6 ways the COVID-19 pandemic could change our approach to human capital

human resources

(Credit: Unsplash)

This article is brought to you thanks to the collaboration of The European Sting with the World Economic Forum.

Author: Andrea Walsh, Head, Talent Line of Business, Chicago, Willis Towers Watson & Ryan Resch, Managing Director, Executive Compensation (Toronto), Willis Towers Watson


  • Companies with well-established human capital governance frameworks are considered better investments and capable of creating more long-term value;
  • The COVID-19 crisis has brought a renewed focus on human capital and employees, from its impact on pay programmes to employee well-being;
  • Investing in and prioritizing these six areas relating to human capital can help organizations mitigate the risks and negative effects of COVID-19.

The COVID-19 pandemic has illustrated the inextricable link between human health and organizational success. Investors and regulators, in turn, are looking to corporate boards of directors to step up their governance of human capital.

Companies with well-established human capital governance frameworks are considered better investments, capable of creating more long-term value; and regulators, such as the US Securities and Exchange Commission, have urged companies to disclose in upcoming earnings releases the actions they’ve taken to protect the health of their employees.

Amid these changes and a still-unfolding COVID-19 crisis, employees are increasingly seen by boards of directors as vital stakeholders, critical to business recovery. As boards bring human capital governance to the fore, we see a renewed focus on employees and rapid changes in six areas: employee pay, well-being, inclusion and diversity (I&D), future of work, leadership and culture.

Employee pay: a focus on fairness

The COVID-19 pandemic has expedited the speed at which organizations are changing their pay programmes through pay reductions, incentive resets and pay premiums. The crisis has also reframed the way organizations segment their workforces to include essential and frontline workers. As it continues, organizations may need to consider long-term strategies to determine which changes will be temporary versus those that will be permanent.

In addition, serious conversations about racial injustice and fair treatment of all cohorts in society are raising further questions of whether pay programmes have other biases, beyond gender.

Gender pay gaps and equal pay gaps for different races and ethnicities in the US
Gender pay gaps and equal pay gaps for different races and ethnicities in the US
Image: Statista

These issues could significantly impact whether the organization is truly delivering “fair pay” that is unbiased and aligned with the organization’s I&D strategies. To help ensure pay equity, boards must understand the effectiveness of their organizations’ fair pay strategies. The fairness of how pay practices and programmes are designed and administered will need to be a top priority, as pay issues can be symptomatic of broader talent diversity issues.

Well-being: critical to sustaining operations

Change and uncertainty have strained employees physically, emotionally and financially. Even before COVID-19, employee emotional and financial well-being were top concerns for businesses. Now, as companies continue to adapt to changing pandemic conditions, workforce health, resilience and well-being are even more critical to sustaining operations.

With widespread stay-at-home orders, employers have adjusted, reduced or suspended operations and shifted workforces online, all of which have affected overall employee well-being. As companies begin to reimagine the new workplace, employee health and safety will continue to be crucial. Boards will need to ensure that the right frameworks are in place and that management’s well-being strategies sufficiently address top employee concerns while minimizing company risk.

Inclusion and diversity: time to reconsider strategies

This is a particularly important time for boards and executives to revisit their I&D strategies. Starting from the top, the composition of some boards might be less diverse than expected or optimal, which can create risks through the need for greater diversity of thought to navigate this uncertain time. In other parts of the organization, frontline worker furloughs have changed diversity statistics, particularly when those furloughs reduce diversity across the remaining workforce.

We also know that race will continue to be an important topic within many organizations and that companies will continue to be under pressure from investors and other stakeholders to demonstrate real and measurable progress in greater diversity among board members, senior management and the overall workforce.

A robust I&D strategy will not only decrease operational risk but also enhance levels of innovation: in an inclusive environment, diverse thought and perspectives increase as more people from different backgrounds share their insights.

Future of work: fast-tracked

While the “future of work” was well underway before the pandemic, COVID-19 has clearly hastened its arrival. Boards now have an opportunity to recalibrate their organizations’ talent strategies (mid- and post-pandemic) to adapt to our evolving reality.

