By Han Jian

The resurgence of COVID-19 in China has dealt a blow to various industries, especially those that are heavily reliant on population mobility (e.g. travel, F&B and retail). It is almost as if the clock has been turned back two years when the innovative model of “employee sharing” by Alibaba’s fresh food chain Hema Fresh sparked much debate about “flexible employment.” But, will flexible employment be a silver bullet to solve the staffing woes of businesses? And, what should companies do to build confidence and trust amongst employees?

During the pandemic, some companies have found themselves in urgent need of manpower, while others have had idle employees. In one sense, Hema’s once radical employee sharing scheme can benefit both the company and its employees. As a form of flexible employment, employee sharing manifests a corporation’s flexible use of human resources both in terms of talent quantity and quality. At its core, employee sharing is all about an organisation’s flexibility and adaptability to the evolving business landscape.

In fact, the co-existence of “labour shortages” and “idle employees” has not arisen from the pandemic, but rather from a long-standing structural problem in the Chinese job market that could be attributed to the following factors:

First, China’s diminishing demographic dividend has made cheap labour and extensive consumption things of the past. Second, restructuring, upgrading, or relocation of low-end manufacturing and service industries have led to job transfers or losses, causing livelihood disruptions. Third, outdated education and vocational training systems have resulted in shortages of well-rounded and high-calibre talent required to meet the needs of industrial upgrading. Last but not least, reduced market demand during the pandemic has contributed to lower staff turnover.

To address the multi-faceted problem, different factors should be taken into consideration, including national and regional policies, the quality and quantity of the labour supply, business management capabilities, and the application of information technology.

First, it is essential that both enterprises (especially micro, small and medium-sized companies) and employees have opportunities to develop. Only when companies have the potential for further growth can employees feel secure in their jobs.

Second, growth opportunities come from market demand. When there is demand, there is also opportunity for businesses to grow by creating value for customers. In many cases, companies only resort to flexible employment to save costs. However, it is important to see flexible employment as part of an organisation’s HR strategy or an overall staffing plan, so as to improve its capacity to adapt to changes and operational efficiency.

Third, flexible employment is by nature a process of defining clear roles and responsibilities, which involves division and integration of functions.

There are multiple ways to break down work. For example, a company may place its employees in key positions for core business of strategic importance, while outsourcing or bringing in flexible employment for peripheral activities. It can also deconstruct jobs into component tasks, and assign those that require expertise to its own employees, while leaving those with general knowledge and skills requirements to flexibly employed individuals.

Workers’ versatility and the possibility to work at different places also help lay a foundation for flexible employment. For example, office workers can open their own online retail stores or serve as part-time ride-hailing drivers to increase income; while highly skilled professionals, such as designers, doctors, financial and management consultants, can provide services in their respective areas of specialisation after work.

The process of integration is about matching jobs with talent with the most relevant skills. Talent management is the art of allocating talent to where and when they are needed most, with the aim of raising productivity and yielding economic benefits. Thanks to development in information technology, professional service organisations can leverage IT systems to match the demand of offline work with the supply of talent, allowing activities including online tutoring, online car-hailing, food delivery, on-site repair, moving, and translation to be performed and paid for. Of course, all of these are based on the demand for certain types of work and the supply of relevant skills.

Will employee sharing be sustainable post-pandemic?

Undeniably, the current model of employee sharing adopted by restaurants and supermarkets has indeed solved the paradox between labour supply and demand in the short run. Nonetheless, organisations still need to weigh up costs, benefits, and supporting policies in the long term.

Supporting policies refer to subsidies, tax incentives, social insurance, and other welfare benefits that flexibly employed individuals are entitled to. What is more important, however, is to provide skills training for people re-entering the workforce.

Chinese firms can draw on the experience of developed countries, where flexible employment is relatively mature. That said, the blind application of Western models will not necessarily achieve the desired results; what we need is a flexible labour market, well-established laws and regulations, a sound social security system, and necessary skill trainings pertaining to flexible employment.

For example, Denmark has a labour market with a high degree of flexibility in hiring and firing which gives companies, especially SMEs, the freedom to dismiss underperformers without being restricted by local labour laws. The Danish labour market is therefore highly mobile with significant job turnover. More importantly, sound unemployment benefits in Denmark are more than enough for jobless workers to get by on. Given the high labour turnover but less stress in life, it is not that hard for job seekers to find new employment. Better still, the Danish government is proactive in providing vocational skills training opportunities.

