The coronavirus pandemic means companies are facing challenges of a magnitude that cannot be fully assessed yet. HR is also being confronted with considerable tasks – from basic crisis management to developing proven HR tools in the course of the crisis. Above all else, it is becoming increasingly important to manage structural costs. Grading can play a key role in this respect – if it enhances efficiency as a holistic navigator for the organization. Dr. Christine Abel and John Pfeiffer, hkp/// group experts, reveal background information and details in an interview with hkp.com.
Dr. Abel, Mr. Pfeiffer, many companies are currently shutting down their operations in light of the Covid-19 crisis. Is grading playing a role at all at present, and does it even help to address the situation?
John Pfeiffer: Yes, it does – but in very different ways. Certainly, some companies have put job and role evaluation on hold. But not all companies are “shutting down”. As we can all see from the supermarkets, there are also those ramping up. Apart from the food trade, the winners in our current situation include companies operating in the healthcare and medical sector, and e-commerce firms. The picture is a varied one.
Christine Abel: When used correctly, grading creates structural efficiency and thus cost efficiency too – and that will be one key to overcoming this crisis. But let’s stay focused on the current situation for the time being: everyone is carrying on with work as best they can – often from home using digital communication tools. The crisis is driving new forms of cooperation that potentially have what it takes to change the nature of jobs.
Do you really believe that Covid-19 will change work?
Christine Abel: Naturally, we can’t say with any certainty what will happen at the moment, but it would be just as naive to believe that everything will remain the same. Virtual forms of cooperation are working not only in technical terms, but also with respect to interpersonal relationships. A virtue has been made out of necessity. Cooperation is currently becoming somewhat more agile.
John Pfeiffer: There have been some significant changes in the world of work. Coordination and decision-making processes that people thought were highly complex or even impossible to implement with respect to remote working are all of a sudden up and running, or have been transformed to allow people to work from home within a few weeks. This also makes you realize just how important good management communication is for the purpose of remote leadership.
So there’ll be no “Back to the Future” once the coronavirus crisis has passed?
John Pfeiffer: Probably not entirely; greater flexibility is here to stay. As is the swift preparation, coordination and adjustment of decisions.
Christine Abel: And since most companies were and are undergoing transformation anyway, what we are ultimately experiencing here is simply an acceleration of the process. So, no, we won’t completely return to our old ways once Covid-19 has passed.
What do you mean by “a sped-up transformation process”?
Christine Abel: According to studies that focus on the financial crisis and its impact, the number of transactions – i.e. sales, carve-outs, joint ventures, and so on – are expected to increase once the Covid-19 crisis is over. In particular, companies with little room for maneuver in terms of liquidity will now have to resort to measures that they might otherwise have been able to avoid or put off. Overheated sales prices are also expected to cool down.
John Pfeiffer: There is still a lot of money in the market. Private equity teams and companies specializing in transactions are working flat out at the moment.
What do you mean by that exactly?
Christine Abel: The pressure for synergies and cost savings will increase and speed up. When two similarly-sized entities merge, the aim is to achieve synergies and economies of scale. If one company spins off from another, you may want to break up a conglomerate with a view to taking faster or more focused action.
John Pfeiffer: This environment naturally offers opportunities to address and make critical decisions in a more calculated was. Before Covid-19, privately owned companies in particular had a tough time with this. This may no longer be possible in the wake of the coronavirus crisis.
Christine Abel: In this context, we will probably also see companies move towards forming more agile groups – going from tankers to flotillas, so to speak – as well as a reduction in reporting levels known as “de-layering”.
And what does that now mean for grading?
John Pfeiffer: While, during previous external crises, grading processes were temporarily suspended and people waited for the crisis or its consequences to take hold, those responsible for grading are now well advised to take preparatory action. We need to brace ourselves for these coming developments and do our homework. That’s the only way to remain relevant in our own roles.
How should we approach that situation, then?
Christine Abel: A SWOT analysis is required as a first step. Strengths, weaknesses, opportunities and threats for and relating to the grading technique, the maintenance workflow processes and governance should be examined. Then, we need to courageously move forward, take the initiative and initiate the necessary changes.
John Pfeiffer: We shouldn’t forget that grading is significant for organizational design. Companies are increasingly asking for information about management structures, for example: How many executives do we need? What is “best in class” in the market? How are other companies of comparable size and complexity positioning themselves? While these tendencies already existed before Covid-19, the crisis will only compound them.
So will grading end up with a different role as a result of this?
John Pfeiffer: Yes. Grading is a major driver of structural costs, and this will become more important in the future. Previously, a job was described in detail. If someone accepted it, it would also be evaluated. Generally speaking, the candidate was also given the job with the appropriate grade and the respective compensation. Companies will think more comprehensively in future: Is a job with such a value necessary in the first place? What value can it generate? Are there different, i.e. cheaper, alternatives? Does the job fit into the budget?
Christine Abel: Grading will thus become a stronger navigation tool for the organization – for its operating principle, efficiency and cost structure. We can already see that companies are still anchoring grading in HR, and at the same time establishing expertise in organizational strategy reporting directly to the CEO. To balance things out, so to speak, the value of grading and role evaluations will simultaneously be enhanced, since they make a sustainable contribution to developing efficient organizations.
It is clear that we will continue following this development on hkp.com closely. Dr. Abel, Mr. Pfeiffer, thank you very much for taking the time to speak to us.