Human Resource Management in the New Normal

Human Resource Management in the New Normal



The COVID-19 pandemic has resulted in the largest and dramatic drop in economic activity in modern history. Among the many criticalities, one of the largest was the handling of human resources (HR). Human capital represents the most important part of firms’ knowledge stock and accounts for a significant percent of operating expenses (70% on average), which are traditionally characterized by a low degree of flexibility.

The labor market has changed rapidly from February 2020, changing the experience of work for thevast majority of employees and forcing organizations across the globe to adapt how work is organized and how jobs are designed. Globally, extraordinary HR initiatives have been implemented to face cost-cutting pressures. In common law countries (e.g., US), the large majority of organizations have started to lay off a large part of their workforce to cut costs, while in civil law countries, such as Italy, important governmental lay-off extraordinary measures have been implemented to support employees and ban the termination of collective and individual contract agreements during the pandemic period. In turn, this has created re-organizational issues, reducingcompanies’ autonomy and internal flexibility.

Nowadays, with restored confidence and the vaccine campaign, HR leaders are required to think through what will come next, and how to appropriately implement cost-effective workforce strategies to restore business growth as well as preserve the employees’ welfare.

The cost of re-hiring competence. Once the economy will re-start, organizations will have to consider rehiring or replacing workers. Employers often underestimate the costs to replace employees. These costs are instead notable – estimated to account for about one-third of a worker’s annual earnings and increasing with the level of education (The Center for American Progress) – and spans from more explicit costs incurred for the opening of a new position and the training of a new worker to more hidden (and potentially way more relevant) costs associated with the loss of social capital and creativity due to workers’ departure. From a cost perspective, organizations need to urgently and strategically balance the need for re-hiring competence with HRcost-cutting decisions, while preserving employees’ engagement and productivity. An in-depth evaluation of their contribution within the corporate ecosystem can help avoid rash decisions that might damage key talent outcomes in the middle-long term.

The cost of smart working in the post-COVID era. During the first waves of the pandemic, COVID-19 forced many firms to leave employees at home. Today, with raising vaccination campaigns, return to offices and in-person interactions appear closer. However, as reported by interviewed members of the Harvard Business School, the new post-COVID workplace will strongly differ from the past and workers’ productivity should be fostered within a new paradigm. As much as some employees will crave the return of in-person social connections in the office, they have become accustomed to the flexibility that comes with virtual work, from less time to commute to more time with family. Managers will have to accommodate changes to work patterns and find newsolutions not to incur in costs associated with a low level of personnel’s commitment, knowledge transfer, creativity, and problem-solving capabilities. From a cost perspective, a better understanding of how new forms of remote working could both preserve employees’ productivity and allow the re-organization of firms’ physical spaces (and associated expenses) is today essentialfor sustainably operate in the “new normal”.

Human resource management in the new era. Human resource leaders have become central to the response in organizations globally in the last two years. At its core, the COVID‐19 pandemic has been indeed a human crisis that implies profound socio-psychological, physical, and technical implications for employees. This contrasts with previous crises such as the global recession of 2008-09 or the Y2K crisis that focused on only financial or IT aspects. Today, the increasing importance to constantly examine workforce planning and their conditions, along with emerging skills and digitalization trends will make HR leaders key figures in the organization. HR leaders will need to adapt and be equipped to appropriately evaluate the trade-off between home working and in-person working and thus implement new extended work-from-home engagement activities, implement virtual performance evaluation for new candidates as well as train employees to work effectively and efficiently remotely.

More than a necessity, being successful in the redesign of the future of work will constitute a key factor of talent acquisition and retention strategies, eventually boosting company’s competitive advantage.

Edited by:
Daniele Piazzalunga
Mattia Cattaneo
(Università degli Studi di Bergamo)




20/04/2021