Think Tank

Disruptions to the World of ‘Work’

Manish Sabharwal, Chairman and Co-founder of Teamlease Services

The Covid-19 crisis has unleashed mayhem on the world of business. While the initial response focussed on employee safety, supply chain disruptions and business continuity, the longer-term implications will be profound. Many companies have moved to complete, almost overnight, digital transformations that they may have been planning for years. At a recent India CHRO Forum session, Manish Sabharwal, Chairman and Co-founder of Teamlease Services, shared insights into the future of work and how business and policy might co-create the ‘new normal’.

The impact on companies and countries will vary sharply…

Same storm, different boats
Nations the world over are battling to keep their citizens safe while also safeguarding their economies. In India, while all the right measures have been put in place their sustainability is in doubt. Though essential, the lockdown has come at the cost of livelihoods for a large section of the population. In that respect, while everyone is in the midst of the same storm, they are not in the same boat. The average Indian employer is neither a large IT company nor a bank, but a small company that employs 50 or fewer people. With limited access to external funds, such companies rely on continuous business and cannot survive an extended lockdown. The crisis has also exposed stark inequalities of a different kind: just 5% of the population has access to broadband connectivity, and for most of the workforce, working from home (WFH) is not even an option.

…and India faces a number of constraints in terms of responding to the crisis

Many companies, especially on the services side, report having achieved broad business continuity thus far. However, it remains to be seen whether they have been as productive as usual. With every passing week, the ‘lives versus livelihood’ debate becomes starker. If the lockdown extends beyond May, the solution to reviving livelihoods will effectively have moved out of the realm of commercial activity, and into that of policy. The challenge is that, unlike the industrialised countries, India cannot afford to widen its fiscal deficit beyond a point. It also faces additional constraints including a workforce that is under-skilled, and low levels of formalisation, industrialisation, financialisation and urbanisation.

An opportunity for policy reforms…

A narrow window for policy reforms
If there is one ‘positive’ to have come out of this crisis, it is that it opens up a policy window to bring about two types of reforms:

  • Law/regulatory: Short and rapidly-executable ground-level policy changes, such as making employee provident fund voluntary, minimising ESI contributions or shifting to a unified labour code.
  • Structural: Long-term policy reforms related to sectors such as banking, civil services and local government.

…that help resolve regulatory issues…

…as well as deeper structural problems

A combination of such reforms could help ease many of the regulatory issues that plague the business environment in India. In the present crisis, they will, in fact, be as important as fiscal measures in restoring growth. For instance, companies still need to fill out some 3,100 forms for various regulators, which adds greatly to their compliance burden. This is a deterrent not just for domestic companies but also for foreign investors, including those looking at moving their manufacturing operations out of China. To build business confidence, the government could roll out a 90-day plan for ‘flick-of-the-pen’ law reforms, and a one-year plan for structural reforms. Meanwhile, from a workforce perspective, what India faces today is not an unemployment crisis, but a crisis of wages/earnings. Fixing this will require polices that boost productive employment (self or otherwise) while addressing issues around the archaic labour laws.

Giving a rethink to governance

At a broader level, empowered, decentralised local governments would go a long way towards driving investment and job creation. China’s mayoral system – which pushes the mayors of 200 large cities to compete for investment – is a good example. While such a model may not be feasible in India, a reform commission comprising of representatives from the civil services, local government and industry, could help rid the system of the ‘regulatory cholesterol’ that impedes progress. This can open a path to building a manufacturing brand for India that could potentially create millions of jobs. With nearly 1.2 million engineering graduates a year, India has a strong technology brand that can be strengthened through policy measures.

A window of opportunity for employers, too…

Implications for employers
Just as India has a policy window to drive reforms, employers and HR professionals have the chance today to deconstruct and restructure their organisations around agility; realign rewards and recognition to go beyond quarterly results; and transform learning and development. From pyramids and pipelines, the emerging organisational structures may look more like concentric circles, with permanent employees at the core and apprentices, freelancers, and third-party contractors at the periphery. HR’s role within the organisation has become increasingly strategic, but also nuanced with shorter time frames for implementation. Several of the changes that companies are now experiencing were long in the pipeline but have been accelerated across organisations, to combine resilience with flexibility.

To reinvent…

For instance, taking a 3-year strategic view, a large Indian conglomerate has started reinventing three key business areas: people, supply chain and customer engagement. On the people front, it is reworking its organisational design and workforce planning, including WFH engagement, employee connect, motivation, and ‘emotional anchors’. It is also re-engineering its supply chain to manage dependencies and build agility. Finally, it is finding new ways to engage customers, including through digital channels.

…and change the workforce…

At a general level, organisation design is evolving to include more ‘gig economy’ workers. With a transforming education system and digital learning, there are tremendous opportunities to include labour market ‘outsiders’ into the active workforce. Digital learning and technology have given new meaning to ‘employability’, which is today really about the ability to learn and grow. To enable this, companies must integrate talent sourcing with skill development – a trend that was already evident in the IT sector but is becoming a reality in other sectors, too. Ready made talent narrows the ‘people supply chain’, but integrated L&D (such as through apprenticeships) can broaden the pipeline.

…by leveraging the gig economy…

In a sense, India already has the world’s biggest gig economy. 50% of its labour is self-employed, though many are also under-employed. In the coming years, however, greater access to technology and training will make such employment more productive and sustainable.

…and preparing employees for the future

As companies reorganise themselves, there will be opportunities to recalibrate their policies and make them more relevant to an evolving workforce. Some workers will see this as a threat, so communication and messaging will play a critical role. Employers who can demonstrate that they have ‘skin in the game’ while leading change, will be the ones who are best placed to prepare their employees for the future.

Returning to normalcy…

…in a staggered, localised manner

The way forward
In any crisis, there is a tendency towards ‘presentism’. Some would describe Covid-19 as a situation so unique that the normal laws cease to apply. However, companies should try to look past this tendency as they prepare for a ‘return to normal’. For instance, while WFH is the rage of the day, it is viable only for a certain section of the workforce. In most companies, no more than 10-15% of the workforce will be able to do so sustainably. Moreover, as the lockdown lifts, the path back to ‘normalcy’ will not be a straight one. The authorities will continue to redefine ‘essential’ services, and this list will grow in fits and starts, mostly in a decentralised, localised manner. The initial months will be difficult, with a fair degree of ‘transmission loss’ between how laws are written, interpreted, practised and enforced.