The full force of Covid-19’s economic impact remains to be seen, but reports of wage freezes, cuts and rising retrenchments globally have become daily reminders of the precariousness of livelihoods.
The Singapore government has introduced initiatives such as the Jobs Support Scheme to support employers in retaining and continuing to pay their local employees (Singaporeans and Permanent Residents).
In addition, the Tripartite Advisory on Managing Excess Manpower and Responsible Retrenchment recommends alternatives to retrenchments. Among them, training, redeployment, flexible work schedules, shorter work weeks and temporary layoffs.
These are certainly viable alternatives. For example, employers could receive absentee payroll subsidies for employees undergoing training. This not only assists with salary costs, but also enables your employees pick up new skills that could help your business recover more quickly.
At PeopleSearch, we have also pointed out that retrenchments can be costly in the long-run. Ultimately, rehiring and training when the economy picks up could set you back a sizeable amount. The Society for Human Resource Management states that generally, it could cost about 50 per cent of an employee’s annual salary to find a direct replacement.
PeopleSearch Singapore’s Jaime Lim pointed out in a recent commentary piece for Channel NewsAsia that in fact, this might be a good time to do a human resources audit. Keep employees who are likely to be valuable to your success and longevity. Ask yourself, do they have a spirit of learning? Do they have a spirit of adaptability and experimentation needed to succeed in an uncertain business climate?
She also recommends engaging in strategic hiring during a crisis. As you consider the elements you need to survive and to recover sustainably, skills gaps within your organisation might become more apparent. Think about the types of people you’ll need to assist in your transformation and longevity.
In a previous article, we also discussed flexible staffing to future-proof your business against similar crises.
Amid the current upheaval, some researchers believe that retrenchments are avoidable.
In a Harvard Business Review article, “The Coronavirus Crisis Doesn’t Have to Lead to Layoffs”, three experts say that while “a cost-cutting reflex is understandable”, “those who manage the economic effects of this crisis in a clear and compassionate way create more value for their companies and will come out of this pandemic stronger than ever before.”
Atta Tarki, the founder and CEO of specialised executive-search and project-based staffing firm ECA and author the book, Evidence Based Recruiting, Paul Levy, CEO of Beth Israel Deaconess Medical Center in Boston from 2002 to 2011 whose actions to avoid layoffs during the Global Financial Crisis led to worldwide attention and acclaim for his hospital and author of Goal Play! Leadership Lessons from the Soccer Field, and Jeff Weiss, founder and managing director of CCI, a national CEO network and Assistant professor, adjunct at UCLA School of Medicine, recommend the following measures before resorting to retrenchments.
They recommend being “utterly clear with them (your staff) about the financial health of your firm and what goals you will prioritise.” Indeed, having to second-guess what’s ahead can be nerve-wracking.
Tarki, Levy and Weiss point out that these goals “will not be the same for every company, and you shouldn’t communicate empty statements you don’t believe in, such as ‘we put our employees first.’ These statements can be confusing and even counterproductive when people are worried about their jobs.”
They recommend being specific. “If your goal is to save jobs while meeting your bank covenants, say that. If it is to make a series of changes swiftly to shore up job security, clarify that you are prioritising that decision over other, slower changes.”
Pay Cuts Across the Board
On this point, they recommend applying pay cuts across the board, not just to lower ranks.
In fact, they say, “as CEO, you should take the largest salary cut yourself.”
Make Employees Part of the Process
Tarki, Levy and Weiss recommend crowdsourcing solutions with your employees.
While some leaders might have reservations about this, “crowdsourcing doesn’t have to be equivalent to chaos. In our experience, it is critical that you ask your employees to voice their ideas. By showing them, not just saying, that you care about what they think, you will have stronger buy-in for the initiatives you eventually prioritise.”
The process should begin with leaders articulating what they intend to prioritise. “Then truly demonstrate that you are open to the ideas of the staff.”
Have “Ice in the Belly”
Lastly, they recommend “what in Swedish is called Is i magen, “ice in the belly,” roughly translated as your ability to keep your cool in a critical situation.”
They allude to exercising options such as government assistance, which we discussed earlier.
But they also touch on being more discerning in terms of assessing the impact of the crisis.
“Don’t treat all negative indicators for your business the same. If your client is a movie theatre and they need to pause your project, you have reason to believe they will not be able to pick the project back up anytime soon since the theatre industry is taking a big financial hit. However, if your client is a hospital that says they’d like to pause your project so that they can focus on the high volume of patients at the moment, it’s worthwhile showing their management team that you understand their current priorities.”
They recommend asking your clients “if they can have an open discussion with you to help you understand how likely it is that they will continue the project once things calm down.”
The Importance of Empathy
Several experts have pointed out the importance of showing your staff genuine empathy. Considering the acute uncertainty of the Covid-19 pandemic, this is especially crucial now.
Tarki, Levy and Weiss say, “one common misconception is that most people primarily look out for themselves in turbulent times. On the contrary, our experience is that during a crisis, individuals overwhelmingly prefer to make sacrifices if it means that their company can help more of their colleagues keep their jobs.”
Leading with compassion could help you emerge from the crisis “stronger than ever before, enhancing the shared values of your staff.”