The future of work in figures
The future of work in figures
Image: OECD

For example, in the era of social distancing and increased remote working, companies are realigning talent strategies and reskilling their workforces. The Harvard Business Review found that, in the pandemic environment, organizations should consider three future-of-work concepts:

  • Work portability
  • Automation
  • Cross-industry talent exchanges

The COVID-19 pandemic necessitates actions to realign, repurpose and (re)skill talent. Companies that expedite the future of work by fostering human capital into more efficient, agile and purposeful resources mitigate risk while sustainably increasing competitiveness and profitability. Boards can take a long-term view of the future of work and ensure their organizations can proactively address the rapidly changing work environment.

Leadership: promoting a culture that encourages well-being

For many, the physical workplace has become a health hazard and companies have been quick to make physical modifications or take the workplace entirely online. With this transformation, boards rely heavily on leaders to espouse a culture that promotes physical and psychological safety, all while delivering business results.

Boards should expect management to revisit the leadership capabilities that best support long-term value creation with deliberate consideration of their business’ purpose, values and cultures. Management should clearly articulate the new attributes of good leaders and establish processes to develop the right leaders based on these requirements.

coronavirus, health, COVID19, pandemic

What is the World Economic Forum doing to manage emerging risks from COVID-19?

The first global pandemic in more than 100 years, COVID-19 has spread throughout the world at an unprecedented speed. At the time of writing, 4.5 million cases have been confirmed and more than 300,000 people have died due to the virus.

As countries seek to recover, some of the more long-term economic, business, environmental, societal and technological challenges and opportunities are just beginning to become visible.

To help all stakeholders – communities, governments, businesses and individuals understand the emerging risks and follow-on effects generated by the impact of the coronavirus pandemic, the World Economic Forum, in collaboration with Marsh and McLennan and Zurich Insurance Group, has launched its COVID-19 Risks Outlook: A Preliminary Mapping and its Implications – a companion for decision-makers, building on the Forum’s annual Global Risks Report.

Companies are invited to join the Forum’s work to help manage the identified emerging risks of COVID-19 across industries to shape a better future. Read the full COVID-19 Risks Outlook: A Preliminary Mapping and its Implications report here, and our impact story with further information.

Most board-reviewed succession plans have focused on executive talent and a limited number of incumbents whose roles are critical to strategic or operational success. In the current environment, boards, with management support, might wish to reconsider their succession planning activities to include a broader definition of “critical talent,” one that might include future leaders lower in the organization as well as essential and frontline workers.

Expanding the definition of critical talent will help mitigate future disruptions caused by human capital. These efforts help future-proof organizations, as a robust talent pipeline across all organizational levels will be ready to react to changing business conditions.

Culture: values and purpose move to the forefront

Many high-performing companies remain committed to their employees, organizational purpose and values in these difficult times. They use purpose and cultural values to make fast decisions and create as much certainty as possible for employees, consumers and investors. Boards and organizations should work to create a culture where employees understand what to do to support the overall strategy.

Moving forward, organizations are likely to look for meaningful ways to measure culture and show progress. By working with their boards to define two to three important cultural attributes and measuring those attributes against market benchmarks, organizations can track cultural performance and develop strategies to maximize employee experience and, importantly, financial performance.

Bringing it together

Relative to peers, we expect that the organizations who prioritized human capital as part of a broader sustainability strategy will be better able to mitigate risk and support value creation more broadly over the coming quarters. The good news for those that may not have moved as quickly as they would have liked is: it’s not too late to take these strategic actions.

Justin Luce, Ruby Tewani and Jacob Custer also contributed to this article.

the sting Milestone

Featured Stings

Can we feed everyone without unleashing disaster? Read on

These campaigners want to give a quarter of the UK back to nature

How to build a more resilient and inclusive global system

Stopping antimicrobial resistance would cost just USD 2 per person a year

How the world’s best teacher is changing lives in Africa

Member States and Commission to work together to boost artificial intelligence “made in Europe”

Nitrate pollution of water sources: new impulses for EU Water Policy?

Can indoor farming feed the world?

EU leaders agree on 2030 Climate and Energy Package: is “flexible” brave enough?

