COVID-19 has reached North America in full force and is the major influencer in almost all our actions. Terms such as self-isolation and social distancing have entered everyday conversation, along with stories of panic buying and toilet paper profiteering. This situation is, and will continue to be, a life-changing event.
One of the realities facing businesses during this time is managing costs, both containing and reducing. Even the most thorough business continuity plan could not have foreseen the widespread shutdowns, cancellations, and quarantines. This is a reactive situation, which usually means businesses are quick to make cuts and look for any quick solution. But is this the right move? Eventually it may be, particularly in the most vulnerable industries right now such as food service and hospitality.
It is important to think through cost-saving measures carefully with a view to the long-term impact. When the COVID-19 pandemic is over what will the status be of your organization? Where will you want it to be? Plan your cost cutting and savings carefully to address these questions.
- Always return to your company values and ensure any action you take is in keeping with those core values.
- Your employees are critical to your success. What impact will it have if there are layoffs to the company and to the employees?
- Unemployment numbers remain low and a strong talent strategy remains a priority, for example, in the manufacturing sector many jobs have become technically more sophisticated and harder to fill. Retention is important.
- Company brand and reputation are important considerations. You can be sure that how you treat your employees and communicate your decisions will be shared. Make it a good story no matter how difficult the decision.
- Communicate often and communicate clearly. Use McLean and Company’s resource Craft An Internal Communications Strategy, which includes tools and templates, to enable effective communication.
Some thought starters:
- Check with government resources. As governments propose financial assistance, see if there are programs your company can take advantage of. For example, can employees collect Unemployment Insurance to supplement earnings if their hours are simply reduced?
- Be creative and selfless. Can some withstand pay reductions more than others? Airline CEOs are reducing or eliminating their salaries temporarily to help offset costs. Are there other employees that can temporarily reduce their salaries?
- Cancel or delay management bonuses.
- Offer voluntary reductions in work and pay to those that will take them. If people are willing to work three or four days per week with the commensurate pay cut can the company accommodate that?
- Freeze any hiring and redeploy employees to fulfill other roles to balance where the work needs to be done.
- Encourage employees to come up with ideas to contain costs – make sure to recognize those that come up with viable ideas. Having a culture of reward and recognition is crucial to keeping employees engaged.
McLean and Company’s Develop a Workforce Plan to Address Talent Needs will guide the HR team to implement a clear and straightforward workforce planning process aligned with organizational capabilities and maturity to make workforce planning achievable and impactful. A helpful tool for cost containment strategy is the Critical Role Identifier.
To assist in planning for the more difficult decisions an additional resource is Develop an Offboarding Plan to Manage Risk and Transition Employees Effectively, which will help manage departures effectively while protecting your corporate brand, retaining organizational knowledge, and preventing exposure to risk.
Pause; be planful and strategic in your recommendations and look for positive outcomes for both the organization and its employees.