Managing and planning for Brexit – Roundtable Report
22 November 2016 London
Hosted by theHRDIRECTOR.
Chaired by Jason Spiller.
Caroline Bowes, HR Director Emea – Dechert LLP
Helen Budd, HR Director
Stella Dixon, Head of HR Operations – Associated Press Television News Ltd
Michael Doolin, HR Director – Kuehne + Nagel
Ian Dowd, Marketing Director – NGA HR
Nick Henley, Head of Talent Development – AOL
Ian Johnston, HR Director – Barclays Risk
Robin Parkinson, Change & Employment, HR – Santander UK
Dimitris Tsouroplis, Group Head of HR – Libra Group
Steve Foster, Head of Business Consultancy & Pre Sales – NGA HR
Beverley Vince, HR Director – AFME Association for Financial Markets in Europe
As well as being a big disruptor, Brexit presents new commercial imperatives for exploring and capitalising on the greater freedom to trade outside the EU. It is uncertain at this stage what special new trading relationships the UK will develop, but there is no doubt that businesses need to prepare and plan for EU exit to prepare for the uncertain road ahead, and forge ahead with plans for new opportunities further afield.
How, so far, have your organisations planned for brexit?
Michael Doolin: There is a lot of uncertainty for sure and that will continue and there is a hell of a lot of work that needs to take place for employers to prepare – there are 40,000 pieces of legislation that need to be considered and many more besides surrounding trade agreements.
Ian Johnston: For an international business like ourselves, issues like passporting rights will need a good deal of consideration. It will have a very massive impact if a radical decision is made around the rights of people to stay in the UK. We are obviously all hoping that that doesn’t happen and commonsense would tell you that it is probably unlikely, but commonsense told us that Brexit was unlikely as well. There is absolutely nothing that is certain except that at some point in time, we will exit Europe. It will have a very detrimental impact, I think. Where will the resources come from?
Stella Dixon: As well as the initial aftermath affected staff are concerned and we have done what we can, sensibly, with the void that there is in information. We could bring a lawyer in every week to run a seminar but they can’t tell you any more than we already know. It will be a significant resourcing issue for us, we use a lot of freelancers in the organisation. Some of our freelancers pop over for shifts from Europe, they’ll come and work five or six shifts and perhaps do other work across Europe and they are used to being a transient labour force. It has really sent a shockwave.
Michael Doolin: I think that presents an opportunity, to do a lot of reassurance, a lot of communication, a lot of handholding. I think it is something that we underestimate, there is a massive amount of fear, worry and anxiety from not just that group but also their families.
Steve Foster: There is a real danger that in this vacuum there might be an overreaction from both companies and employees, driven by panic – in some cases, people might simply decide to cut their losses and repatriate themselves while they can still control their destiny. That would be a terrible loss of talent.
Caroline Bowes: We are considering a taskforce to review any Government plans as they are announced to conduct scenario planning. We want to maintain open communication with our Ukresident European workforce to understand their concerns and provide support.
Nick Henley: Facebook have decided to invest in new head count here in the UK; a big investment and Google too. In tech sector, there are no drawbridges, but I don’t think that anyone can predict and it’s going to take years to do this. It is all over cooked, but I think our market is going to work way faster than the Government, businesses will anticipate a lot of the changes. In tech you can just almost at a flick of a switch move your people around, but it can take Brussels seven years to get even the most basic legislation through the Italian Parliament.
Dimitris obviously the backbone of your business shipping, a physical movement of things and also you are multinational, so give us an idea of how your leaders thoughts about the prospect of brexit?
Dimitris Tsouroplis: Of course, to a certain degree it is fear, and maybe fear creates anger. But it’s also how companies handle things. In our case I think there is trust first in what the company will do,
and there has been no panic. In our case, we have all the information about how many employees are Europeans and, of course, to support those who can apply for residency or citizenship and at least make this process a priority. Then it is just wait and see. Panic is not sound advice, we should try to maintain calm and help in any way possible.
Beverley Vince: There is shock and distress on an individual level – over one-third of our workforce are non-UK. We did react very quickly, and as a smaller organisation it was much easier to reassure people that although we don’t have the answers, we support and communicate. As an association, we are quite reactive to our membership, but we need to be in a position where our workforce is as flexible as possible and we can adapt to what is coming in the future.
Stella Dixon: We know who is on work permits and special visa arrangements and we are monitoring that all the time. When we are recruiting the only thing we look for is, is the person eligible to work in the EU? So this is a major data exercise, and knowing EU status doesn’t necessarily help either. There may be other examples and circumstances that sit behind a person’s work status. One of our first queries was from someone who is actually from New Zealand, but he is here on an Irish passport and needs to sort his work status out if there are changes ahead.
