In collaboration with Willis Towers Watson/World Economic Forum
http://www3.weforum.org/docs/WEF_NES_COVID_19_Pandemic_Workforce_Principles_2020.pdf
Stakeholder Capitalism in a Time of Crisis.
While there currently is a significant focus on the public health and economic impact of the COVID-19 pandemic, the workforce and societal implications are no less profound. The guiding principles and the four workforce management imperatives outlined in this document are a preliminary response to the unfolding crisis. They are intended to serve as a tool for Chief Human Resources Officers (CHROs) and other business leaders. While businesses may need to adjust measures according to different policy environments, the concept of stakeholder capitalism can provide a framework for a responsible course of action at this pivotal moment.
In 2019, less than 10% of business leaders from G20 and OECD countries considered the
spread of infectious diseases as a looming global risk, according to the World Economic
Forum Executive Opinion Survey. Nor were companies anticipating that a pandemic might
test their public reputation as a responsible employer. Yet in early 2020 all organizations
are facing just such a crisis and the need to address the urgent concerns of various
categories of workers: those who can and continue to work remotely, non-remote
workers who can work remotely with proper support, those who can no longer work for
a variety of reasons and those who continue to work in person. Additionally, most
companies, across sectors, had not implemented flexible or remote working
arrangements. In the current environment most businesses are having to put in place new
measures for their workforces rapidly – often with no previous comparable experiences.
The following principles can help guide organizations in shaping a responsible course of
action that balances short-term pressures against medium- to longer-term needs:
– See this crisis as a defining leadership moment— and continue delivering the best possible
outcomes for all stakeholders. Staying true to the purpose, values, principles and culture
of an organization starts at the top. Effective leaders are transparent, empathetic and
create trust, and their behaviors help calm, support and even energize employees so that
they feel vested in a common mission and purpose, and embrace new ways of working.
– Adopt an agile and continuous learning mindset to ensure your response
is (re-)calibrated to the circumstances at hand. The uncharted waters of this crisis demand
agility and innovation, and adapting to rapidly changing systems and regulations.
– Understand the perspectives of and engage all stakeholders (e.g., employees,
shareholders, customers, suppliers, unions, healthcare providers, community) in decision
making. Keep a pulse on the shifting needs and priorities of all stakeholders and the
evolving state of competitive and innovative practices.
– Focus on the intersection of employee and company wellbeing. The cost pressure of the
current revenue-challenged environment places significant stress on leaders to meet the
needs of shareholders at a time when the wellbeing of employees, particularly the most
vulnerable, is being seriously threatened. But the risks to – and benefits of – employee
wellbeing and company wellbeing are highly aligned.
– Make decisions and take actions that take into account medium-term needs and long term business objectives. Decision-making in this rapidly shifting and uncertain
environment requires organizations to resist the pressure to engage in short-term actions
that seem essential in the chaos of the current environment but may compromise the
longer-term sustainability of the business.
These guiding principles and the four workforce management imperatives outlined in this
document are a preliminary response to the unfolding crisis. They are intended to serve as
a tool for Chief Human Resources Officers (CHROs) and other business leaders. While
businesses may need to adjust measures according to different policy environments, the
concept of stakeholder capitalism can provide a framework for a responsible course of
action at this pivotal moment.
1. Prioritize planning, wellbeing and communication:
The four dimensions of employee wellbeing – physical, emotional, financial and social –
are at the center of the employee experience and essential to an engaged and
productive workforce in normal times. During a pandemic, wellbeing assumes a new
urgency. An employer’s actions in supporting wellbeing are critical to building and
sustaining workforce resiliency and sending the message that employees matter.
Companies need to support employees through clear communication during all
phases of an organization’s response to COVID-19. And companies must seek to
maximize the coverage of all employees, including those in roles where remote work is
possible as well as non-mobile employees (e.g., customer-facing retail and service
workers). The following key actions around planning and communications will help
employers and workers alike:
– Clearly articulate key policies and procedures. Companies with strong policies and
procedures for emergencies are better positioned to address the challenges of the
COVID-19 pandemic. An organization’s ability to move quickly and effectively to protect
workers’ health and minimize exposure is determined to a great extent by the quality of its
business continuity plan. A robust plan enables an employer to take decisive actions
grounded in an understanding of the impact on employee health and critical business
operations.
