Why firms should embrace 'creative destruction' to kickstart transformation amidst a pandemic

Effective leaders don’t keep their WFH employees boxed in strict schedules, expert says.

Even before the coronavirus pandemic broke out, businesses are already scrambling to catch up to the rapid digitisation of industries and changes in their consumer behaviors. Now, to add to the ongoing struggle of changing frameworks and business models, businesses suddenly must face a vapid environment driven by fear and uncertainty.

Instead of a period of anxiety and chaos, however, businesses should see the ongoing crisis as a perfect storm of creative destruction to kickstart their transformation, says Laurence Smith, former Managing Director HR and Group Head of Learning & Talent Development for DBS Bank in Singapore and author of the recently-published Transformation Mindset: 10 Things Leaders and HR Can Do Today to Turn Crisis into Transformation.

“The reality is the future work is here. Digital denial is over. The necessity to have your team in front of you the whole time and be able to look over their shoulders is no longer possible,” Smith told Singapore Business Review in an exclusive interview.

Smith, who carries over 20 years of experience working in the banking industry as well as HR and has helped leaders drive digital transformation in their workplaces, noted that effective managers and leaders have learned to let go of their incessant controlling mindset when it comes to managing their employees.

“One of the things has become very clear is that in the early stage [of the pandemic] there was this massive fear about people working from home. ‘How do we control them? How do we know that they’re really working? We have to manage them. Let's put spyware on their computers. Let's take continuous screenshots, so we know they're really working.’ There were a lot of fear-driven technological fixes,” he said.

But too much of these actions may not necessarily lead to an increase of productivity—in fact, it may even hamper achieving good results. Instead, purpose remains central to getting staff to get the job done, according to Smith, who recently worked as Chief People Officer for a pre-launch digital bank in Dubai. Just this June, he became a part-time member of the Harvard Business Review Advisory Council.

“If you have an organisation where people are genuinely excited about their job, about the purpose of the organisation...guess what, it doesn't matter where they're working, whether they’re in the office, the coffee shop, or their spare room or the garage. They're going to be getting stuff done because they care.”

This is especially important right now given the ongoing crisis, when employees are expected to help with taking care of their families and relatives, he added. “They're going to be homeschooling their kids, they're going to be looking after sick relatives, but they're still going to get the work done.”

Headcount woes
Smith cautions against jumping the gun and shaving your headcount during the crisis.

“We’ve seen organisations take some pretty horrific knee-jerk responses, such as firing people over Zoom. [They think that] laying off a large number of people and just cutting headcount is the way to cut costs. That's the old way of doing things and I think it's incredibly short-sighted,” he said.

Instead, he advises companies to find ways to “make the employees part of the solution.”

“We've also seen some brilliant examples where organisations have gone to employees and said, ‘Look, we all know this is a crisis, the company is struggling, we need to cut our costs. [But] we don't want to let you go, that’s the last option. What do you think? How can we work through this together?’” said Smith, adding that there were instances where employees have voluntarily taken pay cuts.

He cited an example where one company let everybody voluntarily and confidentially email HR to say how much they could afford to take as a pay cut. The pay cut varied amongst employees, with an average of 20%, according to Smith. The result? “The company is still going, and they didn't fire anybody,” Smith said with a smile.

Another way to go about this is to help their employees take the first steps to create their own businesses by introducing flexibility in their work hours—in return, fostering loyalty and even getting back services in the process.

“You probably have a number of employees, perhaps 5%, who've always wanted to start their own business but never quite had the courage. Maybe you could help them start their own business and become an entrepreneur with a little bit of a safety net that you provide, but dramatically reduce fixed costs for you as a company,” suggested Smith.

“Now, there's a few advantages here. You reduce your headcount, you get some ex-employees who are incredibly loyal to you, but who are now strengthening their skills by working across the industry and developing a lot more virtual experience and providing those services back to you at reduced cost. There’s some potential win-win there, and that's a potentially significant cost and savings,” he added.

In China, for example, some retail stores and companies are “sharing” employees between them. One of the businesses even built a platform that helped different companies share their workforce across different industries—kickstarting a whole new business starting with employee sharing.

The idea has already taken roots and travelled to the West, with Aldi supermarket chain in Europe and even McDonald’s in the USA adopting this approach.

Rise of the gig economy
One big trend that Smith says will likely expand over the next few years is the “gig economy”, where people have a part-time job or even a part-time business outside their main work.

With this generation getting a taste of what it’s like to lose their main sources of income, a side hustle may become appealing for the extra income and doubling as a security blanket in case they are let go at their main companies.

“What we're seeing in different parts of the world and in some parts of Asia is that the gig economy is increasing. If people have got let go from their big corporate job, unfortunately, then they're likely to start their own businesses, or they're reinventing themselves as freelancers, or they're doing that alongside that part time job as well,” he noted, adding that such trends are growing.

The gig economy is likely to rise in countries such as Indonesia, which has a strong entrepreneurial mindset, and in South Korea and Japan—although these countries might see companies having a harder time adapting to this mindset. But Smith is optimistic that it will become more accepted over time.