Coronavirus (COVID-19), Talent

Don’t Let Short-Term Actions Hurt Long-Term Outcomes

Short-term actions by organizations across the United States may be helping them stay afloat for now. However, if care is not taken, the long-term results might be less than favorable.

empty officeIndeed, the short-term effects of the current pandemic vary—think airlines and restaurants versus retail giants and grocery stores. Meanwhile, the long-term effects of an economic downturn for many companies depend on several factors; these factors should be controlled, or there might be serious long-term consequences.

“Employers need to consider their short-term actions to manage current costs and position the company for recovery,” said Edith Clee, Partner at Mercer. “The actions they take over the next few months, especially the longer-term strategies put in place, could determine how they fare over the next 12–18 months.”

Employees and Candidates Will Remember How Organizations Behaved

Carefully crafted and maintained employment brands can suffer seemingly overnight when care is not taken to preserve a brand. Look no further than what is happening with Ellen DeGeneres right now if you have any doubts.

The truth is, employees and candidates are focusing on social and corporate responsibility. Employers that lead with economics and empathy will be rewarded with loyalty—from employees, candidates, and existing and future customers. Before reducing compensation and benefit costs, which are often the biggest portion of operating expenses, employers should consider the following actions:

  • Preserve flexibility by conserving cash and delaying increases and grants: Short delays in rewards like merit pay, LTI awards, and discretionary 401(k) contributions can be a safety measure until broader effects are known and desired interventions are better understood.
  • Preserve jobs by identifying ways to redeploy employees within your company or even to other companies with substantial needs: Keeping people working will require adaptation and creativity. Internal and external “labor loans” give employees an opportunity to learn and develop in new roles while preventing reductions in force.
  • Identify and evaluate potential compensation and benefit actions to take later to improve cash flow: Now is the time to inventory current programs, assess costs and competitive positioning, determine employees who may be affected, and model costs and the impact of program changes.
  • Strengthen safety nets, and protect people: Should layoffs or other disruptive actions be required, consider whether policies and programs, like severance pay, health benefits, and workforce transition services, are socially responsible and meet employees’ needs.

If pay cuts, furloughs, and layoffs are absolutely required for your organization to survive, then you have to do what you have to do. But also remember that how you do it will not be forgotten by those who are affected.

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