Robin Parkinson: In banking volatility was expected, so the regulators were very keen that there was planning around potential impacts. So, we had internal working groups preparing for the referendum result and those groups have now morphed into planning for Brexit. The regulators, again, are looking over our shoulders making sure that we are thinking through all the possible ramifications of this. On the HR side, we also had a communication plan to our workforce, including about what our people should say to our customers. We are working with industry groups to influence Government planning of workforce matters post-Brexit. We also have a significant amount of people who are from other EU nationalities who could be potentially impacted as well unless they have continuing right to work. We have been thinking about whether we do something now around communication to EU nationals but data quality is an issue: we have never previously been required to record EU nationalities. We are nervous about creating any more uncertainty for EU staff when we do not know all the answers to likely questions. Instead, we are trying to be reassuring.
Steve Foster: It’s already six months since the Brexit vote and we’re still trying to define the legal framework for making this happen. I don’t envy the people here today trying to put meaningful plans together, because right now you’re planning for every possible outcome.
Ian Dowd: Before Brexit we produced a guide to what would happen the day after Brexit. We made some assumptions in terms of legislation and I think the plan would be that all the current legislation would stay in place and would have to be undone rather than it just falling away on leaving the EU. The Working Time Directive is one thing that would potentially go or be amended. The Agency Working Directive could be modified, so it would be easier and there would be more flexibility around employing people in the hours that they want to work. But in simple terms, there are two parts to it; one is detaching the UK from the EU and the other is the opportunities going forward, and that’s a more positive discussion.
Nick Henley: Agreed, we are talking about the doom and gloom, not the opportunity. As mentioned, the Google and Facebook investment in the UK are big bets; and a classic example of opportunity, motivated by what has happened to Sterling. What does that mean? Suddenly we are going to need more skills; software engineers, data people. I just wonder whether this is a case of opportunity knocks.
Going back to the freedom of movement though, that is a physical reality that will vex employers used to and reliant on unfettered mobility, and of course there is the vast area of employee rights.
Ian Dowd: Agreed, but the prevailing wisdom is that people who are in the country and can work would be able to stay. I don’t think anybody fancies asking people where they are from and then treating them differently based on that. There will be a certain number of people who stay here as long as people from the UK working abroad can stay there. If that is compromised then you are back to square one.
Robin Parkinson: About a month after the referendum vote, the British Government did state that its desired outcome would be reciprocal rights for UK workers in the EU as those EU workers currently here enjoy. However, the Government has to negotiate that with 27 other countries, and there will also be domestic pressures to reform the immigration systems.
Stella Dixon: We have UK citizens based in Germany and France; it is a two way street, it is not just EU citizens coming to work in England.
Nick Henley: In terms of the second part of your question, employee rights; as HR practitioners, we know that if someone has a dispute they will go through the channels in HR here, then you can go to employment tribunal. No such body exists for our relationships with the EU so who is the ultimate arbiter of what the law is? European Court of Justice? Actually, normally, when you have a contract you would say this is under the auspices of UK law.
Dimitris Tsouroplis: By informing employees of their rights and what to expect, you give them the opportunity to come to you and talk to you about solutions for them and their families. Knowing the legislation is a great ally at the moment so understand what is currently in place before anything changes.
Stella Dixon: In the UK, we are a very small team we have an American parent. Interestingly we have had very few concerns from our staff who are UK staff based in Europe who are comparatively relaxed about it compared to EU staff based in the UK.
Michael Doolin: It is difficult to communicate something when you don’t have a great deal of clarity.
Nick Henley: On a practical level is it worth asking, what will this really end up being’? Doesn’t it mean we are just going to have work permits and that’s just going to lead to an extra amount of bureaucracy?
Ian Johnston: A hard Brexit where everybody has to leave is inconceivable. You can imagine that the most likely scenarios are where the people who are here retain the right to live and work in the UK, which would seem sensible and there is some new immigration policy around the EU for the future. Otherwise the impacts on some sectors will be phenomenal. The country can’t afford to pay the care sector as it is and low paid jobs are typically filled mostly by Eastern Europeans. We all hope common sense prevails.
Steve Foster: If you look at the post referendum analysis, arguably the referendum was fought and won on what was essentially an HR issue. It wasn’t about £350m a week for the NHS or complex trade deals – for many people the central issue was immigration, the movement of people. So, HR is really going to be on the front line of this question and the impact of Brexit will be felt first as a people management issue.
Ian Dowd: Nothing I have read suggests large numbers of people being taken from the EU back into the UK and from the UK back into the EU in the context of Europe. There might be more strict working regulations, but I think businesses and HR as a profession will be able to operate.
Dimitris Tsouroplis: It is a double jeopardy for the employees: not only what happens with the final Brexit outcome, but also if the company is going to close or move to another location.
One of the brexiteers’ big clarion calls was the unfettered access to world trade, surely that opens the uk up to a world of potential, but how will we find the right skills?
