SALARY REVISION

PROPOSAL
COVID-19 Crisis

ARABIAN LEOPARD CO.

Al Harbi Commercial Center 012-6512290
Madina Road , Jeddah info@arabianleopardco.com

Confidential – for eyes only

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DISCLAIMER

The contents of this document is a strictly confidential communication to and

solely for the use of the recipient and may not be reproduced or recirculated
without Arabian Leopard Co’s written consent.

If you received this document by mistake, please return to the address mentioned
below.

ARABIAN LEOPARD CO.

AL HARBI COMMERCIAL CENTER
MADINA ROAD
JEDDAH
012-6512290

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INDEX
DISCLAIMER ................................................................................................. 2

INDEX ............................................................................................................ 3

EXECUTIVE SUMMARY ................................................................................ 4

PROPOSAL BACKGROUND .......................................................................... 5

OBJECTIVE ................................................................................................... 6

CURRENT SCENARIO ................................................................................... 7

FUTURE FORECAST ..................................................................................... 7

METHODOLOGY ........................................................................................... 7

RECOMMENDATION ..................................................................................... 7

CHALLENGES ............................................................................................... 9

SOLUTIONS................................................................................................... 9

CONCLUSION .............................................................................................. 10

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EXECUTIVE SUMMARY
6Quoting Harvard Business Review “During a crisis, the path between corporate
denial and layoffs is a short one.”

There is no doubt we are going through one of the unprecedented period of the
company. The Covid-19 pandemic has stalled economic activity at an
unprecedented scale globally. To keep the company afloat Arabian Leopard is
obligated to make responsible decision. A cost cutting reflex is inevitable.

However as a responsible employer we do not believe in layoffs. We believe in

the welfare of each employee. We believe managing the economic effects of the
crisis in a clear and more compassionate way create more value for their
companies and will come out of this pandemic stronger than ever before.

Optimism among all levels has always been the motto of Arabian Leopard. We
believe the economy will recover sooner than expected. Hence we would like to
keep our talent ready for the upcoming boom.

But to sustain the current crisis we have no other option but to make some cost
cutting reforms. We believe a minor revisions in the Pay Scale of the employees
will keep the company afloat preserving the jobs and avoiding any layoffs.

The details of this proposal will be available in the coming pages.

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PROPOSAL BACKGROUND
The Coronavirus outbreak, which was first detected in China, has infected people
in 185 countries. Its spread has left businesses around the world counting the
costs.

COVID-19 literally affected economy in all sectors. Expect for the selective
economies promoting work at homes such as ZOOM, Online Shopping etc. all
other industry has taken a great hit from the pandemic. The travel industry has
been damaged. Industrial Production, investment and sales has fallen to negative
values over the course of few months all over the world.

All major economy surveyors has forecasted a hefty recession in the coming
months. The International Monetary Fund (IMF) says that the global economy will
shrink by 3% this year. The IMF described the decline as the worst since the Great
Depression of the 1930s.

As far as Saudi Arabia is considered where the oil industry is the backbone of
economy, the impact of crisis is alarming. Demand for oil has all but dried up as
lockdowns across the world have kept people inside. The crude oil price had
already been affected by a row between OPEC, the group of oil producers, and
Russia. Corona virus has driven the price down further. The price of Crude oil has
plummeted to the lowest the world has seen in 18 years.

With the country taking drastic measures such as emergency budget and budget
re allocation to fund the health sector, the growth in other sectors is bound to be
hit by a drop. Even with the government’s 120 Saudi Billion Riyal stimulus
measures to support the economy hit, the huge blow to the country’s Fiscal plan
caused by the plummeting of oil prices is sure to hit the economy. The Vision 2030
economic reform plan which has been one of the biggest economic boosters in
recent times is sure to suffer a significant setback.

This huge effect in GDP of Saudi Arabia will affect the economy in all sectors.
Construction Sectors will be one of the top affected sectors with funds being
diverted from infrastructure to health. Arabian Leopard as a construction company
has to foresee this crisis and make necessary reforms.

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OBJECTIVE
This proposal intends to put forward a solution to keep the company afloat by
preserving the jobs during this crisis. Arabian Leopard having main clients in the
government sector is sure to face a Cash flow crisis in the coming quarter.

With government diverting funds to Corona crisis, the construction sector will slow
down and ongoing government funded infrastructure projects will supposedly go
to a Halt. With the oil economy plummeting the entire economy in the country will
take a hit. The income from Projects and Maintenance works will supposedly be
cut by 30%.

With IMF predicting the economy to go to 5.8% by next year its possible economy
may be revived and we may expect a boom. Hence Arabian leopard intends to
retain its talent for the expected boom and we don’t not believe in layoffs.

This proposal is intended to propose a solution to face the forecasted economy

crisis by preserving the human resource in the company. A marginal salary
revision is being suggested to maintain the crisis for the time being.

