With Covid-19, we have entered a New Work Pattern. Based on Research and an examination of the behaviour of the 4 largest international accounting and professional services firms, we have been able to identify 4 major HR practices that have enabled them to better negotiate this shift in the world of Work.
The Organization for Economic Cooperation and Development (OECD) clearly pointed out in 1996 that knowledge has become a source of productivity progress and economic growth, and that knowledge-based economy is an important feature of developed economies. As an external manifestation of a country’s comprehensive strength, knowledge-intensive industries mainly include five categories, namely finance, information services, business services, education and health care. With the rapid development of science and technology and globalisation of capital, knowledge-intensive industries have gradually become an important engine of economic and societal development.
The Big Four Accounting Firms (named the Big Four thereafter), Deloitte, Ernst & Young (EY), PricewaterhouseCoopers (PwC) and KPMG, are renowned as providers of professional auditing, tax and consulting services in the global capital market. The Big Four have achieved relatively outstanding results in the face of systemic external issues, including the global economic shocks, the intensification of localised geopolitical conflicts, and the global public health crises. In this article we examine the challenges faced by the Big Four during the COVID-19 pandemic and the human resource management practices that proved successful and could be applied to post-pandemic workplaces in knowledge-intensive industries.
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After conducting in-depth labor market research on a large number of employees and employers in 22 countries, EY released the EY Reinventing Work Study in 2023, indicating that 31% of employers and employees believe that employees are playing an active role in the talent market, with an 8% increase from before the pandemic. The report shows that since 2022, continued inflation has made the increase of pay packages to be the most important concern for employees. In addition to talent attraction and retention, employers are also concerned about compensation packages and increases. Interestingly, knowledge workers and employers have divergent expectations regarding telecommuting and flexible work schedules. Employees seeking work-life balance favor flexible and remote work options, believing it can reduce commuting stress and improve efficiency. Employers, on the contrary, are concerned that telecommuting will reduce face-to-face interactions, which may make it difficult to ensure employees’ accountability and draw their attention on work. Since telecommuting may become a norm in the post-pandemic era, both employees and employers need to be clear about work-life boundaries and the possible consequences at work. Correspondingly, the Pang Donglai supermarket in Henan City of China, banned employees from making work calls after work to preserve employees’ rest time.
Challenges Faced By the Big Four Accounting Firms During and After the Pandemic
Under the impact of the COVID-19 pandemic, the global economic system has suffered greatly from the traditional work pattern and decentralised functional departmental structure, which caused high office costs, employee exposure risks, loss of interdepartmental communication, information distortion and other shortcomings. This has been unlimitedly magnified in the public health crisis, and the Big Four were no exception. In response, the Big Four took a series of measures to cope with the emergent challenges. These practices were effective in improving work efficiency and quality, as well as safeguarding the health and safety of their employees. As a result, we believe that, the core part of the new work pattern, accompanied with the organisational cultures and leadership change, could be preserved in the post-epidemic era as well. Therefore, we recommend the key human resource management (HRM) practices for post-pandemic workplaces in knowledge-intensive industries as follows:
1. Flexible and Efficient Work Systems
In the post epidemic era, the Big Four have continued to adopt a flexible and efficient work pattern that has yielded significant positive work outcomes. This pattern stems from the remote work mode implemented during the pandemic to ensure employee safety, business continuity and client benefits. Although the fashion of remote work emerged extensively under the pandemic due to convenience and low cost consideration, it is not exclusive to the pandemic time only. And the essence of this new work pattern is to reduce unnecessary travel and overtime through specialised and decentralised in-house subcontracted services, and implement flexible working hours and performance management systems correspondingly to help employees achieve work-life balance.
In the post-epidemic era, the Big Four have retained flexible working patterns including telecommuting and in-house outsourcing, and even plan to further expand the coverage, such as PwC’s plan to build a new audit remote delivery center in Wuhan City of China. This new work pattern, which emphasises flexibility, stability, standardisation, digitalisation, diversity and growth, is also included in the high-performance work system (HPWS) that has proven to enhance organisational resilience (Cai & Rowley, 2021). The work system thus brings innovative attempts in shifting the workplaces of knowledge-intensive industries in the post-pandemic era.
In addition, with the emergence of generative AI models, such as ChatGPT, the Big Four have actively embraced these cutting-edge technologies. For example, PwC has used digital tools to improve audit efficiency, driving a shift from traditional auditing to digital and intelligent auditing. This shift not only improves work efficiency and quality, but also assists a more flexible work system to meet various client needs and market trends, thus enhancing the firm’s competitiveness and innovation power.
2. High Performance Teams
Either at their New York City or London headquarters, or at remote delivery centers and general branches around the world, the Big Four invariably adopt a teamwork mode, having relatively fixed members within a team usually consisting of both experienced managers and junior staff, e.g., assistants. The reason the Big Four let experienced managers lead novice assistants in work projects is to build, develop and retain stable and competent professional staff through the work process. Usually team members are familiar with each other’s work styles and capabilities, which allows for better cooperation and improved work efficiency.
