In response to a tough financial situation, leading Indian edtech company Byju’s has linked its sales employees’ salary to weekly revenue generation. The move comes as the company is grappling with a severe cash crunch that has impacted its capability to pay full salaries. To tackle this, Byju’s has introduced a new policy which currently affects the sales teams, specifically the Inside Sales (IS) and Byju’s Exam Prep (BEP) divisions.
Under this freshly implemented strategy, for a duration of four weeks ending on May 21, sales associates will receive a disbursement based on the revenue they generate each week. An internal company document sheds light on the specifics of this policy, elucidating that “50 per cent of the upfront weekly collection will be directly disbursed” to the sales personnel. This rule came into effect immediately and involves the direct transfer of half the revenue collected from sales within a week to the respective associate. For example, if an associate collects Rs 50,000 from orders within a one-week span, they are set to receive Rs 25,000 as payment at the end of that week.
This approach to salary payment marks a significant shift from the conventional structure, as the base salaries for those within the targeted sales teams are temporarily suspended for the same four-week period. This means that any associate who does not generate revenue in a given week will not receive a payout or salary for that timeframe. The internal document further communicated this condition, emphasizing the dependence of compensation on the ability to make sales.
The pressure to reform salary structures and improve liquidity stems from Byju’s recent financial challenges. Last month marked a critical juncture for the company as shareholders approved a rights issue, which provided a pathway for Think & Learn Private Limited, Byju’s parent company, to issue new shares. Successfully concluding this rights issue is essential for alleviating the financial strain Byju’s is facing, which includes handling unpaid salaries, outstanding regulatory dues, and vendor payments.
Urgency was felt at the extraordinary general meeting (EGM), where proposals to address these financial hurdles were passed, allowing the company to take a firm step towards recovery. However, Byju’s has abstained from officially commenting on the new performance-linked salary policy.
The shift to directly connect the income of sales associates to their weekly successes is reflective of the tumultuous phase that Byju’s is experiencing. Such a move is indicative of an aggressive pursuit of stabilizing revenue streams and managing operational costs. This decision not only affects the immediate financial health of the company but also sends ripples through the corporate culture, as the sales teams adapt to a new reality that directly ties their efforts to their earnings.
Byju’s has been at the forefront of the edtech industry in India, revolutionizing learning with its range of educational products and services. However, this recent development underscores the broader challenges faced by fast-growing startups that have to pivot and adapt to scaling hurdles, investor expectations, and, most importantly, maintaining a viable economic model to ensure sustainability.
As the situation unfolds, the industry at large will be observing how Byju’s handles its cash flow crisis and whether the performance-linked pay model for its salesforce will serve as a temporary fix or become a more permanent fixture in the company’s compensation schemes. For now, the sales associates at Byju’s are under increased pressure to deliver results, while the company seeks to navigate through its financial headwinds.
