Managing Workforce Strategies

in Times of Crisis
To successfully navigate three critical phases of responding to the COVID-19 pandemic,
companies must leverage workforce analytics at each step along the way.

May 2020
Contents

Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3

React and Respond. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6

Recovery Period . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10

Reshape the Future. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14

Looking Ahead . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17

Disclaimer. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18

Contact. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19

By Rajiv Ramanathan
Associate Partner, People Analytics,
Human Capital Solutions
rajiv.ramanathan@aon.com

Gabe Stavsky
Consultant, People Analytics,
Human Capital Solutions
gabe.stavsky@aon.com

Ranjan Dutta
Partner, People Analytics,
Human Capital Solutions
ranjan.dutta@aon.com

Managing Workforce Strategies in Times of Crisis 2

Introduction

The world has changed dramatically, and perhaps

unalterably, since the start of 2020. In addition to the
humanitarian toll of the COVID-19 pandemic, which is
severe in almost every part of the world and continues
to grow, the macroeconomic fallout of this crisis is just
beginning to leave its mark. A global economic slowdown
seems inevitable, with only its duration now in doubt.

For businesses, the challenge is unlike anything seen before.

Companies first scrambled to protect their people, moving to
remote operations where possible while adjusting customer-facing
and manufacturing operations to comply with emerging safety
regulations. At the same time, companies faced significant supply
chain disruptions, tightening financial restrictions, and massive drops
in consumer demand for non-essential goods and services.

Yet, while the COVID-19 pandemic is different from past crises, including
the Great Recession of 2008–2009, they share some traits. In both cases,
businesses must take quick action to adjust their workforce strategies
and rewards programs to protect employees and stabilize operations.

Many governments across the globe have provided emergency relief

to targeted industries and small businesses, but these initiatives are
not enough for most organizations to weather a downturn without
taking additional actions to strengthen their balance sheets. We
have already seen many companies postpone merit increases,
implement hiring freezes, cancel internship programs, furlough
select employees or (usually as a last resort) turn to layoffs.

Managing Workforce Strategies in Times of Crisis 3

Consider the following data from Aon’s pulse survey on
Adjusting Total Rewards Programs and Workforce Strategies
in Response to COVID-19 conducted in mid-April:

• 72% of respondents expect that COVID-19 will have an

impact on their workforce planning, ranging from a cautious
approach to future hiring to potential downsizing.

• More than half of respondents expect to adjust compensation

in light of COVID-19, and we expect this number to continue
rising in response to changing market conditions.

• Most companies have taken multiple actions to assist employees,

including 78% adjusting family care benefits, such as additional
sick leave to care for family members that are ill with COVID-19.

The ability to leverage workforce analytics and forecast how the pandemic
will impact revenue, profitability, consumer demand and supply, among
other key metrics, will support quick, strategic decision-making that all
businesses need both during and immediately following a crisis. During
times such as these, where each day new information comes in that
reshapes how we are approaching this pandemic, organizations that
can utilize up-to-date robust analytics to inform decisions will be better
equipped to make rapid fire decisions rooted in data — not just instinct.

Managing Workforce Strategies in Times of Crisis 4

 As organizations continue to navigate the forces of this pandemic,
they should consider a series of evolutionary steps over the next
18 to 24 months that allow them to proactively respond to the
impact of the crisis on their workforce. The chart below illustrates
the actions companies should take between now (the react and
respond period), three to six months from now (the recovery period)
and six months to two years from now (the reshaping period).

