The UK’s exit from the European Union (EU), commonly called Brexit, has been shrouded in controversy since the unexpected results of the UK EU membership referendum in 2016. Arguments have ensued at all levels of society as people on both sides of the fence debate whether this move will hurt or heal the UK. Negotiations have begun with the expected severance date being March 29, 2019. This transitionary period is crucial for businesses of all sizes based in the UK. It’s also crucial for companies that do business in the UK.

It’s essential for business leaders to pay keen attention to negotiation outcomes throughout this transition. Many of these outcomes have ramifications on the economic stability and human resources of businesses. In fact, there are instances where the 2 are interlinked; economic issues affect human resources and vice versa. Human resource functions will considerably change in the following areas: employee recruitment and retention, incentive payouts, and national HR policies and procedures. We’ll examine the effects related to each area and discuss what you can do to prepare for these challenges.

Employee Recruitment and Retention

One of the greatest benefits of being an EU member is free movement within EU member states. This expands the talent pool that UK companies can attract since they aren’t limited to people within the UK. It also makes it easier for UK companies to expand their reach into EU markets. However, one of the outcomes of the Brexit negotiations is that the rights of European citizens living in the UK will be preserved only until the severance date. A visa regime will be implemented thereafter.

This has several implications for HR management. Lauren Jack cites a study conducted by CIPD/Hays Resourcing and Talent Planning revealing that “75% of HR professionals are experiencing recruitment difficulties.” People are less interested in UK jobs and top UK professionals are searching for international roles. This is especially concerning for the engineering and tech industries. The UK engineering industry already has a skill shortage of 1.8 million while approximately 33% of the tech industry consists of international talent.

An upside to this radical change is that UK natives will have less competition for UK jobs. The Guardian reports, in fact, that 197,000 jobs were added to Britain’s workforce in 2018 despite slow economic growth.  In theory, this will reduce the unemployment rate which now stands at 4.1%. However, the issue of a lack of skilled workers comes into play. More jobs will be available, but will there be capable people to fill the roles?

You must spring into action to meet these issues as an HR manager. Here’re some strategies you can implement:

  1. Identify employees who’ll be affected by changes to immigration status and provide them with the necessary support. This may mean filing new paperwork that allows them to stay in the UK on a work visa. It could also mean providing the support needed for the employee to get residency status.
  2.  Develop existing staff so that they have the skills needed to take on new roles.
  3. Maintain caution in your recruitment process. You don’t want to take on new employees who aren’t the right fit because you’re desperate to fill a gap.
  4. Ensure that a positive work environment and healthy work culture are created. You want your existing employees to stay.
  5. Work with higher level management to prepare employees for succession planning.
  6. Identify alternate talent pools.

Incentive Payouts

Brexit has wreaked havoc on the UK’s economy. According to the Guardian, the Sterling dropped to its lowest level in 2018. The Guardian also states that “GDP growth slowed to 0.1% in the first quarter of 2018.” This has resulted in British households being “£900 worse off since the Brexit vote.” Additionally, Britain must pay 50 billion euros to the EU as compensation and the European Investment Bank (EIB) will stop lending money to the UK after Brexit is finalized.  It’s clear to see that the UK’s economy is strained.

A strained economy means that consumers will be even more cautious about their spending. The domino effect ultimately results in a financial bind for businesses.  Your company’s Board of Directors will implement cost-saving measures that impact your HR functions. There’ll be less money to plan staff development programs and provide bonus’ and incentives.

Navigating through this change requires a lot of forward thinking and planning. You must work closely with other managers to:

  1. Create innovative strategies to acquire new clients and boost revenue. This may mean hiring new talent or reshuffling existing talent to fit new roles.
  2. Communicate the challenges to staff so that they’re clear about the sacrifices that must be made during this transition. Opportunities should be created for employees to voice their concerns and present solutions for a brighter future.
  3. Train employees in developing financial and holistic wellness. Your employees won’t be able to perform well if these areas of their lives aren’t properly managed.

National HR Policies and Procedures

Employment laws will change. Beckett Frith quotes an important statement from Charles Rae who is an employment partner at Shoosmiths. He said that some of the laws that will change include, “anti-discriminatory rights, transfer of undertakings (TUPE) regulations, family leave entitlements, collective consultation obligations, duties to agency workers, and working time regulations.”  

It’s also predicted that defined benefit (DB) and defined contribution (DC) pensions can also be affected when Brexit is finalized. Pension savings may not be able to weather the storm of the UK’s volatile economy. Consequently, many people may lose a lot of their retirement savings.

There isn’t much you can do as an HR manager to deal with these issues. What you should do is keep abreast of the latest changes to employment laws so that you can apprise your staff and make the necessary changes to your HR system.  Knowledge is power.

Look at the Bright Side

Brexit is happening whether we like it or not. The future is uncertain, but we must view the uncertainty as a push towards finding viable opportunities. We must think creatively and innovatively to reach new business prospects, deal with changes in the economy, hire and retain the right employees, and deal with changes in employment laws. It’ll be a challenge, but it’s a challenge we can overcome.

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