Life goes on despite the Corona crisis, but not business — for the time being. Lufthansa is losing one million euros in liquidity an hour; Volkswagen two billion euros every week. Airbus is cutting production by a third. And these are just three prominent examples. Entire industries of medium-sized companies are facing unprecedented challenges. At the same time, Moldex is increasing the production of protective masks by 50% and Dräger is expanding the production of medical ventilators and protective gear. Amazon intends to hire over 100,000 new employees.
Now that remote work and lay-offs have been carried out, rents have been cut and the Corona emergency aid has been requested, the uncomfortable and urgent question of how things will progress after the restrictions crops up. Optimists expect a V-curve in the economic development; realists a U- or W-curve, and the pessimists an L-curve. The situation presents itself differently for every business model. No one knows. And HR management asks itself:
The management’s expectations for the future determine the decision. Everyone has to make far-reaching decisions based on very incomplete data. Now it would be daring to assume that business as usual can be resumed after the crisis. Supply chains will be changed, risk assessments revised, wage demands for systemically relevant and underpaid professions will be raised, new business models will arise, others will disappear. In any case, this crisis will accelerate digitalisation. Those responsible will have to make assumptions haphazardly that will determine the welfare of their workforce.
Whereas before the crisis the untapped potential lay next to the coffee machine, today it may well be in the home office. Who, if not the employees, knows the business best? Why not ask them how we can get out of the crisis together? From the development of new business areas and products; from more cost-effective work processes to solidarity support actions (everyone partially waives, in order not to confront a few with the termination): everything can and should be discussed. The idea is the everyone’s commitment will help find a way out of the crisis.
For those who expect a V-curve, i.e., the rapid recovery of their business, short-time working is the verified method of choice. They are in good company with the business experts, who, however, don't have a crystal ball at hand in their institutes. This saves the considerable costs of dismissals as well as the not inconsiderable recruitment costs that follow. Not to mention the undesirable drop in the motivation of the remaining staff resulting from layoffs. Firing today and hiring tomorrow is the worst and most expensive strategy imaginable in the V-curve scenario.
For those who expect a U- or W-curve, and for the pessimists whose scenario describes an L curve, there remains only one measure that must be implemented with determination and consistency concerning the number of staff: layoffs. Immediately. “If you panic, panic first”, as the saying on the Wall Street stock market goes. If you expect a prolonged lull or a permanently reduced level of business, you have to reduce your costs quickly and sustainably. Here, the first loss is the least. Hesitation only costs money and does not solve any problems. As with any layoff, this decision means pure stress.
For those afflicted — of course: They must fear that in a collapsing labour market, they will have few chances of finding a new job in the long run. Help in finding a job in addition to fair compensation is mandatory.
For the executives — also: The termination is a legal and communicative minefield. Management is confronted with complex conflicts of values, roles, loyalty and conscience. The challenge quickly mounts up to overload. Workshops for separation processes and termination discussions are the method of choice here.
For the remaining employees — also, and this is all too often overlooked: With every layoff, those who stay become survivors. This group struggles with contradictory feelings, compassion for those afflicted and the relief of not being hit themselves, which leads to feeling guilty. This touches on the primal fear of the employment relationship — the termination by the employer. And this is where the damage materialises (or not), which no controller can quantify: motivation and engagement. This crew stays, observing very closely how their employer handles those who are let go. But now these are the people whose commitment future success is to be built on. This is the most important target group! To keep the decline in motivation as minor as possible, open and clear communication is just as important as a legally flawless severance process and fair and caring treatment of those afflicted with specific severance and outplacement offers, so that the crew that stays quickly regains confidence.
Business models that were already precarious before the crisis do not deserve to survive. The end of the business is to be preferred over the horror with no end in sight. Here, too, the first loss is the least of all evils, and insolvency or suspending business is the appropriate response to the crisis. Managers know this; employees do too.
Crisis time is talking time — for managers, employee representatives and employees. We have to clarify, explain, argue and convince. And then we must act — now more rationally than ever. Will we make mistakes? Probably. It’s still better than remaining undecided. We use the creative potential of the crisis and succeed by trial and error.
Clemens Kemmer (born 1960) worked for many years in national and international HR management in the electronic consumer goods, media and MedTech industries. Today he works as a career consultant at fair placement. (www.fair-placement.de)
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Many companies are faced with unprecedented challenges in the Corona crisis. A central question revolves around the staff: hold? Short-time work? Dismiss?