Employment contracts will undergo a COVID-19 inspired makeover

This article appeared originally in Gulf News: link to original article

The beauty of a brain is not only in its complexity, but in being able to take it anywhere.

For talent, regardless of where the individual resides, is mobile. This is probably going to be one of the key takeaways from the pandemic and how job markets are going to be shaped as a result of it.

This is also why countries – and sometimes cities – are now coming to understand the importance of flexibility in employment and in doing work, allowing individuals to choose their working hours as well as their work locations. The latter is happening in Japan, where national parks are welcoming employees who desire a change in scenery when working.

At other places, malls are being fitted with workstations – similar to business centres at hotels – to provide comfort and accessibility to office services without being physically in the office.

What this means is that a person can unplug from working in one location and within a specific timeframe and move to another location for the sake of a change. While we are not there yet, at least not the places that I know of and interact with, we seem to be headed there sooner rather than later.

Being ahead in getting to grips with such shifts in the job market will make it easier for an entity to adapt to them and to tap into a global talent pool… and not just a local one.

Rework contracts

The first shift will be a growing divergence between fixed and temporary employment contracts. Entities that would like to lock talent into its employment will go for the former, ensuring that pay and benefits make up for relatively longer commitment to the entity.

Part of the benefits would be choosing the place of work and the most suitable working hours. As long as the work is getting completed and KPIs achieved, within the targeted time frame, nothing else should matter. Here, though, coming into the office once or twice a week would be helpful for the individual to not lose touch with what’s going on in the office, and for the entity to not lose track of what’s going on with the individual.

Dependent on skills

Other types of fixed employment contracts will include those for employees who must be retained in the entity for back-up and support services. Examples include HR, IT, finance, procurement, and so on.

The second shift will be higher dependence on temporary or mixed part-time employment. In other words, there is no permanent employment with any entity – and there does not need to be one.

Mixed part-time employment is second best to the first category of fixed employment, where individuals require further flexibility in employment terms and conditions and the entity is in dire need of the individual’s capabilities. Such arrangements exist already in the healthcare sector whenever demand exceeds supply for specialised physicians.

Mixed part-time employment will grow in importance in other sectors based on the interplay of demand and supply.

Can be demanding

There are two caveats here in being a part-time employee instead of being on fixed payroll for x number of years. First, there will be a need to manage conflict of interest when working in multiple places within the same industry.

Second, managing and planning pension would be a headache. The easier way is to have the contribution, to a government or private pension, being done by the part-time employee. Alternatively, pensions can be worked out between the employee and the employer if the part-time contract is of a longer duration, which can be a way to retain talent even if on temporary basis and without being totally committed to a single entity.

Finally, the distinction between what can be classified as core business in an entity and what can be classified as support services will be of greater importance compared to where it stands today. This is not only about the importance of one job versus the other.

All about retention

This is about what talent is needed for what position and how can this talent be retained in the long-term. Whether this retention takes place in the form of a long-term employment contract or a part-time one that would ensure access to talent wherever that talent resides.

Towards that, entities will need to classify their jobs into the aforementioned broad categories and to plan for tomorrow with their future needs in mind.

Whilst different entities would have different needs thus different importance classification of their jobs, one rule of thumb is what has always happened during mergers and acquisitions. Generally, the jobs that are likely to go first during a merger or an acquisition are the less important ones to an entity.

Another rule of thumb is the replacement rate, i.e., the time it would take to replace a specific individual with another who would have the same or close enough skillset and capabilities. The longer it would take, the more important the job is.

Permanent shift

In conclusion, COVID-19 is causing shifts in the job markets that will change the way entities consider fixed and part-time employment. Since the entity’s main goal is to attract and retain talent, flexibility in employment will ensure a larger talent pool with less strings attached for both parties to the employment contract.

The importance of the job and the work that the individual does would not only decide what kind of employment is needed, but what talent needs to be retained at all costs.

The last thought that I want to leave you with: Can the importance of a work role be quantified?