The COVID-19 pandemic has already radically transformed the workforce, as many professionals have transitioned from the physical workplace to remote work because of the public health threat. (And many who don’t have the benefit of this option are struggling with layoffs and reduced employment). The COVID-19 virus has delivered a major hit on the economy, as companies are shuttering, the travel and hospitality industries have become virtually decimated, and the stock market is plunging. As the pandemic is showing no signs of slowing down, many businesses are experiencing a serious decline in revenue, and are forced to rethink their spending in order to stay afloat: And inevitably, workforce costs are landing high up the list.
A March 23 survey from Gartner examines the way companies are approaching the issue, drawing from the input of 160 HR leaders. The results show that most HR departments have begun cost-cutting––nearly half of respondents (49%) have implemented hiring freezes, for instance, and 41% are making efforts to use technology more efficiently. The report also finds, however, that many companies have held off on making larger-scale cuts, instead focusing on preventing extra costs. The data also suggests that we should expect to see a second round of larger cost-cutting measures in the near future, which may include layoffs, furloughs, and other forms of downsizing.
“While HR leaders are being cautious about initializing cost-cutting measures, they are preparing for the possibility of needing to take stronger actions to manage costs,” Matthias Graf, senior director analyst in the Gartner HR practice, said in the press release.
SEE: Coronavirus: Critical IT policies and tools every business needs (TechRepublic Premium)
Here are the three major takeaways from the report:
1. Tackling HR spending
Nearly a third (27%) of HR leaders surveyed report that they are cutting HR services and processes. Consultant spending has also been targeted, with 12% of respondents saying their company has halted or decreased spending in this area.
2. A third of respondents have not initiated workforce-cuts
Twenty-seven percent of HR leaders say they have not begun plans to reduce the workforce––yet. Respondents are preparing for a second round of cuts soon.
3. Organizations are struggling to optimize spending
Nearly half (42%) of the HR leaders are finding it difficult to save more money than they already have––the “ad hoc cost-cutting pressure” is difficult to face, more than 25% of respondents say. Graf suggests that companies “look into reprioritizing current and planned projects,” and “think about making staff available for other functions and projects across other business units” to avoid more workforce cuts.