Anticipating Recovery: A Strategic, International Perspective

Introduction

Our work as advisers to some of the world’s largest businesses gives us a unique perspective on the way in which employers are beginning to recover from the initial crisis management phase of the COVID-19 pandemic.

Much of the compliance aspect of this process is guided by the bewildering patchwork of regulation, both national and local, that has developed over the past 10 weeks. While we have been advising on those aspects, this note isn’t a catalogue of the statutes, ordinances, guidelines, and so on that have been recently put in place. Rather, we wish to take this opportunity to offer our high level perspective on the very practical strategies and tactics that we are seeing employers include in their recovery planning around the world.

The note is split into 2 sections:

  1. Strategic: this section describes some of the longer term measures that we’ve observed. The majority of these have not yet been deployed, if only because they’re linked to the recovery phase which has not yet taken hold in most markets that imposed a lock-down.
  2. Recovery: this section lists some of the things that we have seen incorporated as elements of the return/recovery planning in which most large businesses are currently engaged.

The COVID-19 pandemic has negatively impacted almost every business that we have assisted, with some sectors and geographies being hit worse than others. Some businesses, such as food (grocery) retailers, have shown short term gains, but these seem likely to be transitory. A small number of other businesses, including those whose operations are based upon online retail, have seen sales gains and general business advances that are more likely to be permanent. But even those businesses that have seen an increase in their current revenue have needed to implement disruptive workplace restructuring that has added to their cost-base. Overall, there is now growing concern that the pandemic is causing serious, lasting, and systemic economic damage to most businesses and their workforces.

Strategic

  1. As of today (22 May 2020) most businesses have moved beyond the initial crisis management phase and are either in, or planning for, recovery. They have built and/or executed decision criteria and conditions for workplace return, using curated data and scanning sources. We’ve seen how complicated this can be for employers who must accommodate not just a single, national set of regulations, but multiple, stratified layers of regional and local regulation. On occasion, we’ve seen single sites covered by national, state, regional, and city rules, not all of which are consistent and/or integrated. Employers affected by this patchwork of rules are mostly taking a risk-based approach in determining how to balance and apply these varying competing obligations.
  2. There’s a weary acceptance that true ‘normality’ will only emerge for workforces when a vaccine is widely available and delivered, which may be a year or more away. The recovery state that many businesses are trying to visualize is novel, but neither crisis mode nor business as usual. ‘Recovery’ isn’t a singular, static phase either, but one that is incremental and which allows for a phased emergence from full lockdown.
  3. All major businesses that we work with have used some form of scenario planning, dedicated, cross functional, and discrete recovery teams (including HR leaders), and horizon scanning to determine the likely shape of their business during and after recovery. Scenario planning is well suited to the unpredictability of the outbreak and its possible economic impact.
  4. All businesses will need to ensure that their long-term planning reflects actual and anticipated government regulations. Some businesses will be able to exert some influence over how the regulatory process develops through consultation. Planning also needs to reflect key inter-dependencies (such as travel freedoms) and assumptions around the return of employee and customer confidence levels.
  5. There is growing appreciation that some of the crisis-level rapid responses from regulators and businesses might not sit well with existing legal rules. Many regulators, recognizing the risk of conflict with existing law, took the approach of issuing ‘guidance’ that did not actually change existing legal rights and obligations. Employees and their representatives have been largely content to acquiesce to crisis-level responses from businesses but, as societies move into a more controlled phase of the pandemic, there is risk that there will be opportunistic re-examination of those responses to probe for potential legal breaches. We see this being a particular risk for that part of the workforce who are subject to permanent, rather than temporary, adverse changes in their employment. Sensible long-term planning needs to recognize where the likely pinch points are.
  6. Many commentators and businesses assume that although the COVID-19 emergency stop to the global economy will be sharper and more damaging than the Global Financial Crisis, the recovery from it will be quicker and stronger. We see recent uncertainty in this as policy-makers start qualifying their forecasts by assuming an absence of the so-called ‘second-wave’.
  7. In terms of long-term staffing requirements, most corporates assume:
    • that the level and availability of international labor migration will never be the same again;
    • there is unavoidable uncertainty in the level of staffing that will be needed in the longer-term and, unless the business is under immediate, dire threat, it is better to be cautious before significantly reducing headcount;
    • that future staffing needs will reflect a renewed emphasis on the ability to react quickly to a similar event in the future, including the much talked about ‘second wave’, and a desire for maximum operational flexibility and resilience. This carries implications for both the types of engagement that are optimal and the content of the employee documentation; and
    • supply chains will be shorter, and warehousing will be closer to key operations.
  8. All businesses have been closely watching the emergence from lockdown in China/Asia, and now also selected parts of Europe, to learn from their experience of recovery. Those lessons are still emerging.
  9. There’s a recognition that the crisis management phase has been managed best through collaboration between workforce stakeholders and by thinking long term. While it’s important to be mindful of an employer’s legal rights, in this unprecedented situation there may be much to be gained through dialogue and negotiations. We have seen levels of industrial cooperation that have been unprecedented and keeping them at that standard will be very important.
  10. Many employers have actively considered whether they can and should set themselves up as the trusted source of information for their employees, many of whom are overloaded and/or over-stressed by the massive quantity of information that is presented to them.
  11. Most businesses are also designing fresh ‘response’ or crisis management plans that could be deployed if the need to shut down recurs.
  12. Most businesses are also taking time to consider whether this event creates business opportunities and/or threats that need to be reflected in the way in which the business implements recovery, whether around resource allocation or otherwise.
  13. Most of the businesses we have worked with recognize how important it is to maintain transparent, empathetic leadership: they see this as a leadership test, which it is.
  14. Finally, all recovery plans need flexibility not only for practical, business reasons, but also to ensure compliance. Regulators are caught in reactionary postures just as much as businesses are, and laws are changing weekly (and were changing daily in the crisis phase).

