The cut-off date for saying yes or no was yesterday, and the firm anticipated at least 75% of the people they asked to consider taking a pay-cut would opt in. CLSA asked senior employees if they would volunteer a salary reduction û with an option of taking a 15%, 20% or 25% reduction. The idea, of course, is to reduce the chance of possible layoffs.
The rationale is that the firm will be able to maintain the same service level it is already providing clients if it doesn't have to lay off people and doesn't have staff worrying about internal changes instead of thinking about building the business during the downturn.
"We feel there is an opportunity to take market share if we are able to keep the staffing level at what we have now," explains Simone Wheeler, head of communications for CLSA Asia-Pacific Markets.
The incentive for choosing a pay-cut is that if CLSA keeps costs below 50% of revenue each month, then those who opted to take the pay-cut will be reimbursed back to their earlier salary, and make an incremental extra. It is reviewed monthly, but possible pay-backs will be made quarterly.
Voluntary pay-cuts are not unprecedented for CLSA, which took this same approach to cost-savings during Sars. The 2003 scheme ran the full calendar year of 2003 and was deemed a success by the firm. "We reached the cost-to-revenue ratio targets in 11 out of 12 months û so all participants were repaid and most received incremental revenue," points out Wheeler.