Covid-19 Crisis - Stress Test for Companies' Recruitment and Retention
As contributed for entrepreneur.com
"Know how businesses react to current conditions will shape their future attractiveness to talent and ability to retain staff"
It will not have escaped your notice that the Covid-19 crisis is already breaking countless businesses and causing record unemployment. We will get through it, however, and strong, resilient organizations will survive. Companies thinking long-term would do well to view the current situation as a stress test for their recruitment and employee retention strategies.
Even before the crisis, Singaporean tech firms had extraordinarily high voluntary turnover rates. Last year, a survey from Radford Global Technology revealed that in Q2 2019, tech companies in Singapore suffered voluntary turnover of 14.7%, the second-highest rate in Asia, exceeded only by Malaysia’s 15.3%. Innovative businesses in this city-state clearly already struggle to retain talent. Depending on their HR response to the Covid-19 crisis, in the future, they may also face difficulties recruiting.
In one or two years’ time, candidates will almost certainly ask potential employers, “How did you respond to the Covid-19?” Companies that only facilitated work-from-home for staff when the Singapore government’s legal mandate took effect on 7 April 2020 and failed to do so when the transition to telecommuting was “strongly recommended” by the Ministry of Manpower (MOM) almost a month beforehand, may be accused of an uncaring attitude — or worse, blithe endangerment of employee safety. The same goes for companies whose bosses send employees back to work before it is definitively proven safe to do so.
Similarly, businesses that indiscriminately terminate employees during this challenging period could very easily be perceived as disloyal. Both the surviving staff and future potential hires will ponder whether a company that, faced with troubled times, has demonstrated a willingness to throw its people under the proverbial bus is worthy of their loyalty or consideration.
While letting employees go may at first glance appear to be a prudent cost-cutting measure, it can in fact have the opposite effect. Post-crisis, when the time comes to restaff, according to the Society for Human Resource Management, “Research suggests that direct replacement costs can reach as high as 50%-60% of an employee’s annual salary, with total costs associated with turnover ranging from 90% to 200% of annual salary.”
Top talent is scarce and in high demand. Even the giants fail to hold onto hires for long — the median tenure of an employee at Apple is two years, while at Google and Amazon, it’s around half that. In this moment of uncertainty, more than ever, it is incumbent upon companies to demonstrate a culture of valuing employees and taking the steps required to retain quality staff.
During the coronovirus crisis, financial realities such as a decrease in revenue or funding or both may necessitate measures including temporary salary reductions of between 10 to 50%, reduced hours and pay, or unpaid furloughs. This type of action is being encouraged by MOM in lieu of layoffs, with the Singapore government putting a series of schemes and subsidies in place to support employers that strive to retain staff.
The best leaders consciously involve staff in the decision-making process around difficult cost-cutting steps of this sort and explain why they are being taken, assuring employees that their jobs, compensation, and conditions will eventually return to normal. This empowers staff to be part of the solution and does much to foster cohesion and team spirit.
That is particularly true when leaders and upper management themselves ‘share the pain’ and participate in cost-cutting. Internationally, we have recently seen CEOs of Covid-19-affected companies such as Marriott, GE, Ford and Lyft offering to forfeit large percentages (50% to 100%) of their 2020 salaries. Here in Singapore, Grab’s senior leaders have agreed to pay cuts of up to 20% (for an unspecified period), while the group CEO of ComfortDelGro will take a 15% pay cut and senior management a 10% salary reduction (from April to June).
However, senior executives who inflict hardships on their employees while continuing to enjoy generous remuneration themselves are unlikely to elicit the ongoing allegiance of existing staff, nor the faith of prospective hires. Companies need to demonstrate that they are an attractive employer, during both good times and bad. Management needs to show that they ‘lead from the front’, instead of simply letting their staff bear the brunt of the punishment.
Some of the stings will be removed from measures that adversely affect an employee’s income if they have joined a company out of passion and alignment with the business’s mission, rather than having signed up solely for the pay and perks. When employees join a company on the basis of shared values, they’re motivated not solely by a paycheque, but because they love what they do and find real fulfillment in it.
During circumstances such as those the world now faces, insofar as staffing goes, there’s a keen temptation to freeze or shrink numbers. Even if they’re not actively hiring at this very moment, employers should continue using the tools at their disposal to build their profiles and assert their credentials as an attractive place to work. Companies must be careful about layoffs, as a reputation for ruthlessness won’t work in their favor in the future. Besides which, scaling back up post-crisis may be more of a challenge than expected; far better to retain the talent that’s currently on board, by whatever means necessary.
Finally, though there are enormous obstacles right now (not least, the inability to meet candidates person-to-person), if a company is still hiring, they must be mindful of the fact that it can take three to six months to locate the perfect candidate for a role. When this crisis is over, you’re going to need the human resources in place to handle resurgent demand. Don’t delay in engaging with the incredible talent that less prescient companies may short-sightedly choose to part with as this situation unfolds.
This article first appeared on https://www.entrepreneur.com/article/349126