– Empower local leaders and managers with tools and information. Frontline managers and
supervisors should have rapid access to accurate information about the company
strategy, protocols and rules. Local leaders need to have the authority to effectively
address local issues on a real-time basis. Managers and supervisors must clearly
understand how to report COVID-19-related issues internally and how to work effectively
with local public health authorities. In addition, managers should be trained to support
employees as they deal with their personal challenges – for example, through stress
management programs, counseling and flexible work arrangements.
– Prioritize empathic and personalized communications. Employers have the opportunity to
clearly communicate the value of their benefits and help guide employees toward
improved use of benefits and services. The crisis is a chance to be there for employees
when it matters most, building trust and demonstrating empathy. Employers may also
consider using communications technology that enables them to push personalized
communications and content to employees that addresses their specific needs and
concerns. Given that financial and job insecurity are leading sources of stress, employers
should prioritize communicating tips and resources such as virtual and tele-behavioral
health services to help boost employees’ mental health.
2. Focus on employee experience, engagement and motivation:
Employees may be experiencing a heightened mix of anxieties, and employers need to
consider the most critical aspects of employee experience to attend to.
Research tells us that employees are looking for two fundamental experiences from work:
(i) Connecting with people and being inspired by the purpose of the organization, and (ii)
Contributing work as well as being able to grow and be rewarded accordingly. These two
factors are equally important for enhancing engagement and ensuring sustainable financial
performance.
As organizations readjust how they deliver work and often how they reward, they must
maintain a strong sense of purpose for the organization and build trust in leadership. The
following actions can help improve employee experience, engagement and motivation:
– Lead with integrity and purpose. We are experiencing a moment when companies
and their leaders — through their decisions — will define who they are. In a forthcoming
study of the leadership actions that allow organizations to thrive during change and
turbulence, across 9 million employees globally, the four most important were: 1.
Exemplify integrity, respect and humanity
(care for others); 2. Provide a clear sense of direction to inspire people around the
purpose of the organization; 3. Solicit and respond to employee feedback; and 4. Remain agile and move swiftly from idea to implementation.
– Be active with employee listening. Soliciting opinions and listening to employees is an
important signal that the organization cares; it can help reduce anxiety and build trust.
As a lesson learned during the 2008 financial crisis, leadership needs to hear from
employees “now, more than ever.” In crisis times, it is important to survey employees
frequently, using survey questions designed specifically for the current situation.
– Connect employees using new technologies. With large numbers of employees working
from home and a sizeable group of non-mobile workers, it is important to ensure all
employees retain a strong sense of connection. Employers should consider new and
engaging technologies, such as virtual focus groups, which can be accessed via a
mobile phone.
3. Ensure responsible work redesign:
The COVID-19 crisis is accelerating a number of trends related to the future of work, from
remote work to increased use of temporary workers (specifically in customer fulfilment
and health care) to accelerate the automation of highly repetitive tasks. It is also
highlighting the need for innovative solutions to enable a rebalancing of talent between
industries suffering declining demand and those experiencing a spike in demand.
However, amid this disruption, there are some positives for companies and workers,
particularly in relation to long overdue upskilling and reskilling. The following action areas
should be considered in relation to work design:
– Sustainably manage the shift to flexible/remote working. A recent survey of 2,000
participants in flexible work arrangements in China, the first country to aggressively move in
this direction in response to the crisis, indicated that 63% were supportive of remote work,
with 55% believing that their employer provided them with the software, tools and
resources to work effectively. While many organizations have rushed into remote working
arrangements in the past few weeks, it is essential that such arrangements balance the
needs of employees and the company. Employers should consider how to make flexible
work as inclusive as possible — for example, by providing stipends for those who may not
have needed equipment or full access for those with disabilities.
– Incorporate contingent labor in a responsible manner. Certain industries (e.g.,
distribution and logistics) are seeing a spike in demand and are resourcing that spike with
talent from the gig economy. However, as organizations pursue the flexibility afforded by
gig talent, it is critical that they do so ethically and responsibly. The World Economic
Forum’s Charter of Principles for Good Platform Work presents one relevant starting
point.
