Brandix CEO Ashroff Omar just told his staff that Brandix is making big cuts in executive pay in response to the COVID-19 crisis. Brandix is suspending Mr Omar’s own pay as CEO and that of all Board members for six months, and cutting the pay of all managers by 5 to 60%.
Big businesses, especially airlines, around the world have been doing this for months. Highly profitable (and state owned) Singapore Airlines starting making staff pay cuts and putting people on temporary no-pay leaves weeks ago, and it has since increased these cuts.
Brandix is our biggest exporter, but the collapse in demand around the world is hitting it hard. The situation will be much bleaker for most other companies. The situation will get worse in the next year. Job losses are unavoidable, and many businesses will run out of cash and go bankrupt.
To survive and preserve our economic base, businesses will have to take drastic measures to cut their outflow of cash. Firing people or going bankrupt is the worst outcome. Having cut taxes for decades, our government doesn’t have the money to bail out companies or give money to people who lose their jobs.
Cutting pay is the best choice. But managers can’t ask the the lowest paid – who need an income the most – to accept sacrifices, if the highest paid staff do not set an example. This also means cutting dividends to owners to preserve cash.
We all have to accept some pain. People will accept this is more if the most vulnerable are protected and the better-off bear more of the burden.
So thank you Brandix! Leading by example is what real CSR is about.
As for SriLankan Airlines which still hasn’t done so, I can only despair. Their policy seems to be that everyone else—the taxpayers and the public—should bear the burden of keeping it afloat, and not its own staff. It’s time they and other loss-making state enterprises heed the examples set by the likes of Brandix and Singapore Airlines.
Since I avoid politics, I offer no advice to the President, ministers and our other elected representatives on what they should do.
In an announcement today, SriLankan Airlines finally decided to cut staff salaries for three months. It’s belated, but still good news for the airline and also for the country. News reports indicate that the cut will range from 2.5% to 25%, but it’s unclear how these will be distributed – I hope the burden is more on management and highly paid staff such as pilots than the others. Since I think the operating environment for airlines will remain bleak for many more months, I anticipate further and deeper cuts will become necessary, but it’s a start.