Travel & Hospitality sector hit hardest by COVID-19
IMA releases report on the global impact of Covid-19pandemic on organisations worldwide' finance function
Travel & Hospitality Sector Hit the Hardest by COVID-19
IMA® (Institute of Management Accountants) released a study that highlights the global impact of the COVID-19 pandemic on organisations worldwide’ finance function – with a specific focus on staffing, salaries, and skills. The respondents of the global survey’s key highlights include across the board revenue decline – with large companies suffering more than their smaller counterparts. Interestingly, many companies report that despite the pandemic, they are faring better than the competition.
Only a marginal few confided that they were worse off than their peers. From a staffing perspective, only half the companies surveyed revealed that they retrenched employees during this period. The pandemic has affected employment and the compensation of those still employed. Most survey respondents indicated that they reduced their payment, either in salary, bonus, or both.
The report is of notable significance when the COVID-19 pandemic continues to challenge organizations worldwide and forces them to rethink their business models as they struggle for survival. The pandemic’s impact has varied widely by industry; many industries initially completely shut down and only now started to reopen with others being slightly impacted. This varying impact can also be seen in the change in financial professionals’ compensation since the pandemic began.
Hardest hit are the professionals in the tourism, travel and hospitality industry – 13% of whom were furloughed and 58% received pay cuts. 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.
The report is based on a survey of 1,481 accounting and finance professionals located in five countries: China, India, Saudi Arabia (KSA), the United Arab Emirates (UAE), and the United States (U.S.). Respondents were evenly divided among these five countries, with more than one-third of them being women and the percentage ranging from a high of 51% in China to a low of 18% in Saudi Arabia.
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 necessitated 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 skill sets 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 to maintain and advance their careers.”
Impact of the Pandemic on Organizations
While the pandemic’s impact 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 substantial companies most likely to have experienced a considerable reduction in income (over US$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 were influenced by firm size: larger firms (greater than 1,000 employees) were more likely (39%) to believe they were ahead of their competition than more minor (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 worldwide. 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 reduced their compensation this year, either in salary, bonus, or both. Yet, similarly to employment, the impact of the pandemic on compensation varied significantly by country. Companies in the U.S. were most likely not to change the amount paid to employees. On the other hand, Chinese companies 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 all age groups’ compensation was impacted, those in middle management positions saw the most negligible change in compensation. In contrast, lower management was most likely to see pay cuts or no bonuses. Top and senior management as a segment witnessed the highest degree of salary cuts during this period.
Finance Function Priorities
As might be expected, the area with the most significant increase in emphasis is risk management, with nearly half (44%) of companies spending more (or much more) time in this area. This is followed by cash forecasting/management. On the other hand, less time is 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 of 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 about whether their current professional skills will still be relevant in the post-COVID-19 era. Twelve per cent believed their skills would not be applicable; another 10% were unsure. Again, results varied by country with respondents in the U.S. most confident in their skills’ post-pandemic relevance. Those in India were the least confident in their skills post-pandemic, with only 69% believing they would be relevant, 15% thinking them not to be relevant, and 16% unsure.
The current high levels of unemployment globally have caused finance professionals to gain new skills. Sixty-eight per cent of the respondents indicated they were more interested in upskilling because of the pandemic. This percentage was most significant in China and lowest in the U.S..
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 improving their job skills during the current pandemic. While in every country in this study, the majority of respondents are improving their skills, and this percentage is most significant in China and India and the lowest in the U.S.
Respondents at more minor (<100 employees) companies were also more concerned about their skills than those working for larger organizations. This may reflect the fewer resources available to employees at these companies to develop and maintain their skills. Younger respondents were more likely to believe their skills would not be relevant post-pandemic than older ones.
Employer Support for Upskilling/Reskilling
In these challenging economic times, it is not enough for employees to want to upskill. They also require and seek the financial resources required to do so. Seventy-two per cent of respondents believed that their respective companies should financially support employee upskilling. This was consistent across all countries. What did vary was the actual support of upskilling efforts. Overall, 49% of employers supported upskilling/reskilling of employees. This differed from 57% in China and 55% in the U.S. to 47% in India. It was lowest in the UAE with 39%.