React
World Growth Outlook for 2020 & Respond
in the Best and Worst Case Scenario, as of Late March 2020

4.0 Best-case scenario

Worst-case scenario
Recover
Activiyin Economic Activiy

3.0

4.0 Best-case scenario

2.0
Worst-case scenario Reshape

3.0
in EconomicChange

1.0
Percentage Change Percentage

2.0

0.0

1.0 React &

Respond Recover Reshape
-1.0
• Financial flexibility measures • Define critical roles • Future proof the
2020 workforce 2023
• People measures • IdentifyTime
successors • Cost and
0.0 • Hiring freeze for critical roles productivity link
• Compensation deferment • Organizational
• Skills and people
• Cost optimization measures redeployment skills repository
• Voluntary measures • Cross-train talent
React & measures
• Involuntary • Reskill talent
Respond
• Furloughs Recover Reshape
• Agile working
-1.0
2020 2023
Time

Source: Graphic from Aon, Overlay of Economic Activity from UN DESA

Managing Workforce Strategies in Times of Crisis 5

React and Respond

With many businesses closed throughout much of March,

April and into May, people ordered to stay at home, and only
workers that are considered essential permitted to remain
at work, the workforce has been completely disrupted.

As organizations continue to navigate through these unforeseen

circumstances, they are going to be faced with numerous challenges
concerning how to protect the health and wellbeing of their
React
& Respond
employees and customers and identifying innovative and safe
ways through which they can provide much needed support.

Simultaneously, organizations will also need to turn inwards

to determine the extent of the pandemic’s impact on their
Recover
business and revenue for 2020 and beyond and how the
composition of the workforce will ultimately be affected.

Organizations are likely going to experience a loss over the next

quarter if not much longer, which means they need to seriously
assess cost-containment opportunities. They will need to realign Reshape
their workforce based on costs (e.g., wages and rent) and
effectively engage in a balance sheet management exercise in
the short term to offset the impending decrease in revenue.

Managing Workforce Strategies in Times of Crisis 6

Here are the actions HR and business leaders
can take now to respond to the crisis:

o Managing through attrition. Consider the expected attrition and

hiring rates across your organization. While the voluntary attrition rate
will likely shrink by up to 50%, which is typical during times of crisis,
voluntary turnover will still occur. Furthermore, consider the expected
hiring rates that were built into the budget over the next quarter or so. React
A quick forecasting exercise to analyze the expected hiring and attrition & Respond
rates across your organization based on the external market and internal
historical trends will help to determine how much financial flexibility
will be provided through voluntary turnover and hiring freezes.

o Creating near-term financial flexibility. In addition to accounting Recover

for voluntary turnover and hiring freezes, other easy measures include
deferring bonus payouts and merit cycle increases and freezing
401(k) contributions. This will provide organizations greater financial
flexibility that will strengthen the balance sheet in the short-term
and increase cash flow — particularly to revive the harder hit parts Reshape
of the organization. These temporary measures to reduce costs
use relatively easily accessed data housed within your organization
(i.e., bonus data, merit increases and benefits information). By
analyzing this data across business function, department or region,
you can promptly determine the pockets within your organization
that will provide you with the most financial flexibility.

Managing Workforce Strategies in Times of Crisis 7

o Ensuring consistent leadership and identifying critical roles.
Managing through a crisis requires steady, consistent and visionary
leadership. This is the time that companies need to be strengthening
their succession plans, and not just for the C-suite. Organizations
should identify first, second and third-level successors to business-
critical roles. The long-term effects of the pandemic remain uncertain
and ensuring you have the leaders in place, not only in the short term
but the in long term as well, will be vital to navigating through the
React
crisis. Proactively identifying successors to these roles will enable you & Respond
to build a targeted retention strategy during a time of uncertainty
for key individuals within your organization. Workforce analytics can
use employee data that is available on most current HR information
systems relating to performance and previous roles and experiences
to generate insights on the talent pipeline for critical business roles. Recover

o Analyzing return-to-work strategies. As organizations work

through the crisis, it will become critical for leaders to start thinking
about restarting their business and/or bringing employees back
to work. Leaders will start asking questions, such as: How can Reshape
we plan a safe and orderly return to work? Which industries and
occupations should be allowed to return first, and what waves
should follow? Organizations and government agencies can look
at a host of macroeconomic and social factors to help inform these
decisions, including data on vulnerable employee populations,
impact on public health and safety, and labor force reductions.

