Human Power amidst Covid-19 : Is Lay Off the Only Option?

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Human Power amidst Covid-19 : Is Lay Off the Only Option?

The current economy and market conditions are a significant reminder to companies that they will always be facing constant changes that can threaten their businesses.  It is thus important to remain flexible, resilient and agile.  Companies have always focused on products and operations for its sustainability, but this time, companies are also forced to look into and recognise the impact of human sustainability within the organisation.  And HR plays the most important role in impacting and addressing this.


Many companies have opted to put recruitment on-hold or to lay off employees in the wake of the Covid-19 crisis.  According to the latest data released by the Department of Statistics Malaysia (DOSM), Malaysia’s unemployment rate is at 3.9% in March 2020, and the number of unemployed persons increased by 17.1% year-on-year to 610,500.  This compares with the unemployment rate of 3.3% in February 2020.  Laying off employees no doubt reduces the operation costs in the short turn, but it may also result in manpower shortages as economy is now slowly opening up.  Balancing between cost-control and talent-retention is always a tricky task, and here are some strategies that HR and companies are adopting to help preserve their manpower for a faster recovery once the economy improves.





Redeploying Talents and Reskilling Staff

During this crisis, senior leaders and HR should be looking into reconfiguring workflows and, where possible, propose “job movement” and retrain or upskill their employees to support the changes within the business.  With more than 40% of employees willing to learn new things, this is perhaps an exponential area to explore, and should serve as a long-term strategy to include measures to adapt to digitalisation and automation.  Companies can align their business goals and strategies while giving their employees opportunities to continue to develop their skill set.  It reduces hiring costs, and helps companies to retain their top skilled talents.  Further, reskilling increases employee engagement and adaptability, and in turn, drives productivity through new ideas and innovation, which is vital in current economic situation to ensure sustainability and competitiveness.


Implementing Pay Cut or Reduction

Pay cuts or reductions is perhaps the most common strategy adopted by companies, especially small and medium enterprises (SMEs), to sustain operations during this crisis.  However, it may likely create dissatisfactions and demotivation among employees, and there are also legal implications to be considered.  In general, terms proposed by employers should be fair and transparent, so that both parties are clear about what to expect.  Most importantly, the terms of the pay cut or reduction should be mutually agreed by both the employers and employees.


Introducing a Four-day Work Week

Alternatively, companies may look into introducing a four-day work week with 20% pay reduction.  This option would likely be more amicable to employee, and perhaps help to promote productivity and efficiency as employees are now required to complete work in a compressed time.  It helps to reduce payroll costs for companies, whilst creating a better work-life balance for employees.  A four-day work week is not something new, and might gain grounds in wake of this crisis as a temporary, or permanent, employee benefit.


Offering Sabbatical Leave

Another way for employers to retain top talents during this crisis is to offer them a period of voluntary sabbatical or unpaid leave.  With school and nursery unavailable during this period, this could be a welcoming option for employees that are finding it difficult to juggle between working and taking care of family and young children.  This provides them an assurance of a job to return to at the end of the sabbatical leave and with a fresh mind.  However, it is important that both employers and employees are clear of the terms of the sabbatical leave to avoid any future disputes.