Report: A quarter to forget for Europe’s multinationals

The first quarter of this year was a period of significant change for Europe’s multinationals who watched from home as share prices tumbled and long-potted plans failed to germinate.

For many, it was a case of pivoting while digging in where possible.

“On the subject of costs, for years we had already backed up our digitalisation strategy with significant investments into modern IT and infrastructure,” said Flavia Genillard, co-representative at Allianz SE, via email. “The crisis meant however that all who could work remotely actually did, in many Allianz companies this was between 80 percent and close to 100 percent of staff.”

“This meant creating additional capacity for those colleagues who had not availed themselves of the remote working possibilities yet, so there was an increase in IT services and equipment provided.”

Despite this, the German insurer had a tough quarter, with net income decreasing by 27.7 percent year on year.

Dutch human resources giant Randstad had a similar tough time, with net income dropping from €133m (£131m) in 2019 to €49m (£44.6m) in Q1 2020. It’s looking to digitise to get back on track.

“A surprise benefit of Randstad’s digital transformation was that when the lockdown came it only took a few days before all of the company’s 38,000 employees were online and working remotely,” said a company representative, via email.

“Consultants had full access to databases and candidate profiles and tools such as video conferencing meant they could continue to interview people and place them where there still was demand. The pandemic has underlined how technology can enable a human connection at times like these,” they said.

Digitisation and flexibility have been critical elsewhere: German pharma giant Bayer – which perhaps unsurprisingly had an increase in net income during the first quarter, year on year – for instance, has long encouraged remote working.

“Home office and remote working have long been established forms of work for employees in the Bayer Group and were used regularly by many employees even before the Corona crisis, albeit mostly on a daily basis,” said a company spokesperson, via email.

Bayer also had to switch to remote working within its laboratories.

“We have even established remote working in areas where this is rather unusual, such as laboratory jobs,” said the spokesperson. “In this respect, Bayer had liberal and employee-friendly home office regulations even before Corona, which did not need to be adapted as a result of the pandemic. Our employees are also equipped with laptops and smartphones as standard, so that a large number of employees could easily switch to the home office at short notice.”

Bayer’s production plants and research facilities, however, continued to be occupied under increased hygienic safety precautions.

Around 40,000 employees of the pharmaceutical giant switched to remote working but there was been no “fundamental change in work culture or productivity”.

“The corona crisis has shown that working from home is effectively possible. Our organisation and in particular our administrative functions are also fully capable of working from the home office. We have no indications of a noticeable decline in the productivity of the company and its employees as a result of the widespread transfer of employees to the home office,” he added.

Similar to many organisations however, the number of employees at the German pharmaceutical has decreased by more than 5,000 year on year – representative of a significant shift across industries.

At ING – which recorded a slight decrease in total income in year on year first quarter total income –  supporting customers was one of the firm’s key focuses during the pandemic, in which the bank acclimated to new consumer needs by offering wider access to digital transactions.

“We empower them [customers] to continue to use their bank so they can remain in charge of their finances. Together with our banks we have promoted contactless payments and increased ATM limits,” according to a company spokesperson, via email.

Almost 80 percent of ING employees are working remotely, meaning a few of the bank’s branches have remained open.

“To protect customer-facing staff in the countries where we have branches, we strictly enforce social distancing guidelines, limit the number of open branches and restrict their opening hours,” said Smulders.

In a statement, ING said the decline was due to “high-risk costs and negative valuation adjustments caused by the market volatility and expected the future economic impact of the Covid-19 pandemic, partly off-set by higher fee income.”

The multinational also saw its share price decrease from €10.70 (£9.74) on February 17 to €4.30 (£3.91) on March 18.

Staff returning to offices

In Germany, the percentage of employees allowed to return to the office went up to 50 percent at the end of June.

“Of course, we now have to observe strict safety and hygiene measures at the office that are changing the way colleagues interact (distancing rules, no shared desks, no physical meetings with more than two people, no joint lunches or coffee breaks – our company restaurants, canteens, coffee shops are only doing takeaways, etc.),” said Allianz’s Genillard.

“While we want to learn as much as possible from the crisis, we do hope that these restrictions will be lifted once the pandemic is over.”

Bayer allowed 10-15 percent of its employees to go back to their regular workplaces but has set an upper limit of 40 percent.

“We initially made it possible for those who could not create good working conditions for themselves at home to return. Now we are entering the next phase and want to enable all employees to return temporarily by making their presence at the site flexible. We have defined an upper limit which may not be exceeded at any one location at the same time,” explained the company’s spokesperson.

They added that Bayer was “not in a hurry,” to bring back all its employees to offices, stressing the return to the old workplace will be done “step by step.”

Allianz is currently assessing the lessons learnt from the pandemic in terms of its workplace and is now considering a stronger focus on digitalisation.

“We are in the process of analysing and discussing what the crisis is teaching us about how to organise work and our workplace in the future. A move towards more digitalisation and virtualisation of working will be further accelerated by the crisis, and flexible working models will probably increase. Possibly, international business travel will decrease, which would also benefit the environment,” said Genillard.

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