The road to recovery

The first half of the year is almost up. While most of the countries around the globe are still dealing with the crisis, more news regarding F&B enterprises declared bankrupt while centuries-old native restaurants have to shut for good. We have been slipping through the point where we assume 'everything will be back to normal' because 'normal' has been redefined.

For case discussion purposes, Genting Malaysia recently released an announcement for 20% pay cut across all management-level personnel, and a major workforce rightsizing (a.k.a. mass termination) even included dependent on recruitment agency for operational staff. This means they will hire some personnel on a part-time basis depending on business volume. 

Source:NST Malaysia

In an esteemed company like Genting, this approach is cost-effective but quality not-guaranteed. Hotel operations like house-keeping, restaurants, or the front desk agents, dependent on personnel who knew the job inside out and demonstrated the ability to grow with the organization. Many of them spent years getting a relevant degree just to land them a job. Not forget to mention job efficiency gets better as the personnel spent more time familiarity with the related position.

Replacing these staff with part-time recruits is definitely the worst-case scenario. Although part-time means the labor cost incurs corresponding with business volume, however, factoring in the time for on-job training, supervising and quality control is the hidden cost. The only reason for such an act is the establishment already concluded impact by the outbreak passed the point of reversible. The business volume will not return to the pre-outbreak point any sooner than 12 months, while the company decided unable to sustain the labor cost for this latency phase.

"There is nothing one can do just have to weather the storm and hope for better days". This was quoted from one of my senior friends who owns a 3rd generation heritage restaurant. It really depends on how much the company willing to spend on retaining its employees. Quoted by one of the senior executives in MGM Macau, the casino-based establishments has enough cash reserves to operate without revenue for 12-24 months by suspending dividends.

The road to recovery will be challenging. While the pandemic issue is still ongoing, there are other global issues such as tensions at HK and some riots sparked by racial cases. Experts are still optimistic and have been preparing action-lists for the recovery, and hopefully, we are better prepared for the next pandemic. 

ZF

#staystrong