Protecting the Workforce During the COVID-19 Recession

06.22.2020

Companies that prioritize talent retention during the current COVID-19-sparked recession will be rewarded with employee loyalty and better positioned to recover when the economy improves.

Retaining Talent to Support Future Success

Companies that can retain their talent during this recession will have advantages over those that must lay off workers. Keeping the workforce intact supports both uninterrupted productivity and strong employee morale. It also allows companies to avoid rehiring, retraining and integrating new employees into their businesses as the economy improves. Beyond these benefits, avoiding layoffs can help protect a company’s culture and brand reputation over the long term.

Unfortunately, not all companies can avoid layoffs if they are to remain solvent. In cases where layoffs are necessary, cost-cutting approaches, including eliminating unnecessary expenses and share buybacks, as well as reducing executive compensation, should be implemented before resorting to furloughs or layoffs. When terminations are unavoidable, companies should extend layoff compensation and health benefits to impacted employees.

The following examples illustrate the divergent approaches to layoffs taken by companies in the same industries during the pandemic.

·        VF Corp. (VFC) has taken steps to limit pay impacts for their employees and provide emergency-leave compensation during the pandemic. In early April, this apparel and footwear company also announced that the CEO would temporarily reduce his base salary by 50% and VF’s executive leadership team’s salaries would be reduced by 25%.
In contrast, a competing apparel company furloughed 80,000 store employees after paying them for only two weeks after the beginning of the shutdown. This decision damaged the company’s reputation and will make their reopening process difficult.

·        Waste Management (WM), which provides critical solid waste and recycling services, guaranteed their hourly workers compensation for 40 hours per week, regardless of their ability to work, and pledged to avoid layoffs during the pandemic. The company also leveraged technology to quickly transition approximately 20,000 employees to work from home, enabling these team members to serve customers and support frontline employees remotely.
Instead of fully covering all COVID-19 sick leave during the pandemic, another waste disposal company required workers to first use their existing paid time off benefits. The company then provided additional time off only if an employee was able to provide documentation of a COVID diagnosis. This company also failed to provide protective equipment for many of its frontline workers. As a result, the company has drawn negative press coverage, and its relationships with the union and its employees have deteriorated.

Protecting The Workplace During COVID-19 Recession.pdf

·        Download

·        View

·        Email

The views expressed are subject to change at any time in response to changing circumstances in the markets and are not intended to predict or guarantee the future performance of any individual security, market sector or the markets generally, or the Parnassus Funds. Current and future portfolio holdings are subject to risks.

Mutual fund investing involves risk, and loss of principal is possible. There are no guarantees any investment strategy, including a socially responsible (ESG) investment strategy, will be successful in any market environment.

https://www.parnassus.com/insights/article/protecting_the_workforce_during_the_covid_19?utm_source=esg-clarity&utm_medium=sponsored-content&utm_campaign=esg-profile&utm_content=june_p&p?NL_issueDate=2020083&NLID=ESG-Clarity-Newsletter