Companies’ staffing capacity still has much room for improvement. Even before the pandemic, many companies managed human capital in a sloppy manner, and lacked dynamic human resources planning as well as the business agility necessary to navigate uncertain times. Fortunately, companies have started to review their talent pools in recent years, in a bid to motivate and retain outstanding employees. At the same time, they also need to explore new possibilities when recruiting workers for supportive positions. It should be noted that these approaches are aimed at improving the productivity and profitability of a business, rather than solely on cutting labour costs.

Due to frequently fragmented and non-systematic policies on flexible employment, HR managers need more than ever to share information with each other. Accordingly, they ought to gain broader knowledge and enhance management capabilities in this regard.

As good as it sounds, employment sharing still faces many challenges in getting off the ground. For instance, companies borrowing employees should strengthen their management of and training for newcomers, and define labour relations, liability for work-related injuries, and insurance during employment. At the same time, they should be conscious of protecting their trade secrets and corporate image.

In the long run, factors such as labour supply and demand imbalances, tightening cost control, and new business models and technologies will continue to drive labour-market flexibility beyond the pandemic. Hence, governments at all levels should improve relevant laws and regulations to protect the legitimate rights of workers. In addition, companies should make systematic staffing part of corporate strategies, while HR departments have the ability to evaluate the payoffs and risks of different forms of employment.

Is it viable to shift from offline to online commerce?

Given how hard offline business has been hit by COVID-19, many are now wondering whether shifting from offline to online commerce is an effective solution. From my perspective, it depends on the change in economic logic in the entire value chain, no matter how a business evolves. Customers are willing to pay only because products or services are of some value to them, regardless of where they make their purchases. Value creation is a lifeline for companies. If a company fails to deliver value after transitioning from offline to online commerce (or vice versa) due to old-fashioned practices across key functions such as operations, finance, and planning, its business model will not be sustainable.

But, is digitalisation a panacea? For one thing, we should not count on digital transformation as a one-shot cure-all, as digital transformation itself is a gradual process. A comprehensive informatization process achieved by recording, breaking down, storing, and managing all the links in the business value chain is the cornerstone of digital transformation. For another, unsolved offline problems will not disappear magically in an online marketplace. Digital technologies cannot solve the cognitive problems of executives or coordination issues within an organisation. Companies still have to systematically improve managers’ problem-solving skills and management capabilities to survive and compete.

How can we invigorate companies and their employees during the pandemic?

To recast an organisation, it is essential to break boundaries both vertically and horizontally in order to create a synergistic ecosystem. To motivate employees, companies should adopt both internal and external rewards. In light of the ongoing pandemic and digital transformation, it is vital to strike a proper balance between business efficiency and employees’ interests, and reach a consensus amongst both employers and employees that staff are not just puppets for their companies.

Morality and humanity also matters, the lack of which will make employees belittle themselves and prevent them from deriving intrinsic motivation or a sense of fulfilment from their work. This is even the case during the pandemic, when companies have struggled to survive with low employee morale. When employees are not motivated intrinsically or extrinsically, they won’t stick together and uphold a set of shared values, rendering “organisational dynamics” unachievable.

There are three ways in which companies can invigorate themselves and their employees:

1. Give employees a sense of security to ensure that their life is guaranteed;
2. Give employees a sense of purpose. Small but easily achievable goals will light up their life;
3. Manage work atmosphere properly. Do not turn a blind eye to negative energy, nor over-emphasise positive energy. A human touch is fundamentally important.

It is natural for people to experience negative emotions such as anxiety, fear, and worry under pressure, which requires companies to communicate with them more regularly. Some industry leaders have suggested that internal communication should amongst the top priories for corporate development. Helping employees shed negativity is instrumental to reduce stress and build trust between businesses and their employees. Team morale is all that matters. People will live and work as they did in the past after the pandemic. And this justifies the need to maintain the confidence and trust of employees in their employers.

Han Jian is a Professor of Management at CEIBS. For more on her teaching and research interests, please visit her faculty profile here.