Infosys The recent initiatives of HR definitely contributed to the discontent among the employees. The first was variable pay. This concept was viewed poorly by the majority of employees as a ploy to lower compensation costs. While variable pay worked for the senior executives of the company, the reality is that senior executives a) are often competitive in nature and are thus motivated by the challenge to excel and b) make lots of money so aren't worried on that level if they miss their targets. Employees lower in the organizational hierarchy may not have the financial security yet – especially ones fresh out of college – to whether pay uncertainty. Further, they have fewer skills that would make them feel confident about outperforming. On top of that, the majority of people are not especially competitive in this regard and may not even have the opportunity to excel much less the desire to do so. Variable pay was a poor idea for a company so reliant on young, relatively inexperienced labor.

Broad-banding was met poorly by the employees as well. First, it was poorly communicated, which alone would spell trouble for an HR initiative. HR needed to take the lead on internal communications, instead of delegating that to managers, who may also have struggled to understand or champion the idea. Furthermore, people like making progress, so cutting in half the number of levels through which one can make progress likely rubbed employees the wrong way, especially if they felt that they were not going to be supported in their journey.

The promotion policy rankled some employees as well. Partly, there are some who expect seniority to matter, but there is nothing intrinsically wrong with merit-based promotions. At its heart, tying promotions to the needs of the organization makes perfect sense, but it will create a situation where an employee who has earned a promotion might be forced to seek it elsewhere if they do not receive it at their company.

The problems that Infosys faces are serious in the sense that there is intense competition for high quality workers. The restructuring moves were made with an eye to ensuring a high quality workforce, but when they are...

The company in part has at least been unwilling to communicate, if not to admit, that it is no longer a place for rock stars, but a place for process-oriented people seeking stability. Those who were sold something else will inevitably feel slighted.
The HR department may not have enough information about the issues that they face. First, they have to realize that as a more process-oriented company, they are going to need to attract people who want that, and structure the HR around their needs. So there seems to be a disconnect between the desires of senior management for what the company is or should be, and the reality of what the company actually is at this point. It is basically a scaling issue, or one of growing pains, and senior management must accept that their business has changed, and their approach to human resources must change along with it in order to bring in employees who will be happy and perform well in this different environment.

At different levels of operational maturity, a company will invariably have different human resources needs. A lot of the recent policies seem to be based on former needs, rather than future ones, hence the discord. HR and senior management need to learn more about their employees, and ensure that they are recruiting the right people, and building their pay and benefits programs to align with the needs of the organization going forward.

Circling back to the different initiatives, the variable pay has to be retracted. This pay structure may work for a startup, and for senior executives, but is entirely inappropriate for a company full of young workers just starting out, in need of financial certainty, and ill-equipped to perform at the highest levels. Ultimately, this policy is the worst thing that the company has done. At lower levels of the organization, the incentive to outperform is either intrinsic, or…