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Culture & Compensation: SRF Limited

Current Scenario
Individual performance based pay hikes depending on specific goals and process improvements 6 pay grades maintained uniformly throughout the organization to offer uniform pay structures & increments
Inter-departmental shifts encouraged True market worth determined by comparisons with similar industries

Fixed salary increases with raise in pay and promotion


Employees insulated from market fluctuations Pay increments in a particular year affect the cash flows of the firm throughout the tenure of the employee Long term stability ensured

Consultants Strategy
Action values into its value system which was dominated by moral values Slow down investments in commoditized textile markets Divest the packaging film industry due to requirements of major investments. To invest heavily in SRFs niche chemical business Entry into the starved energy sector to balance out heavy competition Variable + Performance pay to the extent of 70% of total pay High performance v/s Stable organization
High attrition rate dues to double digit growth figures New market + R&D requires young talented professionals

Drawbacks of Traditional Structure


Ability of the firm to compensate employees will be affected in the long run with existing myopic policies Heavy increments in a particular year may cause an employee to relax for the next few years, affecting overall efficiency Individual pay rises may be due to temporary market fluctuations predicting unnaturally high growth in the future.
Recession years will not affect the increments given to employees while a growth phase will give high returns

Market worth affected as current efficiency of employee not taken into account Lack of team work assessment & links to macro goals of company Lack on fresh talent due to unnatural low attrition rates may cause early decline of the firm

Personal recommendations
Blue collared v/s White collared employee remunerations
Lower grade employees can be kept on a fixed payroll with a small component of variable pay Higher management roles can have extremely high variable pays, thus allowing for flexibility of selfcompensation depending on ambition levels.

Auxiliary non-financial & recognition based awards to be linked to company performance. Eg: Merchandise incentives, travel allowances, work/life benefits Long term employees critical to the firm can be provided with loyalty bonuses depending on their tenure at SRF Blend of Short & Long term goals to maintain strategic goals of the firm Moral values & team work rewards in addition to social recognition for the efforts Expectancy: Ensure well-defined objectives; Instrumentality: Hold public functions to highlight high remunerations based on performance; Valence: Financial benefits coupled with social recognition will increase the perceived value of the reward Automatic Reinforcement through variable pay by continuously supporting high efficiency individuals and sidelining inefficient processes Focus on motivator factors of challenging & responsible work profiles over unnecessary focus on hygiene factors relying on financial benefits
Entry into new markets can offer potential for enriching and responsible roles

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