Managing Workforce Strategies in Times of Crisis 8

 Analyzing expected hiring
and attrition rates based on the
external market and
internal historical trends will
help determine how much
financial flexibility will be
provided through voluntary
turnover and hiring freezes.

Managing Workforce Strategies in Times of Crisis 9

Recovery Period

As businesses start reopening and work

resumes, organizations are contemplating what
the “new normal” looks like and what changes
they will need to make to their business.

HR leaders are at the forefront of this dialogue: working closely

with CFOs to manage the balance sheet, engaging with sales
leaders to ramp up their sales force to cater to pent-up demand,
React
& Respond
and collaborating with manufacturing and supply chain leaders
to get products into the hands of the end consumers.

To facilitate these conversations, HR will need to lean on workforce

analytics to understand what their people costs are going to be in
Recover
the short and long term, how they relate to the business’ needs,
and where they should invest in talent. Cost-containment efforts,
from hiring freezes to compensation adjustments, are going to
force companies to prioritize the roles and skills that will enable
them to still meet business objectives during this volatile time.
Reshape

Managing Workforce Strategies in Times of Crisis 10

Here are the actions companies can take
as they look toward recovery:

o Pivotal role modeling. Organizations will need to become

leaner out of necessity. In doing so, they need to ensure
they are cutting from their fat and not muscle. This requires
identifying the pivotal roles in your organizations and answering
key questions regarding your workforce, such as: React
& Respond
• Which roles are most critical to the success of the business?

• How do different roles contribute to profitability?

• Which roles and skills are the most vital to current vs. future success?
Recover
Before you can get accurate answers to these questions, you need
the right employee data, including (but not limited to) business
drivers, business volume, employee headcount by roles, and
corresponding skills required to meet business objectives.
Reshape

Let us take a very simple example to illustrate

pivotal role modeling. In a typical calendar
year, a manufacturing company requires
100 engineers to produce 100,000 equipment
production units. A 50% decrease in production
could negatively impact half of the headcount.
To avoid layoffs, the company will want to
consider how the skills of its engineers can be
leveraged and redeployed to meet other business
objectives. Once the company has a better
idea of how existing skills can be resourced,
it can effectively compare the relative impact
of critical roles on key business outcomes and
the full-time employee (FTE) per role or skill
required to meet short and long-term demands.

Managing Workforce Strategies in Times of Crisis 11

o Manage the balance sheet. In addition to modeling pivotal roles
in the business, organizations can help manage costs through
workforce benchmarking. When comparing your workforce to industry
benchmarks, certain business functions or job levels may have a higher
cost per FTE ratio or a lower revenue per FTE ratio. This can help reveal
inefficiencies across organizational spans (the number of direct reports
per supervisor) and layers (the number of reporting levels from the
bottom of the organization all the way up to the CEO), which can be
React
quickly corrected by reallocating work in pockets of the business. & Respond
o Deploy “quick-wins” to ease the workforce cost pressure. HR leaders
will have to deploy a series of voluntary and involuntary measures to
manage through the crisis. While voluntary measures like attrition,
hiring freezes, retirement and separation tactics will be useful, they Recover
may not be enough to manage costs in the long run. Involuntary
measures can include a combination of tactics, such as asking senior
executives to take a temporary pay cut, which not only provides
more cash flow but also demonstrates commitment and loyalty to
your staff. A more drastic, but sometimes necessary, step would be to Reshape
terminate low-performing and/or the least tenured employees. While
laying off employees is never ideal, these demographics are often
less productive compared to more tenured, experienced employees.
Finally, due to the steep drop in consumer demand, many employers
will need to consider furloughs to reduce costs while also positioning
themselves for an ensuing recovery. Consider how the change in
demand is going to impact your operational needs to determine if
an employee furlough will be an effective cost-saving measure.

