Employee welfare or welfare donations for frontline workers?

Earlier this month, fitness app, Cure.fit was in the news for the wrong reasons as it announced a lay-off of hundreds of its employees along with a salary cut of up to 50 per cent for its remaining taskforce. This came a month after the brand contributed Rs 5 crore to the PM-cares front. 

 

After this came Qatar Airways. A couple of days after announcing 1,00,000 tickets for frontline workers from around the world, the airline countered by announcing it would be cutting its staff by 20 per cent. 

 

These are just a couple of brands among the many that have followed such patterns. Each lockdown extension is coming with its perils, with layoffs being announced.

 

We spoke with adland to get their view on the impact on brands.

 

Poran Malani, director – operations, S4 Capital India, said, “What we are seeing is a kind of ethical revolution going on where brands are being judged not on what they say but on how they act across the board, with their means of production and supply chains. This ‘good capitalism’ versus ‘bad capitalism’ perspective was already on the rise and is being catapulted by the current crisis.”

 

He adds that companies should be looking to first safeguard their employees before making donations. But he also states that companies may not have foreseen the length of the lockdown and the complete effect of it while making the donation and then facing to embark on cost reductions. 

 

“The primary goal should be the first circle, employees and their families. We are seeing huge PR backlash against companies using taxpayer money for furloughs when they clearly have enough private or company wealth to see this through at least in the short term. However, it is not always that simple. For instance I know of one company who made donations early on with the best intent. It wasn't until the crisis deepened that they then had to embark on cost reductions. The whole story will probably never be told, but sometimes it's not as cynical as you would at first think,” he said.

 

Ruchi Sharma, creative and culture officer, Brands For Humans echoes Malani's sentiments about first safeguarding employees. "There is a saying - charity begins at home. So, companies need to take care of their family of employees first. One can argue that the country needs these donations and thus the private sector needs to help. Of course, they do, but not by cutting off employees livelihood. Because that will create a greater unemployment burden for the government."

 

She adds, "Ideally, a company should try and do both - make a donation for the country’s betterment and take care of its employees, by offering them choices on how to tackle the scenario. Many engaged employees have voluntarily agreed to take pay cuts rather than have people lose jobs. It's always better for everyone to suffer a little bit than for some to suffer a lot."

 

Narayan Devanathan, group executive and strategy officer, Dentsu Aegis Network - South Asia, states that companies that are donating to relief funds such as PM-cares and then firing its employees, they’re looking to safeguard government relations and not their employees.

He says, “Above all, it’s clear they’re looking to safeguard only shareholder interests (and not stakeholder interests—which in this case would include employees too). And as long as shareholder interest is placed above all other considerations, companies will not put employee interest first—unfortunately. As much as we’re seeing empathetic soundbites from business leaders who have had to lay off their employees ‘thanking them for their services and understanding’ while terminating them, I’m yet to hear a single CEO or board give similar speeches to shareholders ‘thanking them for their understanding when the company doesn’t make profits or fails to give them continuously greater dividends in these challenging and unprecedented times.’”

 

He adds that layoffs do more harm for a company. “The news that will stick more with the consumer are the ones where the company holds on to its employees (like Bajaj) or raises the salaries of its employees during the crisis (like Asian Paints did). Layoffs feel very personal (as do companies holding on to their employees), and while there is a certain feel-good factor in companies making donations, it feels impersonal. Additionally, given the opaqueness of where those funds go and how they are utilised, many people aren’t even sure if the donations serve any purpose beyond filling political coffers.”

 

Govind Pandey, CEO, TBWA India, believes that layoffs and donations trigger different parts of the brain. “They trigger different parts of our brain - fear and hope. And they both stick. While news in general does tend to accord more significance to what goes wrong rather than what is being done right but it is too simplistic to think of news as context free. Bad news headlines stick, just as good news sticks. I think we all are actively seeking good news while being surrounded with bad news these days.”

 

We also asked adland for a stand-out marketing effort during the crisis. 

 

Poran Malani 

 

Two come to mind, Coca-Cola when they withdrew marketing and diverted energies and immense distribution resources to helping distribution of medical supplies. It was not just the action but the speed of the action that is impressive. The other is Akshaya Patra, who have served millions of school meals a week pivoting their resources to help feed those in need during the crisis. Again , the speed and agility was extremely impressive and I think the intent behind both of these was true to both brands' DNA.

 

 

Narayan Devanathan

 

The Bajaj Group for sure. Because they haven’t seen making donations and standing by their employees as mutually exclusive.

 

 

 

 

 

 

Govind Pandey

 

I am a big admirer of Azim Premji. This crisis or otherwise, when it comes to contribution to the society in India.