COVID-19 Impact: Company's surge into "cost savings" mode

To no surprise, COVID-19 global pandemic is effecting all businesses across all sectors. In the most recent flurry of events, "The Silicon Valley Tech Industry" has undoubtable been hit. For some employees, the ill-fate of unemployment has become reality. Company's that generally have a conservative approach are jumping into a "cost-saving" mode quickly, in what I believe is in fear of "going under".

Employer's are having to face unfavorable decision of laying off employees or reducing their work-force in efforts to stay "on top" of the unknown COVID-19 impacts. With the global economy's future in the whim, businesses are playing a game of roulette. Will their decision have them win big? Or will it be their demise? One thing is for certain, COVID-19 is a different beast and has taken on a whole different meaning in the business world.

As I dare to say it, during these hard times, strategically, this is great for companies that were looking to do a re-org. or re-structuring in Q2, anyways. As a People Operations professional, I can say for most who have done a re-org, or re-structuring, we do not favor "letting go" of employees. COVID-19 has provided an empathetic reason for "letting go" of that employee who supports their family, or that dedicated worker who just left their recent job to join a a vision at a new company; only to be hit with a separation agreement, a couple months later. Psychologically, it is less impactful to know that, as an employee, the company had to make a hard decision terminating your employment; due to, a global pandemic that has nearly effected everyone. However, nonetheless, for lack of better terms, it sucks.

This pandemic, like all turbulent change, will surpass; and everyone who was kind to their employees during these unstable and unforeseen time will be noticed. If we look into history, it will show those who lost trust in companies or business will be apprehensive to join the next company or business, but, will be pressured into taking a job to make-up for lost wages. Why? That individual that was effected, to their surprise was terminated. They will want to make sure that "value" is at the core of company culture. And secondly, is the company equally invested in their employee.

As I probe this will be the next hiring frenzy in the near future; due to, this unfortunate circumstance. Does or will companies have a task force equipped to hire right? It will be vital for companies to have their HR and Operation soldiers at the forefront.

A few of my biggest questions is: "Who will make it out?" and "What will be the new face of business conduct?" And more specifically related to my profession, "How will HR and People Operations professionals respond?"

To all, I challenge us to have a healthy discussion. Would you rather?

A.) See companies do their best to keep all their employees. By temporarily reducing all wages, by a percentage; and when it all over, restructure bonuses to make up for the reduction, and appropriately increase wages when fit?

This structure would look something like the following. Companies would take their total wages and put them into the following percent tiles 90%, 75%, 50% and 25%. If your total salary fell under 90%, that would mean your salary is at the top 10% of the company total wage cost, your company would reduce your wage by 20%, each percent tile following would reduce by 5%. Or if your company is in the position to do so, they could initially do this in 2 phases, so it wouldn't hit employees as hard. So, instead of reducing wages at 20%, 15%, 10%, and 5%, relatively, we would reduce your wages by 10%, 7.5%, 5%, and 2.5%. then re-evaluate wage reduction or find another solution, as appropriate to the circumstance.

Before you answer. Let me put this into perspective. When you go on a paid leave of absence, most company policy is between 60% and 80% of your total base wage, meaning they will pay during your time of leave between 60% and 80% of your total base wage. A wage reduction would simply mirror at the max of affordability and prior to another solution, a company policy relative to the paid leave of absence. This will in turn keep employee morale up, let all employees know they are valued and that the company sees all employees as an asset. What would that do for your company in the future? How would this jester translate?

B.) Do a reduction in labor force? This is inevitable, and I would rather take my odds and see if I was effected by this reduction. I am also crossing my fingers that there is a severance package tied to it.

Before you answer. On one side, you may not be effected, but on the other hand, you may. How would a lost of wages effect you? In the state of California, the max unemployment benefit is $450/week. Thats $11.25/hr, $90/a day! The supplement benefit is not even minimum wage. And whilst, I'm sure you would be grateful for something, that is added stress in an already stressful time. Not to mention, reduction in labor force are generally more permanent; than say, layoffs.

C.) Do a company wide layoff? It's not as permanent; and everyone that was laid off has the opportunity to have their job back, when this all ends.

Before you answer. Here is something to think about. If you layoff an employee, then they still can collect unemployment, they are guaranteed their job back, but the employer has the negotiating power to reduce wages.

D.) Let's reduce total working hours per week to 35 hours/week and eventually maybe to part-time?

Before you answer. Let's weight out the pros and cons. Pros- everyone still has their job. 35 hours by law is still considered full-time and employees benefits would not be effect. And the added bonus, employees gain a peace of mind and extra time with their family. Con- potentially this could change the companies expectation and norm. Individuals who already work more hours may feel overloaded resulting in people voluntarily quitting.

Without a doubt, Company's will continuously face difficult decisions during this temporary COVID-19 global pandemic sending them into "cost savings" mode that could permanently effect not only the company but the working force. How would you like your employer or your future employer to handle this situation? and What would you try to influence in a company wide decision like this? Leave a comment below.