Awful as the pandemic has been, it's certainly catalyzing — the more accurate term might be compelling — spirited conversations around leadership, business strategy and workforce planning that wouldn’t have happened otherwise. How those conversations get translated into talent strategies and communicated to broader audiences is the unique bailiwick of human capital leaders, and it’s why they have a critically important role to play in recovery, too.
misalignments between c-suite executives and staff
For many HR leaders, ongoing pandemic-related disruption will compel them to endorse extremely difficult, however strategically forward-looking, decisions around human capital and business strategy.
Why? For one, there are critical disconnects between senior leaders and staff members that HR leaders are doing their best to navigate right now. Mercer’s 2020 Talent Trends, a thought-provoking white paper, does a good job of distilling some of these. Take, for example, the following divergent POVs:
- A full 78 percent of employees say that they are capable of and ready to adapt and reskill.
- C-suite leaders, on the other hand, say the same is true of fewer than half of their existing workforces.
That's a serious rift, an area where HR leaders should intervene and obviously part of the reason Randstad, our parent company, plans to upskill 40,000 U.S. workers.
Yet, no matter how any of these decisions play out, HR leaders will nonetheless be held accountable. Look at Intuit’s decision over the summer to shift away from being an AI-driven platform in favor of broader applications and revenue streams. Of course, the decision also entailed laying off 700-plus employees. Who do you think ultimately bore the lion's share of criticism for that decision?
shaping the conversation around recovery
All companies have been hamstrung by COVID-19, but the severity of the injury varies wildly by industry: Tech and utilities companies, to cite two notable examples, have been far less adversely affected than their counterparts in retail and hospitality, for example. In fact, to push that still farther, retail and hospitality together accounted for 42 percent of jobs susceptible to pandemic-related disruption in the U.S. And at the height of the nationwide crisis, hospitality companies alone were hemorrhaging an astonishing $534 million in earnings, as well as more than 12,000 jobs, on average each day.
But even for companies that have maintained something like normal business continuity, the impact of COVID-19 has been pronounced.
- Gartner’s recent webinar about COVID-19 recovery efforts in APAC showed “manager concerns about productivity or engagement” outstripping all other human capital concerns for HR leaders. All told, productivity- and engagement-related issues represented 76 percent of all issues escalated to HR teams in the region.
- Meanwhile, in a recent SHRM study, two out of three companies say they are struggling with employee morale challenges as their teams continue working remotely.
It may seem that monitoring employee productivity or engagement is one thing and employee morale another, but these two statistics from different sources are distinctly related. As Gallup’s employee engagement polls have consistently demonstrated, there’s a clear correlation between high levels of employee engagement and a wide range of net-positive business outcomes — outcomes that run the gamut from better customers experiences to improved rates of retention and more.
Needless to say, productivity management and engagement — or, we might say, the stick and the carrot — seldom sit in natural alignment. Nonetheless, striking the right balance will be key for HR leaders going forward.
key shifts in compensation levers
U.S. unemployment fell to a mid-COVID-19 low of around 11 percent in June, with the number of employees temporarily laid off declining by 4.8 million during the same period. Better still, recent data from the Bureau of Labor Statistics shows the number of Americans applying for unemployment benefits finally leveling off. That’s fantastic news on both fronts.
From an HR standpoint, however, what’s interesting is the surprising extent to which employees appear to be mindful of and even somewhat sympathetic to the acute liquidity challenges their employers are facing right now. Four out of five employees in one recent Randstad survey, for example, said they were sufficiently satisfied with their current compensation packages to remain in the same role with the same employer for the next 12 months.
Simply for context, let’s compare that to a pre-COVID-19 benchmark: Back then, 82 percent of U.S. employees said they would leave their employers if they weren’t rewarded with annual pay increases. (Worryingly, in another SHRM survey, almost one in three companies cited “paying employees” as a serious business challenge. Uh oh.)
Meanwhile, on the executive side, reducing compensation not only confers near-term financial benefits but also a host of reputational payoffs we might bucket under “good optics.” It’s a highly visible and at times necessary way of cutting down financial outlays, stabilizing the organization and effectively signaling a commitment to long-term value for employees and shareholders alike.
Of course, HR leaders will need to make that call in consultation with the board of directors and the C-suite team on a case-by-case basis. But one piece of advice: Identifying the right actions around executive salaries is only the first step. Communicating them clearly and widely in advance of other pay or layoff decisions is just as important.
In the event that executive pay cuts are in order, I recommend the following priorities, in this order:
- Start with executive benefits, 401(k) contributions and SERPs or ESPPs.
- Next for the chopping block should be cash retainers for members of the board.
- From there, proceed to base salaries of CEOs and other senior-level executives.
- Finally, look at annual incentives, followed by long-term incentives for the C-suite.
For HR leaders, it’s truly difficult to overstate the importance of getting all of this right — and of sharing the right messages about these decisions with both internal (employee) and external (candidates, the public at large) audiences, too. I have over 25 years of experience in the executive recruiting space, and I've never seen the stakes any higher.
the strategic value of adjusting employee benefits
Along with strategic messaging, HR leaders should look for opportunities to serve as organizational change agents — that is, to not only “talk the talk,” but “walk the walk” as well. And with annual pay raises no longer on the table at many companies, employee benefits would be a smart place to look.
For starters, employer telehealth plans that include mental health consultations are going to become table stakes at leading companies going forward. More broadly, it’s critically important to recognize that the conversation around mental health in the workplace has gone mainstream as never before — and with good reason. SHRM estimates that between 22 and 35 percent of employees experienced symptoms of depression during COVID-19. Meanwhile, as many as a quarter of nurses today meet the criteria for PTSD.
In light of that environment, focus areas for HR leaders in building out COVID-19-adjusted benefits should be expansive. Consider the following, for example:
- reducing or eliminating copays for telehealth visits
- subsidizing student loans and introducing other forms of financial support
- providing free access to online learning and development platforms
- offering free access to online fitness programs
- aligning benefits with the life stages of employees
Finally, even while managing all of this complexity, it’s imperative for HR leaders to stay abreast of the latest compliance and regulatory changes — and to be vigilant about potential pitfalls. From FLSA violations to red flags around network privacy and data security, there are any number of ways in which empowering your remote workforce can inadvertently maunder into murkier, risk-escalating territory.
key takeaways
Almost overnight, the environment in which most businesses operate changed in dramatic ways beyond any of our power to predict or control. All the same, with the global pandemic continuing to unfold in real time, organizational leaders will be looked to for guidance, strategy, support, direction and more — for all of the elements that assert our ability to actively shape the course of things to come. The pressure on HR leaders is going to be intense.
Personally, I've been wondering of late if the ongoing fog of the present is compelling us to gaze forward and backward a bit too much, and with a kind of diminished self-awareness, at a moment when looking in the mirror would be the most constructive approach. I suppose it doesn't help that no one knows when any of this will end — or how, by the time it does, the yardstick for measuring success will have changed.
But in the interim, HR leaders clearly have a mandate to shape the conversation around recovery, influence priorities and drive meaningful organizational change. In this article, I’ve tried to call out some of the ways they can contribute to business recovery efforts as value-added partners, and I'll be gratified if the insights I’ve surfaced assist in strategic decision-making at your company.
Plus, if key executive roles at your organization need more horsepower, or if someone has simply been recruited out at this least opportune of moments, reach out to me or contact the Executive Search team at Tatum. You’ll discover that we have an unusual approach — and with it, an unusual ability to deliver value.