Currently, COVID-19 is spreading like wildfire and leaving behind its deadly impact across the world. IMF has already predicted the contraction of the world economy in 2020 by 3% as compared to nearly 2.3% GDP growth in 2019. Some experts are projecting one of the worst recessions the world has ever seen.
This would have a varied impact on businesses depending on the sector, financial muscle, and management decisions of the company. While certain businesses may permanently close down, some will struggle and some will come out as a winner. There will be both permanent and temporary lay-offs leaving millions of people jobless.
Even in this imminent recession, companies in health care, pharma, medical equipment, online media & entertainment, e-learning, digital payment/fintech, food processing, etc. are witnessing increased demand and will create new job opportunities for some.
Companies are planning to take various short-term and long terms HR measures best suited to them in their wisdom.
Presented below are some of the prudent HR measures being taken or envisaged by businesses in India as well as across the Globe:
Certain companies are planning to rationalize/reducing compensation on a temporary basis. Certain other companies are restructuring compensation in such a way to have lower fixed & higher variable package.
The variable pay is linked to productivity and performance parameters. This measure reduces the fixed cost burden of the organizations and makes it possible to earn earlier compensation by achieving the desired productivity and targets.
Companies are doing Competency mapping of their employees and exploring the possibility of transferring / re-skilling some of their employees to other divisions/ locations wherever there is a demand or likely to have demand in near future due to the economic impact of COVID-19.
Deferment of Increment and Promotion:
Most of the Indian companies are following the Financial Year i.e. April to March and also carrying out increments & promotions accordingly. Due to the expected economic downturn, the majority of companies are holding or deferring both the increments and promotions. This is the most acceptable solution for all stakeholders.
Managing Temporary Employees:
Temporary/contract employment, an effective tool used by companies, cuts across various segments of manpower. On one hand, we have low-skill or manual jobs and on-the-other, there is professional staffing for high skills jobs. Normally, temporary/contract employees tend to be axed first in an economic downturn. Many companies are planning to do exactly the same, however, there is another set of companies that think differently.
Furlough Leave & Compensatory Working:
In Furlough leave, companies inform employees to go on mandatory leave without pay, however, do not retrench them. Employees are brought back to payroll at a later date based on business viability. One of the top hotel chains in the world has recently announced this in the USA and will send thousands of employees on furlough leave as a cost optimization measure during this tough time.
Holding Performance Pay/Bonus:
Companies are also holding or deferring or totally canceling performance pay and bonuses except for the statutory bonus which is mandated by the law.
Retrenchment and Termination:
Organizations periodically rate their employees and grade them in various categories for the purpose of increments and promotions.
In the emerging scenario, this may unfortunately accelerate. Some businesses may like to close their non-core/ non-performing divisions and/or non-performing branches post lock-down, after evaluating the impact of the pandemic.
Certain mid-sized companies with poor cash-flows or bleak economic outlook are already resorting to this means. This is happening at an informal level as employees and may not be reported by the media.
Outplacement and Career transitioning:
Certain set of companies who will carry out down-sizing, believe that they should extend all possible help to this set of ‘would be left-out’ employees.
These companies care about them and provide Outplacement and Career transitioning services through external consultants.
Temporary Shutdown/Suspension of Operations:
Large companies have multiple manufacturing plants across the world. They may opt for this option for one or more plants to optimize their variable and manpower cost, subject to the local laws in the respective country.
Human Resources play a pivotal role in every organization. Any of the decisions enlisted above may impact employee morale and must be well thought-over and executed.
The morale of employees determines customer engagement which directly impacts the business results. Hence, employee communication plays a very crucial role in this phase.
HR Policies and Procedure Manual:
Companies are re-looking at their HR manual and assessing if there is a need to incorporate certain changes/ realign the policies to deal with such situations in the future. This will ensure not only the safety and security of the employees but the organization’s health as well.
People are the greatest resources in every organization. Attracting and retaining the right talent are some of the key management practices which contribute to the success of any organization. It takes a long time to build an employer brand.
The role of HR has to be redefined from Hiring & Recruitment and Appraisals to New Working Models, Performance-Centric Compensation Restructuring, Managing Cost Optimization and Reduction exercises without damaging employer branding, and play a decisive role in the long term survival of the business.
Courtesy : People Matters