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Managing in times of crisis is not a simple task. It is even less so for Richemont. Since the start of the coronavirus crisis, the Genevan group’s management model has been the target of strong criticism. The luxury group’s employees have been angry that their annual bonuses have been cut, while the management committee has seen its remuneration increase by more than one third in the last financial year. These inconsistencies caused the sudden departure of Sophie Guieysse, the group’s human resources director, in the midst of a coronavirus storm.
A flawed remuneration policy and “management out of touch with reality”
The Geneva-based luxury group (Cartier, Van Cleef & Arpels, Montblanc) shook up its employees on Wednesday May 27th by announcing a significant increase in the salaries of the general management team and a decline in the remuneration of executives and employees for 2020.
The luxury group in fact announced that the remuneration of the Richemont management board reached 41.4 million francs (+35.8%) for the financial year ending at the end of March … at the same time as employees saw their annual bonuses cut by at least 25%.
Inconsistencies pointed out by irritated employees, especially as the Richemont group has also decided to forgo compensation for the salaries of employees on short-time working: from June or July, they will therefore receive only 80% of their income, compared to 94% up to now.
Raphaël Thiémard, national head of the watchmaking branch within the union, says the situation is shocking: “It is not normal for a group that benefits from public money to guarantee the maintenance of its jobs to act this way. Employees with modest incomes, many of them women, find themselves in very complicated positions.”
An indignation shared by a group employee who, after ten years at Richemont, will see her salary cut in June: “Everyone has to make an effort, but to learn that our senior executives share 41 million is a big problem. They are the ones who should be reducing their income, not the employees who earn less than 5,000 francs a month” she testified anonymously to the Swiss daily Le Temps.
In Italy, the dissatisfaction of Richemont employees has even led to concrete action. In Turin and Milan, strikes were organised on June 5th by several hundred workers at the jewellery division of the Swiss luxury group to denounce the cuts in their salaries.
Profound management crisis or miscommunication?
“It’s so big that it can’t just be a communication error. It shows a top management totally out of touch with reality.” If the trade unionist Raphaël Thiémard is unanimous, the Swiss luxury group wanted to justify itself to temper the anger of its employees.
Thus, according to a spokesperson for the group interviewed by Le Temps, “the increase in the remuneration of the management board depends on decisions taken a year ago, well before the pandemic […] to guarantee the attractiveness of the company as an employer” and that therefore, depending on the evolution of Richemont’s financial situation, the members of the management board may well never receive the total remuneration announced in the group’s 2019-2020 report published on May 27 farmbrazil.com.br.
According to her, the new report does not take into account the latest decisions taken by the group to deal with the economic consequences of the health crisis, in particular the decision to reduce the salaries of senior executives: “Since April, the Chairman of the Board of Directors, Johann Rupert, has cut his salary by half, while the members of the Management Board have lowered theirs by 20%, until further notice.”
Also, “activities are starting up again, which means that fewer people are unemployed. The non-compensation will be mitigated by the fact that the days worked are paid fully” reassures the spokesperson.
These statements are all attempts by Richemont to re-establish a dialogue with its employees and try to communicate better after admitting some clumsiness in its communication: “The dissatisfaction expressed by some employees gives the group’s management the opportunity to engage in a constructive dialogue with them“, she concludes.
Nevertheless, Sophie Guieysse, Richemont’s Human Resources Director since October 2017, was dismissed a few days ago after having judged “indecent” the latest decisions and statements made by the Genevan group.
A chaotic human resources management, worsened by the current crisis context, which could well have an impact on the composition of Richemont’s general management and even on the future of the luxury group itself.
Read also > Richemont reports annual profits down 67% to € 931 millions
Featured photo : © Richemont
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