With organizations preparing to return to the workplace in stages, there are many questions around what to prioritize first and how to balance multiple considerations such as employee safety, business survival, compliance with regulations, and so on. People Matters asked Siddharth Mehta, Career Business Leader at Mercer Singapore, for his thoughts on how to make sense of the post-COVID world. Here are some of the insights he shared.

Mercer recently named six immediate priorities for businesses and HR leaders in transitioning to the new shape of work. Which of the six can best be capitalized on to drive positive change?

Where companies focus their efforts will depend on the nature of their business, the areas of their operation, and the stage of recovery they are currently in. However, certain priorities will remain active in the background across most organizations as game changers: delivering a better employee experience, focusing on employee wellbeing—mental, financial and physical—and enhancing digital collaboration and transformation. Companies committed to these priorities will drive better engagement, productivity and build employee goodwill that will benefit their employer brand beyond the current crisis.

Transformation has become a buzzword during this period. What are your thoughts on the challenges and opportunities?

Following the pandemic, many organizations are taking the opportunity to put transformation back on the table and even speed it up. Organizations are planning long-term changes to their operating model to manage costs, leveraging technology as an enabler. The focus is now on finding new and proven technologies that support their workforce needs, and also take care of HR operational tasks and non-core activities such as benefits administration, payroll, recruitment, training, temporary staffing, etc. This would free up HR to focus their attention on more strategic initiatives.

On the other hand, there is also the need to build the capability of employees to increase adoption of technology where required, and to lead digital transformation of the entire organization. As reinforced in recent ministerial speeches, upskilling and reskilling workforces are high on the agenda for the State and businesses. Building from within still remains the first choice for most employers.

However, this means ‘ready now’ talent will not be available any time soon, and a war for skilled and/or experienced talent is expected to intensify in the near future. HR and business leaders should take a long-term strategic workforce and skills development view to balance their talent development and talent acquisition strategies.

A people-centric approach and strong employee value proposition offered by organizations will become a critical differentiator, and can make a big difference if done right.

With the approach to skills changing, what changes might we be most likely to see in terms of cost and workforce optimization?

COVID-19 has intensified the application of strategic workforce planning or SWP, the systematic process of matching future business needs with workforce supply. As organizations change their operating models to pursue new service or product portfolios and make their cost structure leaner, they will need new sets of skills to fulfill these business aspirations. This will lead to fundamental change in the way HR designs and delivers programs and processes.

SWP will encompass a data-driven approach to managing and designing the workforce of the future. As HR gains a deeper understanding about the new service and product portfolios, growth trajectories and economic-models of its business, it will be able to derive the skills, scale and shape of the most optimal workforce configuration.

In addition to using data, HR will increasingly incorporate the agile product design methodologies used by technology companies. The idea of “pilot testing prior to scaling solutions” will become the norm as HR experiments with new unconventional forms of workforce design and management.

What might be the long-term implications for how essential roles are defined and compensated?

We foresee a rise in the use of job segmentation in the workplace. Just as in sales and marketing, segmentation allows companies to break-up target customers into segments deserving a different treatment; HR will break up roles based on their contribution to organizational value:

1. Roles that have a direct and differentiated contribution to organizational strategy. These provide tremendous organizational value and organizations will compete for them in the talent market. They will likely be low-volume. Incumbents in these roles will be highly sought after and earn the greatest attention from HR, but will also carry high performance expectations to balance the return-on investment.

2. Roles that are responsible for translating differentiated ideas into real customer value. These large-volume roles, defined as “core roles”, will experience the greatest optimization attention. They will likely experience automation and process-efficiency. Incumbents in these roles will continue to upgrade their skill to remain relevant as the organization replaces transactional elements of the work through automation.

3. Roles that are not involved in the design or delivery of the value that the organization provides to its customers. These roles deliver services that have been commoditized. They offer little differentiated value but are essential to the workflow and value-chain of the business. As such, they can potentially be shared or outsourced.

In recent times, we have seen a shift in how critical jobs are compensated. Traditionally, variable bonus was the primary means of elevating critical jobs. In the last 10 years, organizations have mostly downgraded the importance of internal equity in base salary, and embraced the more practical approach of segmenting base salaries across critical and non-critical jobs. Even more recently, we begin to see organizations using other levers liberally to attract talent for critical jobs such as sign-on bonus, retention scheme, “hot skills allowance”, specialist career pathways, profit-sharing, etc.

We believe this trend of greater segmentation will continue, as it is the only financially viable approach.

How do you think COVID-19 has changed, or is changing, the discussion around productivity? Could you share any suggestions for refining how we currently look at productivity?

The idea of workforce productivity continues to be a source of confusion for most organizations. While the productivity metric is not difficult to define, in that essentially it is the ratio of output and input, the mechanism of improving the metric is difficult to unravel. And as the value chain and delivery of work becomes increasingly interconnected, our ability to measure productivity at an individual level becomes increasingly more difficult.

To improve workforce productivity, we need to take a systems perspective and map out the cause-effect relationship between factors that may drive workforce productivity. In addition, we need to think of workforce productivity as a group phenomenon rather than an individual phenomenon.

It may be a combination of employee experience, complement of skill sets, quality of interactions among team members, management style of the leader, state of employee engagement and other non-employee factors related to process and technology that together add up to the productivity of a team unit.

With the rise of data in the workplace, we have a greater ability to test these theories and unravel the unique combination of these factors that influence workforce productivity. The answer may vary not just across organizations but also within teams in a single organization.