COVID-19Risk Management

Rightsizing and Reshaping: What Post-Covid Corporates May Look Like

By November 24, 2020No Comments

Internal auditors assess risks as companies shift where and how employees work.
 

Members of NeuGroup’s Internal Auditors’ Peer Group (IAPG) agreed that the pandemic will quite literally reshape the physical look of companies—mostly large technology firms—as well as introduce a host of new risk concerns that are just starting to be considered.

  • Companies’ real estate is bound to shrink as they consider how and when to support the significant number of fully remote and hybrid employees—those coming to office less frequently—that are certain to remain post-pandemic.
  • This shift away from physical offices introduces cultural and legal implications as well as new risks.
  • Employee turnover has slowed during the pandemic but is likely to pick up again when economies reopen more assertively, bringing these issues and risks front and center.

Should I stay or should I go? The hybrid approach appears to be gaining favor, partly because some employees want in-person interaction, and because companies may believe such interaction generates creativity and more effectively enables onboarding new employees.

  • “We’re finding a want or even a need for them to be in proximity to peers,” one member said, adding that it is less important for others, “So we’re looking into how we can group employees and make sure their professional development is taking place.”
  • Hybrid employees must travel to the office now and again. “Are there parameters we can provide in terms of distance and travel time to the office for different categories of employees?” one member asked. “And who foots the bill?”

Remote benefits. Sheltering in place has also revealed the benefits of remote work, both to companies and their employees.

  • Functions, including audit, for which there was concern initially about their effectiveness without face-to-face meetings have proved to be resilient and even conducted better remotely. “Our sales team is now able to work with customers any time of the day, so working remotely is easier for them,” one internal auditor said.
  • Several NeuGroup members agreed that working remotely has enabled them to hire talent that previously was out of reach.

Challenges. Potential hires are making their own demands. “We’re seeing candidates saying that unless we give them an ironclad guarantee that they can work from wherever, they’re not interested,” one member said.  

  • Some current employees have decided they prefer working remotely and have relocated permanently to other geographies, creating potential administrative and legal risks.
  • “If an employee moves to a different state, now there are payroll implications, different cost centers, etc.,” a member said.

The incredible shrinking office. One IAPG member said her company will permanently close half its offices around the globe, a statement eliciting little surprise among peers. A significant reduction in employees coming to the office means a “rightsizing” of corporate real estate is coming. This also means new areas where management will need assurance that i’s are dotted and t’s crossed and all dotted and crossed properly.

  • For instance, what of leases that were signed just before the pandemic? “Do we want to carry the burden of those leases on our balance sheet, or treat them with a special disclosure or some other way?” another member asked. “There’s risk there with respect how companies will address that problem going forward.”
  • Another member said 80% of his company’s leases are coming due in the next 18 months. “There’s a huge assessment happening now,” he said. “We have 190 globally, so how do we reduce those and what will be the outcome from the cost savings?” he said.
  • After accumulating numerous offices worldwide, another member said his company is “starting to look at that and say, ‘If there are fewer than 50 people in them, we’re going to close them and consolidate our footprint in larger offices.’”
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Justin Jones

Author Justin Jones

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