Managing Workforce Strategies in Times of Crisis 12

o Redeploy the workforce based on needs and skills availability. HR
and business leaders will need to identify areas where the demand for
workforce is critical and find a way to redeploy the current workforce
to support other areas of the business. For instance, if research
laboratories are shut down temporary, can the skills of those workers
be redeployed to support supply chain or logistics where some
of the work can be conducted virtually? The ability to retrain and
redeploy quickly will be critical to managing through the stabilization
React
period. Having a strong understanding of internal workforce skills & Respond
and capabilities — and how they translate to other functions — will
help organizations determine how quickly they can redeploy talent
from one area to another and how much training will be required.

Recover

When comparing your workforce to industry

benchmarks, certain business functions or
job levels may have a higher or lower cost
per full-time employee. This can reveal Reshape
inefficiencies by number of direct reports per
supervisor or number of reporting levels from
the bottom of the organization all the way up
to the CEO. These can be quickly corrected by
reallocating work in pockets of the business.

Managing Workforce Strategies in Times of Crisis 13

Reshape the Future

When the economy starts to pick up again,

organizations are going to want to ensure they are
in a place to meet increasing customer demand.

The legwork done to respond and stabilize the business will position
your organization to more effectively meet upcoming business objectives
as we begin to come out of the crisis. But the work is not done yet.
React
HR leaders are always faced with the challenge to ensure they have & Respond
right talent to meet the demands of the business. However, when the
world is changing by the day, organizations need to be as nimble as
possible to ensure they can meet the needs of their stakeholders. The
COVID-19 pandemic has underscored that organizations are not as agile
and flexible as they need to be. Businesses need to prioritize key areas as
Recover
they future proof their organization to handle inevitable future crises.

Reshape
The COVID-19 pandemic has underscored
that organizations are not as agile and
flexible as they need to be. Businesses need to
prioritize key areas as they future proof their
organization to handle inevitable future crises.

Managing Workforce Strategies in Times of Crisis 14

Here are the necessary steps to take as you
reshape the future of your workforce.

o Building a stronger link between cost and productivity measures:

As HR has evolved to play a more strategic role within organizations
over the years, the ability to link people outcomes with business
outcomes has begun to differentiate high-performing HR functions from
the pack. While this is an important HR capability to have during any React
economic environment, the ability to exercise this muscle in a cost- & Respond
containment setting is that much more valuable. HR functions will be
relying on their workforce analytics to be able to establish a strong link
between their people costs, skills availability and business productivity
measures. Being able to quickly and accurately connect these dots will
Recover
enable the organization to optimize their workforce and proactively
respond to the economic environment. This is not just a one-time
exercise — people costs and business objectives evolve over time.

o Identify your organizational skills: We discussed the importance of

knowing where skills lie across people, jobs and locations. Combining Reshape
pivotal role modeling and workforce benchmarking with robust
performance and assessment data will help organizations get a
head start when they need to redeploy talent or prioritize areas for
cost optimization. At any point in time, HR leaders need to have a
full understanding of the skills strength of their talent to accurately
determine which levers to pull – redeployment, workforce reduction
or hiring decisions – to fill people gaps in any part of the business.

Managing Workforce Strategies in Times of Crisis 15

o Cross-train talent: The ability to utilize your human capital talent across
roles needs to be more heavily considered during periods of economic
recovery. Organizations should focus on identifying successors not
only for senior-level positions, but for critical roles in the organization
as well. Getting to the point where discussing redeploying talent is
routine and not exceptional will empower organizations to weather
through any difficult time more effectively. As we mentioned previously,
the ability to quickly access workforce analytics to understand how
React
fungible your talent is will be a crucial factor in determining how & Respond
successful your redeployment is. This is not only a strategy for times
of crisis but should be incorporated into the annual talent process.

o Leverage the ability to adopt a fungible workforce model: Building

the capabilities to enable an agile workforce is vital to the success of the Recover
organization — and that is no truer than in the current environment.
Workforce analytics can help to evaluate what type of work needs to be
done on premises vs. remotely and what capabilities are required for the
different functions within an organization. This information will allow
organizations to flexibly deploy alternative work models as needed. Reshape
These insights, coupled with the ability to proactively implement
new work arrangements, will help organizations better manage their
costs and accurately assess the cost of FTE per square foot. Having a
precise picture of the type of work activities that can be done virtually
will enable organizations to determine how much real estate is really
needed and bring much needed flexibility during austere times.

