to showcase their own grudge about being sidelined by the Jet management. 
—Gautam Ghosh. Management consultant

Make sure you don’t demoralise the staff
Most companies have started cutting their costs to deal with the economic downturn. But a salary slash is not the only way to deal with the drain. I am part of the media industry and have been witness to several cost-cutting measures implemented in the last few months. These include trimming of entertainment, travel and administration expenses. Employee morale is an intangible but very important asset to an organisation at times like these. With big lay-offs being announced, most employees have already become insecure about their jobs. There are rumours that a few companies will be postponing the appraisal cycle too. Measures like these and salary cuts are de-motivating but most employees understand that these are ways of handling the pressure. The top management should welcome the cut and set an example for the rest of the employees.
 —Ray Fernandes

Let the top layer take the blow first
My first cost-cutting shock came this Diwali when my former employer slashed my Diwali bonus by a huge margin. It was not even half of what I got last year. The appraisal cycle is coming to an end and most employees are not even looking forward to it because they don't see themselves getting a considerable hike. With inflation and recession, everyone is saving money and cutting costs, so companies can't be too generous. CEOs have to device techniques to make sure their companies remain profit-making ventures. It is a better idea to cut the salaries of top-management instead of firing large numbers of employees in one shot. Jet Airways already got into a big controversy when it decided to lay off hundreds of employees. Lower-level executives and service men are under pressure to sustain a livelihood. 
 —Sunaina Sabharwal

Loyalty demands some sacrifice
All airlines have hit a bad patch in these tough times and their losses run into crores. To cut costs salaries might be slashed for some time. The company has no other option but to slash salaries; it is not out of choice rather out of compulsion that they have to take such stringent measures. Once the company reduces its liabilities it can get back on its feet and stabilise. Finally employers can look at restoring the original pay levels and may be even compensating for the pay cut. A salary cut is better than a pink slip because there aren't enough jobs in the market any more. Giving locals preference over expatriate workers makes sense. Jet's base is in India and it should give priority to Indians. I would agree to a pay chop because an employee should treat the company as his/her own company and stand by it in bad times.
 —Rashida Baker

Employees, managers should meet, discuss
A temporary salary cut is fair if the company is dealing with a passing crisis. Cutting salaries by 5 to 10% would not upset an employee's lifestyle drastically. And, a salary cut is a far better option than a pink slip. Employees in managerial positions, including pilots, are paid well by companies and a small salary cut is not likely to hit them hard. It is not a fair demand to ask that expat pilots be sacked. But employees and their grades and salaries shouldn't be scaled on the same parameter; companies need to be bit open-minded while making decisions. The relationship between an employee and the organisation works better when both contribute to it. And if this relationship is sound no one minds helping out in difficult times. I wouldn't mind forsaking a small amount from my monthly salary if it helps the company bail itself out from a crisis situation. 
—Rachna Gupta

Austerity measures should apply to all
Given the slowdown a salary cut is a necessity for Jet. Employees are a large part of an organisation and therefore a substantial amount of its costs consists of salaries. Job cuts I would presume would help immensely. But a salary cut is a far better alternative. At least one has an income flowing in. Future employment is also guaranteed. This is a big plus at a time when a lot of companies have cut back on recruitments and there are few jobs in the market. But the pilots' demand that expats be sent off is not fair. If we simply eliminate expatriates to create jobs for nationals what about our call centres that have supposedly drained jobs from the US market? Salary or job cuts should be across boundaries, and should to relate to the origins/nationality of the employee. I would accept a salary cut imposed by my employer to deal with a rough patch. 
—Melissa Serrao

It will dent the employees’ market value
Jet's plans to cut employee salaries are not fair. It is very frustrating not to get your salary intact at the end of a month. For one it reduces your spending power. For another it affects your value in the job market. Companies can consider this a time to exercise greater corporate social responsibility. Why not discuss the problem with the employees and ask for suggestions? This might generate goodwill and loyalty among employees too. Of course most employees would rather let go a part of their salary than lose their jobs. Jet Airways is an international company and cannot distinguish between Indian and foreign employees. If my employer cuts my salary as a temporary measure I would be okay with it because I believe it would help the company in the long run.
 —Jyotii Rathod