Thirteen percent of the professionals in the tourism, travel, and hospitality industry were furloughed and 58% received pay cuts due to the Covid pandemic, according to a new study by the Institute of Management Accountants (IMA).
Also, relatively hard hit were professionals in the government, not-for-profit, and education sectors, 5% of whom were furloughed and 52% receiving a salary decrease. By contrast, the sectors that showed the highest resilience were accounting and finance followed by IT, telecom, and tech, followed by financial services, banking, and real estate.
Raef Lawson, Vice President, Research and Policy Professor-in-Residence at IMA said: “The Covid-19 pandemic is presenting businesses with challenges not seen in recent times. As our survey shows, the impact has been global, affecting every country, sector, and organizations of all sizes. The resultant economic environment that affected finance functions at several levels is necessitating a shift in priorities, with an increased emphasis on risk management, cash forecasting, and management.
“Many finance professionals are also voicing their concerns about the evolving skillsets required post-Covid-19 and many are now working on improving their skills across a wide range of topics. One thing is clear: the pandemic has accelerated changes within the field of finance and accounting; finance professionals must work to enhance their skills in order to maintain and advance their careers.”
Impact of the Pandemic on Organizations
While the impact of the pandemic was felt across organizations of all sizes, the effect varied significantly across industries, with the tourism/travel/hospitality industries being impacted the hardest. The survey results reflect this across-the-board decline in revenue, with very large companies most likely to have experienced a considerable decline in revenue (over $10 billion in revenue). Despite the general decline in revenues among firms of all sizes, one-third of our survey respondents felt they were doing better than their competition, and fewer than 10% felt they were lagging behind their competitors. Companies’ beliefs in how they were faring compared to their competitors was influenced by firm size: larger firms (greater than 1,000 employees) were more likely (39%) to believe they were ahead of their competition than smaller (less than 100 employees) ones (29%).
Impact on Staffing
The survey also confirmed what has been widely reported in the news: the pandemic severely impacted employment around the world. Approximately half the companies surveyed said that they had to let some of their staff go. Yet companies’ response to the pandemic in this regard varied significantly by regions, with companies in the U.S. least likely to reduce the size of their staff, those in the Middle East (Saudi Arabia and the UAE) most likely to do so, with China and India in the middle. Just short of 20% of Indian companies revealed that they had let go of most or all of their employees – this was the highest among all regions with the UAE coming in next at around 10%. China, the survey revealed, is also the region adding the most staff at this time, followed by the U.S. and then India.
Impact on Compensation in Finance
The pandemic has affected not only employment but also compensation of those still employed. Most survey respondents have had a reduction in their compensation this year, either in salary, bonus, or both. Yet, similarly to the situation regarding employment, the impact of the pandemic on compensation varied significantly by country. Companies in the U.S. were most likely to not change the amount paid to employees. Chinese companies, on the other hand, were most likely to leave salaries unchanged but reduce the amount of bonus paid. This reflects the greater use of variable compensation in China than in the U.S
From a demographic perspective, while the compensation of all age groups was impacted, those in middle management positions saw the least change in compensation while lower management was most likely to see pay cuts or no bonuses. Top and senior management as a segment saw the highest degree of salary cuts during this period.
Finance Function Priorities
As might be expected, the area with the largest increase in emphasis now is risk management, with nearly half (44%) of companies spending more (or much more) time this area. This is followed by cash forecasting/management. On the other hand, less time is being spent on business partnering and decision support, with 34% of companies spending less time in this area (as opposed to 22% spending more time).
Many firms, often due to legal requirements, are facing the challenge of employees working from home. In this regard, the Covid-19 pandemic has brought new personnel challenges to the forefront for finance. Key among these is enabling staff to work from home (38% of respondents) and providing a safe environment (37% of respondents) for those who needed to come to the workplace. Relative to the first challenge is the need to train staff on the tools that enable them to work from home (26% of respondents).
Impact on Skills Needs in Finance
There is a significant concern among survey respondents as to whether their current professional skills will still be relevant in the post-Covid-19 era. Twelve percent believed their skills would not be relevant; another 10% were unsure. Again, results varied by country with respondents in the U.S. most confident in the post-pandemic relevance of their skills. Those in India were the least confident in the relevance of their skills post-pandemic, with only 69% believing they would be relevant, 15% believing them not to be relevant, and 16% unsure.
The current high levels of unemployment globally have caused finance professionals to be more interested in gaining new skills. Sixty-eight percent of the respondents indicated they were more interested in upskilling because of the pandemic. This percentage was greatest in China and lowest in the US. This increased interest in upskilling extends throughout finance organizations, from entry-level to top-level management and all levels in between. This interest in upskilling was not merely an aspiration – 75% of survey respondents are working on improving their job skills during the current pandemic. While in every country in this study, the majority of respondents are improving their skills, this percentage is greatest in China and India and lowest in the U.S.
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