CURRENT SCENARIO
Most of revenue of Arabian Leopard is from its prestigious client ABEER Medical
Group. With an unprecedented level of layoffs and families returning to home
country, as any sector, the medical sector especially clinics may also face a loss
of revenue. Under this circumstances it’s possible that some of the projects
carried out by Arabian Leopard may be put to hold.

Other major projects carried out by Arabian Leopard is funded by MOH and Civil
Defense. With the government heavily investing stimulus funds into the economy
it’s possible that payment from government clients will be delayed.

For the time being Arabian Leopard will face a cash flow crisis to keep the
company afloat under current conditions.

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FUTURE FORECAST
Arabian Leopard made its first baby steps in being a self-dependent contracting
company by diverting into various sectors such as Security Solutions, MEP
contractors, Maintenance, etc.

Company has already received a few private projects and is expecting a few major
projects in the coming quarter. However the revenue forecast made in the last
quarter has to be scraped off as attaining that in this crisis is impossible.

METHODOLOGY
Compared to Current market status the pay scale of certain sections in Arabian
Leopard is very generous. In order to propose this salary revision, Industry
Standard salaries were collected from all provinces in the country.

Salary Scales of the leading ten contractors was collected from each province.
The average of this data was put into comparison with the Arabian Leoaprd pay
scales. In addition the services provided by the companies with respect to the
basic pay was put into comparison.

By all means Arabian Leopard salary and benefits was found to be quite
generous. Comparison gave an output varying from 1.3 to 1.2 when compared to
the mean of other companies.

Until now the above average expense of the company could have been
accommodated. However under the circumstance we cannot overlook this at the
moment.

Taking into account the expenses of the benefits and pay scale of each member
in comparison with the industry standards, a revised pay scale was formulated.

Employee welfare and Company survival were the two factors that has been
considered while formulating the same. A salary revision was formulated with
least impact on the employee and most benefit to the company.

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RECOMMENDATION
Based on the above study we are hereby proposing the new pay scale + benefits
as follows.

Vacation
S.No Category Basic OT Accomodation Food
Ticket
Technician –
1 YES NO
Projects
Technician –
2 NO Secured By NO
Maintenance Every 3
Company on
3 Helper – Projects YES NO Year.
Sharing Basis
Helper -
4 NO NO
Maintenance
5 Driver – Projects YES NO
6 Foreman/Supervisor
7 Engineer
8 Manager

This revised pay scale along with the revised benefits will enable the company to
save around 10 to 15%. Actual savings to the company will be less than the
percentage of the reduction of salary as some of the overheads remain the same.

However the pay scale still will be on par with the industry standards around the
country.

We believe under the current crisis job protection takes higher priority. Hence we
believe considering the socio and economic benefit from avoiding layoffs the
above recommended salary deduction is justifiable.

Challenges

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CHALLENGES
Implementation of a Salary cut is a humongous project of its own. This is a very
sensitive issue and challenges will arise from all levels of the hierarchy. However
the most challenge will be from the non-managerial level.

Following are the predicted challenges upon implementation of the salary revision

 Trying to negotiate down the basic pay of employees.

 Resistance from non-managerial level employees.
 Demotivation and Reduced Morale.
 Loss of Productivity
 Possible resignation and fall off employees.

SOLUTIONS
This is a time of unprecedented crisis and no company would have been prepared
for such a sudden blow. But survival of the company by protecting its employees
is inevitable and solutions has to be found for the challenges.

 Proper negotiations have to be made by educating the current market

scenario and the commitment of company in protecting each and every
ones job.
 Company’s social commitment in protecting its employees from lay off has
to be highlighted. While other companies are laying off Arabian Leopard is
trying to protect its employees. This has to be conveyed clearly and
precisely.
 In case the company loses talent due to the salary cut, if necessary
company shall make profit of the mass layoffs. A pool of highly skilled and
talented workforce is expected to be hit with layoffs considering the current
market status. Arabian Leopard may use that into its benefit in obtaining
cheap labor if necessary.

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CONCLUSION
As per world uncertainty index the COVID 19 has put the world economy
uncertainty to a scale of 13, the highest in the century. This pandemic will
supposedly set back the economy by 10 years.

Amidst this uncertainty and unprecedented crisis, survival of the company is

inevitable. At the same time protecting its most valuable asset, the Human
Resource takes precedence. To move forward by protecting all of its employees
and to survive this by accounting the short and long term impacts Arabian
Leopard has no other option but to revise its pay scale for the time being.

We believe in preserving the jobs. Facing this crisis has to be a collective

responsibility. The socio economic impact of the COVID 19 is sure to change the
world and Arabian Leopard will be equipped to welcome the new reformed world.

Salary Revision Proposal – COVID 19 Crisis