Negating slowdown blues: Good times ahead for employees as festive gifts, bonuses lift spirits

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A Mumbai-based electronics retailer is giving away earphones to employees for Diwali. The 200-odd employees have been given three brands to choose from, and a budget of Rs 4,500 each. Over and above this, the company also plans to hold a lucky draw wherein 15 employees could win anything from television sets, laptops to Bluetooth speakers.

An online player has given each of its employees a budget of Rs 10,000 to choose furniture of their choice as festival gift.

Many companies have also announced bonuses, with a hike of 5-8 percent.

Sounds like good times? It is, despite a slowdown.

But looks like companies want to especially lift the spirit of their employees by doling out gift cards, physical gifts or cash. Many of these companies have increased budgets for these gifts by 15-20 percent.

Aditya Narayan Mishra, CEO, CIEL HR Services, said: "Companies don’t want to spread the bad news to employees. Sectors like e-commerce, retail and technology will lead the way in terms of festive gifting for the staff."

For the retail industry, the festive period between September and December is crucial from a sales perspective. This is because 50-55 percent of the annual sales is recorded in these three months alone.

The human resource head of a Bengaluru-based financial technology firm said that they are in talks with vendors to give away pre-loaded gift cards that can be redeemed across retail outlets.

"It is a given that we have seen a slump in our product sales this year. But restricting our festive budget for employees will send across a wrong message to the staff," he said.

Surely, not all sectors have such a cheerful fortune. Auto companies have been forced to cut production, and steel makers are facing one of the worst slumps in demand.

On the other hand, say HR officials, consumer-facing companies in FMCG, retail, fintech, BFSI and e-commerce will continue their employee-related spends.

However, Mishra said that SMEs may restrict their gifting-related spend.

Tax relief

Companies are also making the most of the extra cash in hand.

Finance Minister Nirmala Sitharaman slashed corporate tax rate of 22 percent (from 30 percent) on September 20. This was to revive corporate spending as well as enable firms to save tax costs.

Rituparna Chakraborty, co-founder & Executive Vice President, TeamLease Services, said that the slowdown is sector-specific and not broad-based.

"The corporate tax cut has eased the apprehension and hence the anticipated clampdown won’t happen by companies. In fact, sectors like e-commerce, food-technology and BFSI have kept hiring plans steady. The same goes for the festive gifts and bonuses," she added.

What are the gifts on offer?

With respect to the type of gifts, a majority of companies are moving away from cash incentives and physical gifts, and turning to digital gifting options. These include online coupons and gift cards. Not only is this effective from a roll-out perspective, it also gives a choice to employees to use it to purchase goods that they require.

Further, HR officials said that it is being used as a retention tool by corporates. This is true, especially in the banking sector where a number of new roles have opened up across companies. The head of human resources at a new-age banking entity said that the bonuses in the BFSI sector has gone by 10 percent, as employees now have multiple open job roles to choose from.

"Rather than handing out standard dry-fruit boxes, BFSI firms are in fact walking the extra mile to find out what an average employee wants in his/her household. If it is within an acceptable budget of Rs 5,000-15,000, then these products will be doled out as festive gifts," said the person quoted above.