The future of work is currently being defined: Aon’s Roopank Chaudhary
As the second wave shook India and the sub-continent, many companies refreshed their COVID19 initiatives to help support employees. The spike in COVID19 cases was quick in the months of April and May. Since then, the number of cases has reduced drastically. In an exclusive conversation with Aon’s COO- Roopank Chaudhary, we understand the impact of the second wave on Indian companies and the emerging trends that are reshaping work in the future.
“Roopank Chaudhary is Partner, Chief Commercial Officer India & South Asia, Performance & Rewards. Roopank manages key client relationships with various financial institutions. He specializes in supporting clients in developing rewards strategies, structuring and benchmarking, designing job architecture, organization structuring, employee engagement, and HR set-up.”
The conversation is edited for length and clarity.
Q. What’s been the impact of the second wave on India Inc.?
From our perspective, based on Aon research and discussions with clients, the second wave has been a far bigger humanitarian crisis than purely a financial one for most companies. The number of casualties and personal impact has been far greater than the first wave.
Unlike last year, we feel that companies are better prepared to deal with the short-term lockdown measures and necessary employee assistance. There were also fewer knee-jerk reactions around pay cuts, salary freezes and layoffs, something that was prominent last year. The impact has been less severe for India Inc. on their business, P&L and their future business projections. There is now a fair sense of understanding on how long the impact will last, and a significant amount of optimism given the vaccination drives. There is more information and greater awareness of what we’re facing and how to mitigate it.
Having said that, there is a lot of fatigue and stress due to the impact of the second wave. People are far more apprehensive. So it has certainly impacted employee wellbeing and mental health.
Most organizations are doing the right things and they’re talking about the right things. Hopefully, the impact will last a quarter. Now, the focus will be on reigning in the vaccine program. Although most companies are optimistic, we feel they’re not going to be complacent. They’re more prepared with contingency measures – right from health emergencies, building the necessary cash reserves, and managing expenses to remaining agile around measuring performance.
“ In India, about 66 percent of the companies are either assessing jobs or have already assessed jobs that can be done remotely.”
Q. That’s encouraging to hear that most companies are better prepared now. How was the impact on the job market specifically? Given that prior to the second wave, most service sector companies were prepared to partly open and were actively hiring too.
The hiring bounce back started in January 2021. In fact, between January to March, hiring went up across many sectors.
Unsurprisingly, sectors that were worst hit by the pandemic – retail, hospitality, aviation and construction have seen setbacks. We’ve also seen a negative impact on blue collar jobs.
The sectors that were hiring last year have continued to do reasonably well. If you look at healthcare, hiring in fact has gone up even before the second wave. Hiring is also increasing due to the growth of ecommerce in addition to the growth of jobs in IT and IT enabled services. So the impact has been more severe on limited sectors while others have managed to sustain demand for people and continued to hire.
Q. How are companies rethinking their salaries and their benefits bucket post the second wave? Are there big changes?
If you go back to what happened last year, there was organizational restructuring, salary freezes, pay cuts, etc., as companies were trying to protect their P&L. But then that changed in six months’ time. Companies started to roll back pay cuts by September and went on to give increments late last year. A lot had and continued to depend on the sectors. Sectors like retail, aviation and hospitality struggled to give even 2 to 3 percent increments, whereas many sectors were in the range of 5 to 6 percent. In sectors like healthcare, technology, consumer, the increases were in the range of 7 to 8 percent and even this year, the increments were around 8-9 percent.
In a positive scenario, where vaccinations continue and the third wave is less severe, companies could expect a 8-8.5 percent increment in the next year. And the second wave will seems to be a short term setback. In case of a pessimistic scenario, the number could fall to around 7 percent, still higher than what we saw in 2020 which was around 6 per cent.
