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Latest Black Swan Event Demands Plan for Workforce Restructuring

Workplace experts are devoting enormous amounts of time to anguishing over the disruption caused by the pandemic. Since anguish is unlikely to produce anything productive, there needs to be a reallocation of effort to plan for the future. The pandemic outbreak was a Black Swan event. Hence, it was unanticipated and left many organizations in the lurch.



However, could we have planned for it if scenario-based techniques had been projected?

Organizations have struggled with finding optimal workforce management strategies. One critical issue relates to locating where work gets done and how and where workers do it. Some have employees working remotely because technology enabled them to digitize some types of work. Employee preferences for avoiding difficult commutes might have sold the idea to some firms, particularly if they were competing for scarce talent. In other cases, the costs of bringing employees to centralized locations have made reducing the square footage required to house them an attractive move.

In places like Silicon Valley, the clustering of people raised the demand for housing and for workspace dramatically, making satisfactory housing difficult to afford and creating nightmare commutes. Competing for software engineers, who are in critically short supply, might be done more successfully if there’s an alternative to spending two or three hours per day in a car commuting.

Planning for Alternative Futures
Rather than waiting for the pandemic to be brought under control to decide whether employees will return to central locations, organizations could be conducting controlled experiments to see how alternative strategies might work. In some cases, employees can work where they have been located in the past. Protocols for social distancing, testing and isolation may limit the volume of workers that can return, but for some a return is feasible.

The restrictions may require some to work only at certain times and/or on certain days. Workers who must be in face-to-face contact with customers or co-workers in order to be productive may not be candidates for short-term returns and that reality must be a part of planning for the future.

Prior to the outbreak, U.S. unemployment was at 50-year lows and there were significant shortages of specific types of talent. When the crisis hit like a tsunami, decisions about layoffs had to be made quickly. For some organizations, revenues dropped precipitously, making current payroll costs unaffordable. Even though organizations were forced to let some people go so they could apply for unemployment, the decisions were made without a set of criteria. Without any protocols to guide selection of employees critical to continue operations in some form, snap decisions no doubt led to bad decisions.  

Restructuring a workforce, particularly if done rapidly and dramatically, can lead to unintended consequences. Terminating employees can actually increase short-term costs because accrued benefits may have to be settled immediately, and cash flow is critical to an organization that has just lost its revenue. It has often been said that those who do not study history will do poorly when it repeats itself. The Cascio book Responsible Restructuring was a valuable resource during the financial crisis beginning in 2007 and could have served as a guide during the current crisis for those heeding its guidance.

Each organization should begin building alternative scenarios and formulating strategies best suited to the alternative futures. No one knows how long the crisis will last and the eventual toll, but anticipating what might manifest gives organizations a head start on testing strategies and developing execution tactics.

Scientifically sound research is a valuable guide for those contemplating alternative strategies. The gold standard is randomized controlled trials, but this type of experiment is only rarely possible in the field. Lab studies that are designed to simulate the conditions that exist in the field can offer sound intelligence on how something might work. But a lab study designed to have internal validity can only demonstrate what is likely to happen under the conditions that were present during the study.

For example, a lab study that shows people throwing tennis balls at targets for insignificant monetary rewards will play the game longer if they are not paid than they will if they are has been used as “evidence” that extrinsic rewards will lessen intrinsic rewards in the workplace. Although that study might have internal validity, if the hypothesis is supported repeatedly it cannot be accepted as evidence that people working to support themselves for years, often performing work that is unsatisfying, will have diminished intrinsic satisfaction because they are paid for doing the work. The lab study lacks external validity, since its results are not generalizable to an entirely different context. This limitation can be eased by conducting multiple trials under different conditions that represent simulations of some of the ways the future might manifest.

Today’s conditions provide a unique opportunity to conduct field trials that can help to guide strategies for the future. For example, an organization with worksites in multiple locations or multiple countries could try pilot experiments to test the viability of alternative strategies. If worker density is an issue, scheduling can have everyone working at the prior central location some of the time. Alternating days or shifts can enable smaller staffs to spread themselves out adequately to honor distancing restrictions. Call centers can be assigned customer connections by utilizing differences in the time zones to schedule operators for different shifts, particularly if customers are in different countries. If it is necessary to reduce hours worked for hourly employees in order to retain the entire staff, half of the staff can handle the mornings and the other half the afternoons. It may also be a competitive advantage to extend the hours available to customers, which could further limit the reductions in staff. If the organization had struggled to get the best talent before the outbreak, it may be willing to go the extra mile to avoid letting them go, perhaps to competitors or alternative employment.

Pilot programs could be run in different divisions or locations to test the impact both on productivity and employee satisfaction, which would allow an organization to compare the effectiveness of alternative tactics. Additionally, employees can be switched from one approach to another to stabilize the samples and help ensure that differences were not due to different characteristics of the employee groups.

There are some activities that in the past had seemed to require co-location of workers. Access to expensive centralized resources may have limited consideration of dispersing worksites. But with the advances in technology, it may be economically feasible to distribute those resources so that work could be done in employee homes or satellite locations that are accessible via short commutes. Trials that determine whether work that had been done centrally can be relocated need to be conducted now so decisions later are not made under time pressures.

Charting a Course with Experimentation
A final workforce management issue that needs to be considered is post-pandemic performance management. One of the obstacles to remote work that organizations have faced is resistance from managers who feel they must be able to watch work being performed in order to be able to appraise performance.

Organizations that locate work globally and use virtual teams have had to clear this hurdle and apparently have been able to do so satisfactorily. But managing subordinates remotely does present new challenges and organizations must evaluate their current systems for managing performance and determine if changes are needed. Training can provide a mental reset for managers as long as it’s done ahead of implementation of the new way of working. Many organizations were unable to do that because the onset of the pandemic was so rapid. Whether or not remote work will continue permanently, the need to retrain managers should be done as quickly as possible. Perhaps some skeptics can be won over to the new conditions, but at the very least, they can be made more effective in the short run.

Due to the many unknowns, such as the length and outcomes of the crisis, it’s prudent to plan for a range of futures. This is the principle underlying scenario-based planning … have strategies ready for dealing with anything.

Human resources practitioners should work with executive management to ensure workforce planning is as important as operational and financial planning as each organization charts its course through this storm.

Experimenting now can help an organization plan better and organize itself to cope with further surprises that surely await us. Consulting with a book on experimentation or being guided by experienced researchers can help practitioners understand how to conduct trials that will provide valid intelligence about likelihoods if alternative approaches are adopted.

There is time to be planful, even though it feels like worrying about fire prevention and fire insurance when one’s house is already ablaze. Given the increasing frequency of Black Swan events, it is likely that there might be another fire, even though all the right steps were taken to avoid it.

Now is the time to learn many of the lessons that should have been learned during the financial crisis, especially about decisions related to workforce restructuring.

About the Author 

Robert J. Greene is the CEO of Reward Systems Inc.

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