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In 1999, Infosys realized that it had full potential to become a large company. In order to facilitate the transformation, it had to improve productivity, cost-competitive and efficiency. So the Infosys management implemented a series of organization and policy changes. It started to build a portfolio of companies, each offering different services. These subsidiaries had a lot of cultural compensation disparities among then, which lead to a difficult task of fulfilling employees expectations across the portfolio.
As part it restructuring, Infosys introduced the concept of variable pay which attached 10-15% of the compensation with employee performance. Though a helpful strategy for Infosys to increase work ethics, it made some employees skeptical of company’s intentions on how the variable pay was defined. The restructuring also involved redefining of all roles with within the company. This change confused the employees and managers alike. Managers were unsure of some aspects of the changes made and were unable to communication these change to the employees, which in turn created unease among employees.
In order to gain employees trust and happiness, two alternate courses of action can be worked on. Infosys can retain its top-down approach for introduction of policies, but, to effectively communicate the policy and deal with employees apprehensions, the HR department should take an active role in the introduction phase. Alternately, Infosys can adopt the bottom-up approach and can talk to representatives of employees to get their concern about the policies to be introduced.
Regarding the employees’ unease for variable pay, there are two courses of alternative for Infosys. First is that the company can go back to the traditional pay system it has been using before which was acceptable by the employees. Or, Infosys should modify the variable pay policy to introduce other factors as well.
To overcome the cultural and compensation difference in subsidiaries of Infosys, It can either introduce policies which would encourage exposure of employees to other cultures and introduce benefits for off-base services. Or it can restructure itself in such a way that the function and services of a subsidiary do not involve people from other subsidiaries and the communication with them is only formal.
It is recommended to involve employees in the decision-making process including policy making. The representatives of the employees can be used to express their views on the policy which should be taken into consideration. This would help Infosys a lot by improving employees’ motivation and contribute to a positive workplace (Victoria Publications, 2006).
For variable pay, it is recommended that it should be modified to include other factors such as motivation as well. This will put a positive impact on the employees as they will have more opportunities to gain benefit from the variable pay scheme. It will also help Infosys in getting a positive, motivated workforce that will take pride in working for the company (Burke & Hsieh, 2006).