If you look at benefits, in terms of insurance policies and everything that companies are doing to take care of employee health and wellness, we don’t think these will be short term measures, many of these practices could be available for the long term given the huge impact that the pandemic has had. Many companies have invested in creating the infrastructure to let employees work from home, and this is expected to continue as remote working and flexible working gain in prominence. At the same time, companies are focusing on mental wellbeing and stress not just because of the pandemic, but also because of the anxiety rising from extended work from home, since it has blurred the boundaries between work and personal life in a dramatic way.
"There is a need to fundamentally alter the cost of benefits and align it to what the employees want.”
Q. Research has shown that the rising cost of wellness programs is a concern, because companies are doing too many things at once. And they need a cohesive approach. Is that a concern you share?
In the past, companies made benefit programs that were not aligned to the population’s needs. For example, costly loan related policies were introduced but no one was availing them. The cost of a benefit needs to be assessed in relation to the benefit perceived by an employee. Often we have overlooked the employee preference that will be linked to his / her demographics, life stage and aspirations.
There is a need to fundamentally alter the cost of benefits and align it to what the employees want, and also what will provide them physical and mental well-being, in addition to financial security. The pandemic has exposed this gap and it has shown how vulnerable employees could be. Companies need to think about what’s the risk with their demographics – whether that's an older population or a younger population.
Q. COVID19 is not over until the vaccination drive catches up. And we’re seeing companies definitely intensify their efforts on vaccination, what other trends are you seeing?
We did some research on this globally and in India and there were five to six areas that came out strongly. Almost half the companies we’ve interviewed are looking at a vaccine program. Companies are also looking at ways to incentivize the process. And that’s going to be a trend in the next few months.
About 30 percent of the companies are looking at exploring return to work – and they are figuring out who will need to return to work (in terms of roles that can work remotely) and who need not. And how can they make the process as seamless and stress free as possible.
In India, about 66 percent of the companies are either assessing jobs or have already assessed jobs that can be done remotely. Many companies are creating and considering a remote work policy. Companies are also looking at assessments of roles to understand who can work remotely. Should jobs have eligibility for remote work? And what kind of infrastructure and expense support should be aligned accordingly?
There’s also an interest in location based workforce strategy. It’s still early days in India and the pandemic hasn’t completely abated. But a lot of companies are talking about possibly adjusting geographical differentials in pay in light of the pandemic. If employees continue to work from home and from a lower cost location – would it lead to efficiencies in pay based on their location?
Another trend is on defining the future of work – what will it mean for businesses? And how will it impact work processes, skilling requirements and pay equity. Many companies have also been able to rethink how to look at their DEI policy, given that the pandemic has thrown open opportunities of remote working, and hence accessing employees with very diverse backgrounds.
Q. Facebook was one of the companies to talk about location based pay. How do you think it will pan out?
Yes, Facebook was one of the first companies to talk about it and it obviously came with some adverse reactions. In India as well there is a lot of interest in the concept of re-adjusting pay basis your location, but it’s not an easy thing to do to reduce someone’s salary. Companies could hire local talent and look at different pay ranges or do it on a case to case basis. It is more plausible to look at different hiring ranges when hiring someone rather than tweaking current pay. There is also the fundamental need to consider whether pay should be governed by where you sit, or simply by what you do. The jury is still out on how this concept needs to be absorbed and embraced.
Q. What is your one piece of advice for HR leaders as they prepare to rethink their talent management strategies?
My only advice to anyone, HR or business is to always learn from the previous crises. Companies that were able to learn from previous crises were better prepared; leaders were far more resilient, and they saw opportunities even in adversity. In 2009, there was a financial crisis, and now there’s a humanitarian crisis and it has aggravated a number of issues across financial, mental and physical wellbeing. There is a need for more empathy and resilience. And hence the measures and actions taken should not be myopic or short term. The relevance and adaptability of these will remain for a long time to come, and that should be not discounted. We may return soon to a normal way of working, but it will clearly be a new normal, and we need to embrace that eventuality.