Managing Workforce Strategies in Times of Crisis 16

Looking Ahead

During ordinary times, organizations face challenges

in preparing for the future of work — from automation
to an aging workforce to skill shortages.

Each of these trends requires HR leaders to respond quickly and ensure

that they have the right talent in the appropriate roles to remain
competitive. As the COVID-19 pandemic continues to impact our
lives for the foreseeable future, organizations have an opportunity to
accelerate their plans for the future. Deploying workforce analytics
models during each phase of the response (i.e., reacting and responding
to the crisis, recovering from the initial shockwaves and bringing your
people back to work, and reshaping the future of your work in a “new
normal” environment) will give your organization a competitive edge.

Our new self-service tools help organizations make critical workforce

decisions during times of crisis. The Talent Impact Modeler enables
business and HR leaders to analyze their workforce and compare multiple
scenarios to determine the impact of several voluntary and involuntary
measures on the people costs within their organization. Our Return to
Work tool gives clients access to a dashboard tool that leverages U.S.
Department of Labor data along with our proprietary epidemiological
models to determine return-to-work strategies based on factors like
susceptibility to disease transmission, impact of public health and safety,
and labor force impacts. To learn more about both tools, click here.

For more insights on how businesses can respond to the current

pandemic, including stakeholder communication, health and benefits
impacts and business continuity planning, please see Aon’s COVID-19
Response Site here. To read more articles on how rewards professionals
can respond to the COVID-19 pandemic, please click here.

Managing Workforce Strategies in Times of Crisis 17

Disclaimer

COVID-19 disclaimer

This document has been provided as an informational resource for Aon

clients and business partners. It is intended to provide general guidance
on potential exposures, and is not intended to provide medical advice
or address medical concerns or specific risk circumstances. Due to the
dynamic nature of infectious diseases, Aon cannot be held liable for the
guidance provided. We strongly encourage visitors to seek additional
safety, medical and epidemiologic information from credible sources
such as the Centers for Disease Control and Prevention and World
Health Organization. As regards insurance coverage questions, whether
coverage applies or a policy will respond to any risk or circumstance
is subject to the specific terms and conditions of the insurance
policies and contracts at issue and underwriter determinations.

General disclaimer

The information contained in this article and the statements expressed

herein are of a general nature and not intended to address the
circumstances of any particular individual or entity. Although we endeavor
to provide accurate and timely information and use sources we consider
reliable, there can be no guarantee that such information is accurate
as of the date it is received or that it will continue to be accurate in the
future. No one should act on such information without the appropriate
professional advice after a thorough examination of the particular situation.

Managing Workforce Strategies in Times of Crisis 18

Contact

To learn more about

Human Capital Solutions at Aon:
humancapital.aon.com
humancapitalsolutions@aon.com

Human Capital Solutions

Human Capital Solutions by Aon empower organizations to with people data. The practice includes market-leading talent
identify, retain and motivate the right talent to navigate the assessment solutions, people analytics, rewards data and
future of work as well as drive better business decisions advisory capabilities.
About Aon
Aon plc (NYSE:AON) is a leading global
professional services firm providing a broad
range of risk, retirement and health solutions.
Our 50,000 colleagues in 120 countries
empower results for clients by using proprietary
data and analytics to deliver insights that
reduce volatility and improve performance.

© Aon plc 2020. All rights reserved.

The information contained herein and the statements expressed
are of a general nature and are not intended to address the
circumstances of any particular individual or entity. Although we
endeavor to provide accurate and timely information and use
sources we consider reliable, there can be no guarantee that
such information is accurate as of the date it is received or that
it will continue to be accurate in the future. No one should act
on such information without appropriate professional advice
after a thorough examination of the particular situation.

C1257US 05.20