In the post pandemic era, the Big Four have continued this relatively stable team management mode, which strengthens the collective mental modeling to ensure the capacity and continuity of stable team members. This is reflected in the fact that when a team member leaves or transfers, other team members can quickly take over their duties to ensure the smooth continuation of the work project. The Big Four employ high performance teams to build organisational resilience aiming at improving firm productivity in the post-pandemic workplaces (Cai, Rowley & Xu, 2023). High performance teams also help knowledge-intensive firms to accumulate, create and share team knowledge and experience to foster sustainable service quality and customer loyalty.
3. Individualised Training and Development
In the post-pandemic era, the Big Four have significantly enhanced the professional skills and loyalty of their employees through the continuation and reinforcement of a personalised and fair training and development system, thus solidifying their market position. Although the Big Four also experienced some negative news such as unpaid vacations, delayed promotions, and layoffs of employees due to the market downturn and the massive closure of small and medium-sized firms during the pandemic, they still insisted on investing the human capital of their talents. For example, EY attaches great importance to the professional training and development of their key employees. In order to adapt to the changes of new work pattern during the epidemic, EY provides training sessions in relation to telecommuting, such as communication skills, the use of online collaboration tools, and dress code requirements in the workplace. These initiatives have enhanced employees’ professional competence, strengthened their sense of belonging and loyalty, and guaranteed sound employee performance and thus the company’s sustainable development and competitiveness. In a similar vein, a generative AI expert, together with a senior employee of PwC, helped each employee in PwC establish a personalised and exclusive training program for generative AI skill enhancement which tracks their learning process as well.
The implementation of these talent management strategies not only meets the diverse growth needs of employees, but also promotes the continuous innovation and development of knowledge-intensive organisations, creating a positive learning climate for the organisation and its members. In addition, the successful experience of the Big Four provides important insights into the post-pandemic workplaces of knowledge-intensive firms based on the optimisation of talent management outcomes, which was achieved through the differential cultivation of diverse worker groups, managing the virtual workforce, an emphasis of the impact of cultural and organisational ideologies on talent management practices, and rapid responses to various crises. When adopting these talent management practices, knowledge-intensive firms are able to achieve sustainable development in the complex and changing market environment.
4. Healthy Employment Relationship
During the pandemic, the Big Four implemented various measures to prioritise the health and well-being of their employees, including online medical services, medical insurance, sound relocation allowances, mental health support, and creating appealing work environments. The focus on employee health continued in the post-pandemic era, yielding positive results in employee satisfaction and social recognition. For instance, Deloitte established the Epidemic Mutual Aid Committee in Shanghai City of China to distribute personal care packages, organise employee participation in community services, and provide psychological support such as counseling. The Big Four also integrated the environmental, social, and governance (ESG) elements into their business operation, such as KPMG’s collaboration with the Carbon Emissions Registration and Settlement Corporation in support of carbon neutrality initiatives. These efforts not only improved employee loyalty and company competitiveness, but also contributed enormously to the welfare of the society. As such, a healthy employment relationship in the post-pandemic era highlights the importance of prioritising employee well-being and integrating talent and environmental sustainability into business strategies, promoting sustainable corporate development and positive social impact.
In sum, the Big Four have made a series of changes in the human resource management practices and employment relationship to cope with the challenges brought by the COVID-19 pandemic. These measures have improved the efficiency and quality of work while also focusing on the health and well-being of employees, enhancing the overall performance of the organisation. The success of these practices accompanied by new work trends such as telework, scientific task allocation and technical support jointly improve the organisation’s overall performance and employees’ job satisfaction in the post-pandemic workplaces. Not only that, other practices of management and human resources, such as organisational communication, career development, and organisational change and design could also be explored by the Big Four and other knowledge-intensive companies in the post-pandemic era following the similar mechanisms of high-performance work systems (Cai, 2020), so as to provide unique guidance for the knowledge-intensive companies to survive and prosper in the time of other possible unknown crises in the future.
Reference
Cai, Y. 2020. High-Performance Work Systems in Mainland China: A review and research agenda, Asia Pacific Business Review, 26(5), 563-587.
Cai, Y. and Rowley, C. 2021. Pandemic lessons for management: COVID-19 could lead to high-performance work systems and a healthier employer-worker relationship. Perspectives on Work, 25, 54-56.
Cai, Y., Rowley, C. and Xu, M. 2023. Workplaces during the COVID-19 pandemic and beyond: insights from strategic human resource management in Mainland China. Asia Pacific Business Review, 29(4), 1170-1191.
Acknowledgement
We acknowledge the support from the Belt and Road National Audit Research Fund of Nanjing Audit University.
