This is the HR edition of our New Operational Model series – a practical department-by-department guide for startups operating in the post-COVID world.

When new employees are hired, they sign 2 contracts with their employer. One, the physical contract, lays out the terms of her employment – salary, benefits, expectations, etc. The other contract they “sign” is psychological – it sets out to define the new employee-employer relationship as substantial and long-term; in exchange for integrating themselves into the company culture, the organization will invest into their lasting professional development.

The terms of this psychological contract are constantly re-enforced and renewed, each day, through physical interactions between employee and employer.

In the new post-COVID normal, where remote work will become more ubiquitous and accepted (according to a Viola survey, 77% of companies are considering WFH policies even after COVID-19), this psychological contract will weaken, the metaphorical ink it is written in will smudge and stain.

The fact that an employee will no longer be proximate to her direct manager and team can, without premeditation, redefine the long-term psychological contract into a freelance/gig-type of relationship, even with full time employees.

As a result, the term of employee loyalty and organizational loyalty aimed at enhancing mutual levels of engagement needs to be re-adjusted and reshaped. Companies that fail to do so may find themselves with a weakened culture, low levels of employee engagement, and high rates of churn.

But the companies that manage to take the necessary steps to embrace the new post-COVID HR landscape will find that they have access to an endless pool of top talent, and a loyal core workforce that is more productive than ever.

We spoke with Aviva Arnon, Chief People Officer at Payoneer, to help us explain what it will take to embrace the new HR Operational Model.

The 5 Steps to Embracing the New HR Operational Model

1) Embrace a new elastic employment model

Companies need to not only recognize that there is paradigm shift in employment, but to embrace it. They need to become elastic, expanding and shrinking as needed. This may require a shift towards new modes of employment – engagements that are more contractual-, freelance-, or outsourced-based, which are typical of the Generation-Y employment expectations.

The trick is to retain a core of employees who possess the core knowledge, the core values, the core culture, the core passion and spirit of the company. Companies should place additional weight on being able to identify who these employees are (hint: they’re not just upper management – these employees exist at all levels of the company structure), and invest disproportionately into making them feel valued.

2) Retrain managers to manage deliverables instead of processes

Remote work will require a shift in management style. The focus of management should move from monitoring the employees’ time and process to supervising the deliverables. This will require managers to emphasize and clearly define roles and responsibilities definitions, goals and objective settings, and KPIs.

More companies will move into OKR processes and cascaded goals and objectives, which will become much more measurable, whether they are quantitative or qualitative.

3) Virtualize employee engagement and consider digital monitoring

With WFH becoming the new norm, companies will need to get creative with how they engage their workforce. Training and e-learning will need to become much more available as tools to reinforce the psychological contract between employee and employer.

In terms of remote monitoring, each company is different, and there is no formula for how robust a system should be. That said, each company should formalize a system that holds employees accountable for their work from home. There is an abundance of such tools, such as Prodoscore or Jira, or companies can utilize tracking capabilities in enterprise software tools already in place, such as Zoom’s analytics feature that allows reporting of inactive users.

In any case, companies should communicate openly and honestly about whatever system they are putting in place to monitor employees remotely.

4) Incorporate new HR competencies

Although technical expertise will still be paramount, companies will need to place added emphasis on soft skills that will be difficult to track remotely, both for employees and managers. Employees will need to be independent, autonomous, self-starters, self-disciplined, agile problem solvers, great communicators, resourceful, etc.

In the pre-COVID world, managers could identify weaknesses that might exist in employees and work to supplement them. With remote work becoming more prevalent, and despite any monitoring systems in place, managers will still need to rely on employees themselves to take the initiative, which will require this new list of core competencies.

5) Re-orient HR around the virtual world

The shift to online management will need training and retraining, and that will start with a re-orientation of the entire HR department. HR professionals will need to teach managers how to manage virtual teams, how to engage employees remotely, how to build virtual team cohesiveness, and how to maintain or redefine culture and values.

Although workers will be separated geographically, HR departments will need to lead their companies in an effort to maintain social connections.

This is truly a new chapter being written in the history of HR.

The Benefits of Embracing the New HR Operational Model

Embracing the new HR operational model will undoubtedly require a major shift in the employer-employee relationship. But succeeding in this undertaking will yield major benefits for both employer and employee.

With a new elastic work model in place, employers will have access to an endless pool of top talent. They will not necessarily need to look for talent in close physical proximity. And this expansion opens up a much broader market in the search for talent.

Work from home has been proven to be effective for both employee and employer. From our own research at Viola, most companies that have implemented WFH over recent months said they were “satisfied” with the results. An expansive study from Stanford researchers found that a transition to WFH led to:

• A 13% performance increase for employees working from home
• Quit rates dropped by 50%
• Home workers reported substantially higher work satisfaction
• Significant cost savings from the employer through reduced office space

Transition to the New HR Operational Model

The remote work reality will pressure the psychological contract between employee and employer; companies must transition to a new HR Operational Model in order to stay relevant. If they take the 5 steps outlined and embrace the new remote work reality, the benefits will be massive – to employee and employer alike.