Workforce Reduction & Professional Service Companies
Delivered April 6, 2020. Contributor: MJ K.
To identify and detail how major professional services companies, like agencies and consultancies, are dealing with workforce reductions during the Covid-19 pandemic to inform the client’s internal processes.
McKinsey’s Notes & Recommendations
A recent report from McKinsey details a variety of scenarios for Covid-19 – both in the pandemic’s trajectories, as well as the recommended reactions for affected businesses. They offer several recommendations for all businesses, which we can assume they are instituting themselves.
They recommend that companies “support and protect employees” by engaging in a few practices; aside from health-related items, these include closing all offices and employing work-at-home strategies for all employees for whom this is possible. They state that companies should have no-travel policies, also, and end all employee travel. Workers worry that working from-home may reduce their productivity (especially if they are new to the practice), and companies should take steps to ensure employees’ needs are met and fears are assuaged.
They recommend increasing communication with employees, while “balancing the needs of the business with expectation-setting and morale-building, so employees know their well-being is top of mind.” They also recommend finding ways to help employees protect their health, including amending sick-leave policies if need be.
They recommend c-suite executives (who must make the hard decisions for the company and employees) “monitor leading indicators of how and where the pandemic is evolving and conduct scenario planning using both epidemiological and economic inputs.” What this means is that companies should understand what might happen – and prepare for every eventuality, especially as it relates to their business’ bottom line and their employees.
McKinsey also recommends that companies “think about the next horizons of Covid-19,” as it is “easy to lose sight of the actions that might be needed tomorrow – and the day after that.” Thinking about the potential horizons should include specifics that “ensure an organization’s rapid response, adaptation to change, and reemergence in a position of strength.” Lastly, they recommend companies “evolve the nerve center to plan for the next phase,” which could include any number of outcomes.
The consultancy firm notes that there are five ways companies are responding to “workforce protection.” These are through policy and management, with a “portfolio of actions, including prevention and incident response;” through two-way communications, or using “multi-channel communications, confidential reporting, [and] sources of truth;” through personnel and contractors, which translates to “tiering” employees, where some work at home and some do not; through facilities and on-site norms, which include “staggered work shifts” to prevent the spread of the illness; and through health and government engagement, or working with “local and federal regulators and public-health officials” to determine the best ways to protect the workforce while still remaining open for business.
McKinsey notes that policy-making, especially as it concerns events mostly unknown to corporate America – like pandemics, is “scattershot” at most companies, and may be likely to ineffectively deal with the business interruption and employee-related issues. They note that professional services and tech companies “lean very conservative” on handling issues, though maybe not always effectively. They state that asking unwell employees to stay home – instead of conducting possibly-ineffective temperature screening – is recommended; to make these policies more effective, companies should offer employees “compensation protection – and insulation from other consequences, too.”
Additionally, McKinsey notes the importance of understanding the “second-order effects” of various policies. For example, if a no-travel order is given, then pushing those employees to work from home is better rather than crowding up the office and increasing transmission risk. They also note that the needs / effects / outcomes of different locations and different employee segments must be taken into account rather than using the same policy for every location and employee.
The consultancy also recommends that companies “start by drawing up and executing a plan to support employees that is consistent with the most conservative guidelines that might apply and has trigger points for policy changes.” Some companies are using benchmarking for this, while others are providing greater autonomy to certain levels of employees and empowering them to change policies based on need (though this is better for companies with multiple locations).
Only the project owner can select the next research path.