When we first surveyed organisations on the impact of COVID-19 on business and reward in March, uncertainty was rife. Four weeks later in mid April, at perhaps the height of the crisis for many countries, the business world was seeing the impact of the pandemic more clearly, and with increasing negativity.
72 percent of APAC organisations said they expect to experience a decline in revenues indicating a very significant decline in the global economy. Within that figure, 22 percent of APAC businesses predict a decline of 30 percent or more in annual revenue, compared to 19 percent globally.
Salary and benefits trends across APAC
With the benefit of increased clarity, more organisations are taking action to manage the impact of the crisis, including through implementing measures to adjust salaries and benefits schemes. In APAC, commonly implemented measures across all industries include permanent staff layoffs and redundancies (21 percent), suspension of promotion increases (17 percent) and cancellation or freezing of annual salary increases (17 percent).
79 percent of organisations in the region are not currently considering permanent staff layoffs or redundancies as part of their cost reduction measures and only a small proportion (14 percent) have introduced salary reductions.
When it comes to how these measures are being implemented, the top executives of APAC companies are most likely to be taking salary cuts and bonus reductions (70 percent and 71 percent respectively). Salary freezes are most commonly adopted for the other staff levels (ranging from 58 percent for clerical roles to 71 percent for middle managers).
Global, APAC, ASEAN & ANZ findings from the survey include:
|% of companies that already implemented the measure||Global||APAC||ASEAN||ANZ||INDIA|
|Salary cuts effected||15||14||11||19||14|
|Annual salary increases cancelled/freeze||21||17||14||19||18|
|Annual salary increases deferred / delayed||23||14||12||16||18|
|Promotion increases suspended||22||17||16||15||23|
|Short-term incentive/annual bonus reduced, deferred or delayed||14||13||10||18||15|
|Temporary layoff/furlough (without government subsidy) effected or currently considering||18||15||10||18||17|
|Permanent staff layoffs/redundancies effected or currently considering||23||21||14||33||16|
Singapore targets annual salaries to manage costsWithin APAC, there are differences in the approaches adopted by ASEAN and ANZ organisations, with the latter taking tougher measures. Here’s a snapshot of the trends emerging across the region.
In Singapore, the most common measures for managing costs apply to annual salaries, with 18 percent of businesses cancelling or freezing increases and 17 percent deferring or delaying increases. Companies are also looking at suspending promotion increases (18 percent). These choices are likely influenced by the wage subsidies implemented by the Singaporean government, with 88 percent of companies not implementing (or not currently considering) permanent staff layoffs or redundancies.
Malaysian businesses doing it tough
Malaysian businesses are experiencing significant disruption as a result of the pandemic. 31 percent are expecting their 2020 revenue to decline by more than 30 percent, compared to the APAC average of 22 percent. Of these, around two in every five organisations anticipate their revenue to decline by more than 50%, one of the highest in the region.
Despite the outlook, 83 percent of organisations in Malaysia say that they are not currently considering permanent staff layoffs or redundancies. Businesses are instead looking to manage costs through cancelling or delaying annual increases, reducing or delaying short-term incentives and annual bonuses, or suspending promotion increases.
India targets promotion and salary increases
In India, the most commonly implemented measures relate to promotion and salary increases, with 23 percent suspending promotion increases and 18 percent deferring and/or delaying salary increases. Just over a third of businesses have already frozen salaries, or are considering doing so. Following the Indian government request that organisations avoid laying-off employees, the significant majority of companies have not implemented or are not currently considering permanent or temporary staff layoffs.
ANZ businesses seek clarity on future workforce needs
The biggest challenge for human resource departments in ANZ during the pandemic has been in predicting the future workforce needs in response to the evolving economic landscape. In our first survey in March, this was the main challenge for 33 percent of the respondents. This number has now jumped to 43 percent. With social distancing and isolation measures in place for over two months, organisations have struggled to see beyond current uncertainties including a lack of clarity as to the full economic impact and duration of the outbreak. As governments begin to map out a path to lifting COVID-19 restrictions, businesses can look to manage costs with greater confidence.
The way forward
Organisations across APAC remain circumspect as governments begin to loosen lockdown requirements. More than 70 percent of companies in APAC indicated that they will continue their work arrangement measures even after the crisis, with the top three being: voluntary work from home, social distancing and increased safety measures upon returning to work.
As organisations continue to monitor their own economics within the context of this global health crisis, the welfare of individuals should remain top priority. This is true not only in the sense of their medical health, but in managing the deep impact that decisions around reward can have on employees. These six principles form the foundation for a responsible and respectful approach to managing people-related costs:
- Place employee well-being at the top of your priorities
- Leaders should lead by example
- Treat people like adults (share what you can as soon as you can, be honest and emphasise two-way communication)
- Take a balanced approach (especially when considering labour cost reductions)
- Remember this situation is temporary; avoid drastic near-term actions that could weaken prospects for bouncing back
- Tailor actions to fit individual company/industry/regional circumstances; “best practices” are what is best for you.
Hear more from our experts on how to help your organisation Accelerate Through the Turn, by joining our webinar series.