Ian Dowd: As an EU member, British business said; “come to the UK and you can sell to the rest of Europe”, under the EU negotiated trade deals. In the future, the UK could say “let’s do a trade deal bilaterally with a country that suits us both”. You would then need people who have experience of exporting, experience of selling in those other markets so people that know about selling in; India, Malaysia, Australia. So there’s a big recruitment opportunity.
Ian Johnston: It’s a little bit more complicated in financial services in that, for a start market sentiment has a dramatic impact, or can have a dramatic impact on the business. I suspect there aren’t very many financial services organisations that didn’t take a more conservative view on risk appetite after the referendum.
Beverley Vince: There’s also another aspect for financial services in that London is one of the world’s most attractive hubs for financial services and should those services move out of London, actually, you might have quotas for your very specific skills that you are looking for but are you going to attract them if London is no longer the place to be?
Robin Parkinson: Fintech is changing the shape of banking both for retail customers as well as for corporate and investment customers. Additionally, there is globalisation to address. One impact of the Brexit referendum was a change in the value of the pound. Currency fluctuations affects where you locate your workforce. Also, as a result of the financial crash ten years ago, the UK implemented some of the most draconian restrictions anywhere on remuneration for bank employees. Those who operate in Fintech, outside of regulated environments, can avoid the restrictions that place remuneration on deferral and at risk of clawback So, as well as Brexit putting another challenge in the way, there is a large amount of change going on in banking.
What will be the elements of legislation that are likely to be under review and potentially repealed or changed and how will this impact on operations?
Stella Dixon: When you go to other countries, employment laws can be much more complex. And even a minor administrative error could cause the whole process to go awry. Overall, I don’t think we have a bad set up here really. We have got a lot of process but as long as you follow the process then usually you get an appropriate outcome.
Helen Budd: If this debate was being fed back to Government for advice for them on setting legislation, would the best advice be to leave the legal framework as it is and work out the bigger issues first? It’s a little bit frayed around the edges but it’s not broken. We largely have ownership of the way employment law operates.
Robin Parkinson: I don’t think there will be a lot of change. There are certain areas where the EU has significantly influenced employment law; TUPE -under the Acquired Rights Directive – and the Working Time Directive; and the Agency Worker Directive. With TUPE, the British Government has consistently gold-plated that EU regulation giving greater rights for workers in this country. The Working Time Directive has had its issues and detractors but its premise is about health and safety. I agree that most UK businesses have accepted it and its aims to raise working standards. I don’t see it being repealed.
Nick Henley: What this is really about fundamentally is the difference between control and consent. Control is very important, culturally and behaviourally, and I think at the root of that is there is a little insecurity surrounding that fearful word, ‘change’.
What have delegates picked up from trade union opinion, both in the media and personally?
Michael Doolin: Union voices haven’t been heard loudly enough, the voice of the collective. But they
will likely get into the debate, once worker rights and Working Time and Agency Worker Directives and minimum rates of pay etc come into scrutiny. Up until now though the unions and the seven million people they represent have been almost silent.
They can’t vocalise on what they don’t know though.
Michael Doolin: I would have thought they would. That creates uncertainty, increased uncertainty and unnecessary uncertainty. There’s a real opportunity for trade union groups to collectively get around that.
Steve Foster: I really don’t believe that those who ticked the ‘leave’ box intended the dismantling of TUPE, the Working Time directive and all employment legislation since the 1970s. Most people don’t understand the subtleties of passporting or complex trade agreements. The success of Brexit will be judged on how we handle the transition, what laws we choose to adopt and what we choose to leave behind.
Ian Dowd: Some of the legislation since Brexit, or soon after, I think the National Minimum Wage went up and some of the employment laws in the UK are better than the rest of the EU and even since Brexit some things have been more favourable than they would be in the EU. Politically, it would be difficult to try and dismantle big parts of it.
As businesses look at the commercial imperatives in consideration of the greater freedoms of world trade, how should organisations prepare and plan to optimise and capitalise on that?
Helen Budd: In terms of commercial readiness EasyJet certainly looks on its game, set up headquarters in EU country, and made the GB a wholly owned subsidiary. To future proof, I don’t think they are doing it as an exit thing, they are just future proofing their roots and creating options, discussing their agility to be able to do that in terms of the culture of that organisation.
Ian Johnston: I can’t imagine there are any organisations that aren’t contemplating the trade opportunities, clearly there are going to be a few challenges along the way that most organisations have got to face, but this is just part and parcel of a strategic business and commercial planning. Is this Eldorado? Again, unknown, but you can’t run a business without looking for potential opportunities, whatever is happening around you.
Nick Henley: Have any delegates seen your sales forecasts for the next year out of interest?