Strategic: added complexity for multi-nationals

  1. Planning is most challenging for complex multi-nationals whose organization is, in reality, a matrix of multiple, inter-dependent businesses. Rather than a single recovery plan, there need to be multiple different plans at a business (or even site) level, though they might share certain consistent features or assumptions.
  2. Recovery is very local and so, unless you’re in the vanguard of the recovery (i.e., in Asia), there will always be transferrable learning available from other regions.
  3. Staggered timing is vital to ensure competitiveness. Much of Asia and Europe are already in tentative, cautious recovery.

Recovery: tactical issues to consider

In addition to the strategic issues that businesses are wrestling with, some of which are listed above, there are hundreds of micro decision points that need to be addressed as they plan for recovery. Some of the more common issues that we have seen are listed below.

  1. When should you/can you subject people to background checks and drug and alcohol tests before putting them back to work?
  2. When should you/can you subject people to COVID-19-related health checks before putting them back to work and, then, once they are back at work?
  3. How do you manage a workforce that needs to be spread further out from itself? Social distancing can only go so far, so do you react by extending the business day and having two shifts? Do you have teams that attend site on different days?
  4. Once you decide headcount reduction is necessary, how quickly should you implement your plans, and how do you allow for the fact that regulatory constraints can impact timing significantly?
  5. Do you need to model the impact to your business of anticipated and/or possible changes to immigration regulation and labor mobility around key workers and resources?
  6. How do you handle the adjustment of any pay sacrificed during the crisis? What is the inter-relationship (if any) of this with any government support? Many of our clients have reported that this is an especially difficult issue and that they are also experiencing significant payment delays.
  7. Do you have the right to require people to return to the workplace? What should you do if people refuse to do so, for example, because they say that the crisis showed that working from home is just as efficient as working from the workplace, or because they say that they still do not feel safe subjecting themselves to public transport, the workplace, or similar?
  8. How should you respond if an employee agrees to return to the workplace but asks you to meet any additional cost of commuting? Perhaps the employee might ask you to pick up the cost of using their personal vehicle (fuel and parking) so that they can avoid public transport?
  9. How should you treat any service/accrual/performance-related benefits for employees who have been furloughed/on a reduced schedule?
  10. What do you need to do to create clarity and security for employees on their return? Should you produce guidelines or similar on what they can do to limit their exposure on their return to work? Do you need to provide interactive training? Even if you decide not to mandate health screening pre return, should you offer to provide those checks and/or additional PPE?
  11. Who do you involve in business continuity and communication once work resumes? At the same time as they are building recovery plans, most businesses are also designing ongoing post re-opening review and continuous communication processes.
  12. What can and should you do to help employees manage the enormous levels of anxiety to which most will have been subjected? For many, the anxiety created by the pandemic (‘…will I survive…’) will slowly morph into ongoing anxiety around job and financial security (…’what about my job…’) as employers seek to right size their workforces to accommodate the impact on their businesses.
  13. Who returns to the workforce and when, and will everyone continue to be compensated in the same way? In building recovery plans, most businesses are anticipating a phased return/re-opening rather than a light switch. They are also prioritizing the short-term operational management of critical sites and functions and are thinking through what additional flexibility in job function or working patterns on return will be needed to keep offices and/or spaces open and operational.
  14. In building recovery plans, what steps will have to be taken to comply with occupational safety requirements within individual sites, particularly office locations where such requirements may previously have been a lower priority? These steps must not only be compliant with local/national regulations, but also demonstrate to employees, customers, contractors, and guests that these requirements are being taken seriously, thereby rebuilding trust and confidence. As a consequence, businesses are having to create new ‘safety playbooks’ that describe how they plan to ensure the safety of workplace participants during the recovery phase and beyond. Where appropriate, these playbooks are being created with input from employees and/or their representatives.

Conclusion

The pandemic has impacted many of society’s core functions, including the legislative process. Law making around the world is usually a reflective process in which regulators propose a new law and then consult with interested parties about the way in which it will operate. This process maximizes the chances that the new law works as it’s supposed to, and also gives those who will be impacted by it the chance to anticipate, adjust, and prepare.

Unsurprisingly, the pandemic has generated a lot of new workplace law. Most of it has been introduced at record speed, too, meaning that regulators haven’t had the chance to consult fully in advance. This creates novel challenges for everyone: regulators have lost the ability to refine the operation of a new law before it’s enacted, and corporations have lost the ability to prepare for it.

Workplace regulation has therefore become more fluid and imprecise over the past 10 weeks, ironically at a time when there’s a premium on certainty and predictability. The fact that law making has lost some of its precision doesn’t excuse corporations from the need to stay compliant, but it does have an impact on how they go about doing so.

In updating and implementing their compliance strategies, most of the businesses we work with remain focused on a multi-factor risk/materiality based approach. In doing that, however, they have to be more externally aware of the way in which new laws are operating in practice, the experiences of other businesses and, crucially, how their approach will be perceived given heightened media interest to any allegation of insufficiency.

In focusing this alert on the strategies and tactics that we’ve seen employers use in their recovery planning, we’re not ignoring the fact that the workplace is still bounded by legal obligations. Rather, we’re seeking to aid the planning process by sharing what we’ve seen some employers do as they update their workplace compliance strategies and prepare for recovery.

We hope that you find this to be helpful. 

Please stay safe and well.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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