This German supermarket’s shelves are filled with food other stores won’t sell

This 3D-printed steak could help us reduce meat consumption

Biodiversity ‘fundamental’ for global food systems, at “heart’ of development – UN agriculture chief

LETTER FROM AFGHANISTAN: Elections serve up food for thought, for Afghan youth

This young scientist is tackling food insecurity for the world’s most vulnerable groups

Longer hours, more emails and shorter meetings – working from home in the time of COVID

‘Global care crisis’ set to affect 2.3 billion people warns UN labour agency

Civilians ‘continue to pay highest price’ in Ukraine conflict, with peace prospects losing ‘momentum’

3 things to know about our Sustainable Development Impact Summit

Trump’s Russophiles under investigation, Europe remains ‘en garde’

EU Parliament: The surplus countries must support growth

Eurozone at risk of home-made deflation and recession

‘Collective amnesia’ over causes of global financial crash – human rights expert

World ‘off track’ to meet most Sustainable Development Goals on hunger, food security and nutrition

Millions of Bangladeshi children at risk from climate crisis, warns UNICEF

Eurozone: The crisis hit countries are again subsidizing the German and French banks

Eurozone: Disinflation engulfs the industrial goods sector

A Sting Exclusive: “Leading by example! EU must push for UN deal to avoid dangerous climate change”, European Parliament Vice-President Ulrike Lunacek cries out from Brussels

Sweden is fighting loneliness by housing older and younger generations together

Keeping cool in the face of climate change

Mobile Technology in Nowadays Medical Practice: Is It a Safe Path?

“Working together to make a change at the COP 21 in Paris”, an article by Ambassador Yang of the Chinese Mission to EU

A jingoistic Spanish ‘war’ from the past

Security Union: political agreement on strengthened Schengen Information System

Leaders making these 5 key investments can shape an inclusive future

Over 330,000 Congolese migrants at risk after mass deportations from Angola – UN rights chief

An all-out fight for the EU budget

In Venezuela, Bachelet calls on Government to release prisoners, appeals for ‘bold steps towards compromise’

Colourism: How skin-tone bias affects racial equality at work

EU attempts to make new deal with Turkey as relations deteriorate

These countries create most of the world’s CO2 emissions

Will Europe be able to deal with the migration crisis alone if Turkey quits the pact?

Brexit: Six more months of political paralysis or a May-Corbyn compromise?

“The winner is who can accelerate the transition to a new digital era”. The Sting reports live from EBS 2015: a Digital Europe 4.0

UN global education envoy urges new funding for ‘lost generation’ of children forced out of classrooms by conflict

Where are the world’s nuclear weapons?

Will the EU ever tackle the migration crisis despite the lack of political will?

‘Dire consequences’ for a million children in the Middle East, North Africa, as funding dwindles

COP21 Breaking News_03 December: Unprecedented Global Alliance for Buildings and Construction to Combat Climate Change

Trade: First year of the EU-Japan Economic Partnership Agreement shows growth in EU exports

Climate change: new rules agreed to determine which investments are green

Currency Union might not let an independent Scotland join the EU as the “Yes” front now leads

Data protection: Commission decides to refer Greece and Spain to the Court for not transposing EU law

The Cold War had an unintended side effect: It created a European wildlife paradise

Cholera surges, children in urgent need one month after Cyclone Idai slammed southern Africa – UNICEF

EU Emissions Trading System does not hurt firms’ profitability

How AI and satellite imaging can stamp out modern slavery

“A sustainable economy, low-carbon, resource-efficient, resilient and more competitive on the global stage”, EU Commissioner Vella in a Sting Exclusive

DR Congo: Ebola response resumes despite ‘risky environment’

Are Halloween pumpkins a problem for the planet?

Suicide Prevention: Using Graduation as a Transformative Tool

WHO reports ‘very strong progress’ in battling DR Congo Ebola outbreak

We need to give voice to ‘We the Peoples’, says UN chief

Medical deserts in the European Union: the practicalities of universal health coverage

Water scarcity is a growing problem across the Middle East. Is this how we solve it?

More Stings?

Advertising

Speak your Mind Here

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s