– Consider a cross-industry talent exchange as a means for “sharing” talent. There is a
significant opportunity to redeploy select talent with comparable skills from industries
facing reduced demand (e.g., airlines, hospitality) to those facing a significant increase in
demand (e.g., retail, logistics, health and distribution) for a limited period of time — for
example, enabling baggage handlers from airlines to transition en masse into the logistics
role in retailers and distribution companies. Having organizations collaborate in a talent
exchange can significantly minimize the frictional cost and time associated with traditional
employment transitions (e.g., reductions in workforce/furloughs, application for
unemployment benefits, applying for new positions) while supporting workers in
developing new skills and new networks. Collaboration with the public sector can
support such transitions.
– Use the opportunity afforded by this disruption to make progress toward the
longer-term upskilling and reskilling agenda. Learning is moving from the fringes to
becoming a centrepiece of the employee experience. The crisis provides companies the
opportunity to turn their commitment to continuous learning into a reality for all workers.
The World Economic Forum estimates that by 2022, 42% of core skills required to
perform existing jobs are expected to change, with over 133 million new jobs created in
major economies. Organizations must take advantage of this time of crisis to identify the
skills that talent in various roles should acquire to stay relevant and ensure they have
access to the digital resources that can help them develop those skills. Such learning can
also be conducted with a view to rapid redeployment within different parts of a business.
4. Balance short-term cost concerns with medium-term resilience and rebound:
A company’s commitment to its guiding principles is often most tested and most critical
when it comes to decisions about labour cost and risk management. Companies must
recognize the often competing demands of shareholders, customers and employees, and
look for innovative solutions to ride out the medium-term crisis while minimizing the
negative impact on all groups. The following action areas should be considered for both
businesses and their workers to be able to rebound after the crisis:
– Protect jobs and elements of total rewards. According to a survey conducted in February,
only 25% of companies anticipated “moderate or large negative impact” on their
businesses over the next six months, but the number rose to 59% in a March survey with
the same question. In tackling this challenge, it is critical for companies to emphasize
actions that balance near-term flexibility against the long-term wellbeing of the enterprise
and its workers. Such actions may include mandatory personal time off, unpaid leave and
furloughs instead of reductions in the workforce and severance. Some employers may
want to consider creating a new crisis leave or temporary leave, as well as voluntary leave.
In addition, it is important to embrace the concept of shared risks, responsibilities and
rewards in shaping solutions during a crisis. For example, while varying in use across
geography, industry and company, variable pay could serve as a tool to protect the key
elements of total rewards during the crisis, including fixed pay and benefits. Employers
should also consider providing expanded support to parents and caregivers to support
them at this time.
– Focus on the financial wellbeing of the most vulnerable employees. Focusing on
workplace dignity can help employers support their most vulnerable employees.
The need is particularly acute among hourly workers, those who cannot work from home
and the approximately one-third of employees globally (36%) living paycheck to paycheck.
Many employers recognize their role in addressing this issue. Surveys show that many
employers are paying furloughed workers in full and continuing their benefits as well as
covering pay for hourly workers unable to work either due to a work location closure,
quarantine requirement or exposure to the virus. These practices may change as the crisis
unfolds, but those businesses that live up to the values of stakeholder capitalism are also
likely to be best placed for a rebound, having supported their human capital during the
present crisis.
– Take a segmented view of the workforce. Employers should consider how the crisis
affects different employee segments and identify the roles within those segments that are
truly pivotal to the business. This approach helps ensure that organizations move beyond
one-size-fits-all compensation and benefit solutions, and take actions to support roles
critical to the company’s business model. It is essential that such segmentation reflect the
role and not unique personal characteristics (e.g., gender, ethnicity, religion, personal
circumstances).
Investing in stakeholder capitalism in a time of crisis:
As organizations address the longer-term implications of COVID-19, it is imperative to focus on the needs of all stakeholders — from customers to suppliers to shareholders and, specifically, employees to ensure no one is left behind. This crisis presents an opportunity to take bold actions and show leadership and solidarity by applying the principles and guidelines set out in this document to better balance short-term crisis measures against the medium- and long-term objectives of responsible employers. These actions can include protecting salaries and benefits or providing learning opportunities to make progress against reskilling and workforce transformation objectives. Such an approach enables organizations to earn the trust of employees and unlock the discretionary effort needed to move the organization forward in turbulent times..
