30 Jun Leadership in Times of Crisis Part 2: Hiring Decisions and Retaining Employees
As a result of the economic downturn that came with the implementation of quarantine and social distancing procedures during the coronavirus pandemic, many businesses have been forced to make difficult decisions with regards to their staff. As companies suffer from reduced sales, many underwent significant restructures, both to the ways in which they work and to their organisational structures.
In April 2020, the International Labour Organization predicted that the virus would impact 6.7% of working hours globally in the second quarter of 2020 – equivalent to 195 million full-time workers. They further stated that “more than four out of five people (81 per cent) in the global workforce of 3.3 billion are currently affected by full or partial workplace closures.”
Although this news sounds dire, our research shows that the majority of business leaders such as Eric Wilson, CEO and Founder of Xinja, are working to reduce the impact on employees. In fact, most companies are actively avoiding redundancies. choosing instead to ask employees to reduce their hours (and subsequent pay) by an average of 20%.
“We are extremely determined to keep our team together, redundancies are the last thing we will consider.”
– David Weinberg, Co-Founder, Vervoe
For many companies, this involves asking employees to reduce their hours (and subsequent pay) by an average of 20%. And, although this has been optional, the vast majority have found that employees have been accepting of this approach, understanding it is necessary for the long-term success of the business.
“We have offered all employees to take a 20% pay cut and to work 80% part-time accordingly. The management team took a 20% pay cut while still working 100% of the time. This scheme has been accepted by 70% of the employees and has helped in avoiding redundancies so far.”
– Peter Urmson, CEO, Spotzer
Many companies used this as an opportunity to reduce their cost base in other areas whether it be discretionary marketing and recruiting, subscriptions, or third party services.
At the same time, businesses have actively been applying for grants and subsidies now being offered by both state and federal governments. In short, the primary objective of all business leaders has been to reduce non-essential spending in every area, so they may retain as many people as possible.
“It’s all about cost. We’ve cancelled all big-ticket events, deferred hiring, and taken pay cuts. We don’t want individuals to feel the pain.”
– Lee Thompson, Managing Director ANZ, Nutanix
Investing in talent
Furthermore, contrary to popular belief, although many companies have been forced to downscale their operations, others are continuing to hire for business-critical roles. While some are delaying hiring across the board, others are choosing to recruit talent in key areas and roles that are critical for the success of the team.
If companies can hire sustainably at the moment, or bring forward some hiring, now is a good time to be in the market for talent.
“When there are times of economic downturn the first thing companies do is say they are going to freeze hiring. But on the flip side, the first thing you have to do on the other side is hire. I am suspecting that we are going to see companies soon who are planning on hiring a lot at once to recoup after all this is over.”
– David Weinberg, Co-Founder, Vervoe
Tune in next week to read Leadership in Times of Crisis Part 3: Handling the Next Quarter – Risks and Top Priorities.
In the meantime, don’t forget to read our previous insights: