Over half of Indian organizations expect moderate to large negative business impact in the next six months due to COVID-19: Study

Amid the growing concern over COVID-19, 57% of organizations in India expect a moderate to large negative impact on their business in the next six months, while 46% expect this to last over a 12-month period. Signalling the long-term business impact of the coronavirus, 19% expect such an adverse impact to last over a two-year period, according to a ‘COVID-19 India Readiness Survey’ by Willis Towers Watson. Only 5% of organizations expect a positive business impact within the next 12 to 24 months. 

“The tough economic conditions and anticipated business impact could drive organizations to consider workforce optimization. Employers should take an emphatic and considerate approach and evaluate options such as staff redeployment, reduced working hours/days, long service leave, sabbatical, furlough, hiring freeze and voluntary pay cuts, before any serious consideration of a workforce reduction. In a post-COVID-19 world, some companies may need to re-hire and potential employees will factor in the consideration of organizational culture and how companies have treated their employees during the crisis”, said Rohit Jain, Head of India, Willis Towers Watson. 

Salary increments, performance appraisals and incentives

The survey found that 42% of respondents have not taken a decision on salary increment budgets for this year, while 33% indicated that performance appraisals and bonus pay-outs will happen as planned. Furthermore, 77% said that there will be no reduction in salaries and 53% responded that there have been no adjustments to the sales incentive pay-outs. Almost one in three respondents anticipate that their 2020 annual bonus for executives and employees will be impacted, while 17% expect an impact on their 2020 Long Term Incentive plans.

“We expect compassionate short-term and realistic long-term implications on pay and compensation. For a majority of Indian organizations, the timing of this outbreak has a significant bearing on the annual performance management and rewards exercise. March to April is the performance review period and we’re seeing organizations adopting a wait-and-see approach. Most organizations are likely to consider the options of selective increments for critical skill staff, defer staff increments by three to six months, or even do away with increments altogether if the adverse circumstances prevail. For those employers who plan to proceed, they will likely plan a low to moderate increment in salaries so as to ensure liquidity and protect cash-flow,” said Rajul Mathur, Consulting Head, Talent and Rewards, Willis Towers Watson, India.

Remote working, leveraging technology and effective communication

83% of organizations plan to review their work-from-home policy, and 46% indicated that they would reimburse employees the expenses incurred for setting up their home internet for work purposes. Employers are also taking several measures to keep employees engaged in the new scheme of things. These include team-based virtual or social engagement initiatives, regular company-wide or department level communications, and town halls organised to address employee concerns.

Figure 1: Measures employers are taking to keep employees engaged

“Employers need to communicate optimally by choosing the channel and frequency carefully while keeping the communication simple, in a way that every message adds value to the employees by providing critical information or alleviating stress. Given the information overload, especially on social media and multiple sources, educating employees and guiding them towards a few reliable sources including those launched by the government is recommended,” said Jain.

“The rate at which corporates and employees have adopted technology in the last couple of weeks is truly remarkable. This combined with large numbers of employees working remotely, also leaves organizations vulnerable to cyber-attacks. It is therefore important for organizations to also invest in employee awareness and education while reviewing cyber insurance adequacy,” added Jain.

Employer response and preparedness

Over the past weeks, organizations in India have also initiated several measures to take care of their employees as a result of COVID-19. Most prevalent amongst these are increased access to hand sanitizers, provision of masks and other protective equipment, introduction of alternate work arrangements, increased communication on prevention, disinfection of worksites and increased access to counselling.

“As employers try to protect their most valued asset, i.e. people, this unprecedented situation has brought forward the critical role of HR. Employers must urgently address issues around employee health & safety and business continuity, while simultaneously readying plans around employee engagement, productivity, performance management and rewards,” said Rajul.

Figure 2: Top actions organizations have taken or are planning to take for their employees as a result of COVID-19

A total of 103 organizations in India participated in the Willis Towers Watson ‘COVID-19 India Readiness survey’ conducted from 20 to 31 March 2020. Data was collected from nearly 417,000 employees working across sectors such as Financial Services, Healthcare, IT & Telecom, Manufacturing, Public Sector & Education and Wholesale & Retail, with the survey results presented in an aggregate approach.