The COVID-19 pandemic took the business world by surprise. Organizations are grappling with an unprecedented and challenging time and it’s likely each had to start from ground zero as none was any better prepared or equipped. In a recent survey, 80 percent of the organizations have reported a significant decrease in cash flows due to the pandemic. In another survey conducted by KPMG in India recently on organizations’ response to COVID-19 crisis, it was observed that 22 percent of the organizations may decide to defer, freeze or suspend incentive pay-outs to cover for financial losses; 32 percent of respondent organizations did not consider themselves mature enough to extend remote working support to employees. With liquidity being a major challenge, the current scenario has created strong avenues for organizations to save, as per research, up to 30 percent of manpower-related costs, if not more.
The need of the hour is for organizations to focus on evolving their core operating structure, recalibrating and segmenting roles, re-imagining performance and productivity measurement, and enabling virtual working through transforming governance, technology, and rewards.
Workforce Operating Model
Based on our research, 80 percent of organizations are focusing on ring-fencing critical and essential talent by designing interventions to engage and retain them. In trying times like these, leaders will have to come up with strategies that can provide organizations with business continuity assurance and a quick recovery from the crisis. Identifying various cost-optimization avenues for substantial impact on the bottom line has become a priority for CXOs in the organizations. During and post the COVID-19 scenario, the first crisis response strategy should, therefore, be to re-look at the workforce operating model – positive changes that can lead to substantial financial savings both in manpower and workspace cost. Workforce operating models can be further defined as below:
- Core operating structure: Organisations must decide to operate with either a conventional set-up or look at evolving to a network of teams or hybrid structures. While conventional structures provide centralized authority and a linear flow of information, a network of teams provides highly decentralized working, expedited decision making, and ensures a continuous flow of business even in the absence of people. A hybrid structure provides flexibility and compatibility to fit different situations at different times and geographies.
- Critical workforce segmentation and families of roles: Segmenting the organization’s workforce on two parameters- Impact of Value Chain and Difficulty in Replicating Skill leads to four major cohorts: Critical, Core, Specialist, and Flexible. Mapping them against ‘Families of Roles’ (Onsite, Virtual, GIG, Hybrid) can help organizations ensure that critical and core roles work in the most optimal setup. Specialists and flexible roles, say, have the good potential to be virtual or GIG with the capacity to work in liquid ways of working. Aligning compensation and incentive structures to the workforce segmentation would be integral.
- Neo GIG: A new branch of GIG, is a group of employees who were full time but will now move out of the solid employment cost heads. Lighter in compensation and flexible in nature, these roles will provide organizations with an immediate resolution to the cashflow crisis. Unlike other temporary workers, they will benefit from a focused talent management and rewards strategy.
- Ways of Working: Liquid or fluid role setup is an agile working setup where clusters of associate roles requiring similar skillsets are pooled together to support multiple tasks dynamically depending on work volumes leading to optimal resource utilization. Organizations will need to identify areas where liquid ways of working setup can be applied.
The range of potential savings will depend on industry and dynamics of operation in the organization and hence a business case analysis is required to be done to evaluate the impact of the above on the bottom line.
Performance and productivity
Considering the current scenario, organizations must ensure that the ‘Productivity’ component in PMS is effectively identified and measured. Changing demands and needs for the business have accelerated the shift from ‘Effort’ to ‘Outcome’ based performance management. KPMG in India’s POV on workforce, workplace, and HR transformation details out an approach to measure productivity by customizing a solution for application cohorts. The premise of the solution will be based on using a productivity matrix combining the factors – ‘TAT of Work’, ‘Volume of Work’, and ‘Occurrences of re-work’. To map the organization roles to the productivity matrix, it is crucial to conduct a baselining exercise and segment roles into categories of tactical, managerial, and strategic basis their complexity and impact on business. The relevance and impact of measuring productivity decreases from tactical to strategic roles.
Earn your compensation is a new revolutionary concept that is evolving. It talks about questions such as can we relook at our comp structure to increase the variable pay component to 60-70 percent. Staggered increments and bonuses are innovative techniques that organizations are looking to flatten the cost curve along the year.
In the present scenario, with virtual working being the new normal, measuring performance would require leveraging technology to track outcome-based goals for the workforce. KPMG in India’s view includes deploying live tracking dashboards for performance tracking through metrics such as – number of structured interactions, communication volume, collaboration, learning hours, etc. KPIs will differ and be relevant to the role type basis segmentation.
Establishing a virtual working environment
Most organizations run through an incremental and iterative change cycle when it comes to established policies, systems, and governance frameworks. The addition of new policies around hot-desking, employee well-being, crisis communication, etc. is coming up as a need for the new normal.
With an emerging need for faster turnaround in case of decision making and approval mechanisms, KPMG in India recommends enabling a differentiated governance structure with the deployment of project-based governance in favor of a traditional layered framework. This would essentially entail establishing smaller working committees with defined communication channels and SOPs to prepare for unforeseen crisis scenarios and upcoming future challenges.
The time to act is now
By employing these measures, organizations will be able to re-vamp their operating model, cluster existing and evolving roles in different categories to support business continuity, re-look at productivity, performance and reward structure to align with the changing work paradigms and enable virtual working to support workforce with new ways of operating. Organizations will also be able to optimize manpower and workspace costs by realizing savings in the range of 5- 20 percent through manpower productivity (11% to 19%), GIG-if workforce (4%-5%) and enabling virtual workforce (3% to 16%), via instituting operating model changes, migrating to virtual and hybrid working set-ups and appropriately measuring productivity.
HR along with the business must continue to monitor the organization’s values and culture. A quick dip-stick check of the deviations in it at this point might be a good idea before it cascades to the last level negatively – organizations and leadership must gauge what is going on at the ground level and what can be done about it or to improve it.
As the uncertainties persist and with a fully back-to-normal scenario still a distant reality, Organisations need to act fast, and identify and implement the right strategies to thrive both in the present and the future.
A version of this article appeared in The ET Insights on Monday, 15th June 2020