Robin Parkinson: We have had to revise our business projections downwards as a result of the referendum result and the impacts that has had in the markets and expected investment flows. Developing economies are still likely to be growing faster than other Western economies. We must not lose sight of the consensus of growth predictions before the referendum. Whilst the rate of Britain’s growth would slow post any Brexit, it would still be growing.
Ian Johnston: The only thing we can be certain of is there will be a period of transition and every business will be impacted differently, and the UK economy will undoubtedly go through a period of pain before it elevates to back to where it was or improves on that.
Ian Dowd: Initially yes, but further in the future, the global stats, show huge potential across Africa, Far East, South East Asia not to mention China, India, Malaysia and America and South America; the opportunities to create bilateral trade deals with some of those countries and territories is appetising. Also look at emerging new markets; robotics and automation, big data, lots of new industries springing up, and you can see new industries being created out of new trade deals and then supply chains around them. A whole new opportunity opens up for human resources and people. That’s probably more like five or ten years ahead. We ran some research which I can share, that said most companies with more than 500 employees said post Brexit they would either run at the same levels or increase jobs following Brexit. It’s smaller companies who are a little bit more nervous about it; bigger companies seem to be quite optimistic about; keeping staff at the same level or increasing, and the trade opportunities that will be opened up in the longer terms.
Dimitris Tsouroplis: Based on what I understand, the Government is already preparing to reduce elements of taxation, maybe at 15 percent, so it’s going to be good for companies like us who look to invest more. If you have a thriving talent pipeline, I see many opportunities ahead.
Robin Parkinson: There’s vast diversity and ongoing change in the British economy, which enables it to be resilient to the challenges in some areas. For example, there are significant challenges to financial service at the moment in a low interest rate environment which has put pressure on costs. But not all challenges are Brexit-related.
While we have our tail feathers up, let’s move on to Workforce Planning. What needs to be considered in the workforce plan to find a balance between stability and efficiency and also the agility, capability and appropriate skills to deploy people to new commercial ventures?
Ian Dowd: Looking at the bigger picture, I think this is from the World Economic Forum, between now and 2020, a third of the core skills of many jobs will change in nature, the core skills, not the peripheral ones. If a third of the core skills change, they have got to learn really quickly. Millennials want to do that, but unfortunately the way we deliver it within HR is too slow.
Stella Dixon: Of course, technology is a big issue for us and our workforce will change because of it. Technological advance has completely changed the face of the business and we have a lot of long serving staff who need to retrain to deal with these changes.
Beverley Vince: And we are working in less hierarchical structures and moving much more towards matrix styles of structure. That suits our Millennials, it doesn’t suit our older workforce who have been brought up with that structured environment. It’s changed and it will need adaptation and that will be different for each and every organisation depending on what your objectives are.
Workforce Planning has been a bone of contention for HR for a long, long time. A lot of blame has been put at the door of workforce planning in terms of the dribbling pipeline.
Ian Johnston: The problem is that it is incredibly difficult because there are so many variables that impact on requirements. What you think you are going to need in the future is inevitably going to be different, the closer you get to a three year horizon. The world doesn’t stand still, market dynamics change, competition changes, technology changes. I think when you take it to granular detail it becomes increasingly less accurate over time. If you are focussing at the Macro level, then you can make the right decisions about where you are going to invest, and have that capability roughly ready when you need it.
Nick Henley: In tech especially, if people are not enjoying their job, for the many and varied reasons we all deal with, they are off. In this really highly competitive human capital piece if they aren’t having regular career conversation they are off. You can do your nine box at the end of the year but there won’t be anyone there to do it with you.
Ian Johnston: If you are going to do workforce planning, you need insight in other areas, an example being attrition. You can have a workforce plan that says ‘we are running at 25 percent attrition, so if we need growth of five percent in headcount, we are going to plan to hire 30 percent in this area. Actually we need insight on why we are having that attrition, let’s understand the root cause and have a plan to deal with it and reduce it to 15 percent. That would have a dramatic impact on your workforce plan and the financials of your business in terms of replacement costs. It is a matter of having a degree of insight around the key indicators in your business, and many things coming together in an overall people strategy.
Ian Dowd: In the marketing world one of the big things that is coming in is social media listening and it happened around the last UK and US elections where traditional polls and focus groups just got it wrong. As it turns out people don’t like being polled or surveyed officially and in focus groups they don’t always tell you the truth. Whereas on Social Media they often do for some reason. In organisations you have social media chat forums, to turn that into structured data.
Steve Foster: Organisations do have a general lack of good data about their employees. They know what people are paid, what jobs they do and where they live, but most organisations don’t have a very clear view of what skills and abilities people have. HR tends not to be good at this and we need to get better; the imminence of Brexit confirms this. I’m very uncomfortable with generalising about generational differences; I think it’s too simplistic, for example, to say that everyone under 25 thinks in the same way when there are many other variables, such as education, family background and the local economy that are just as important as age. I think it’s really dangerous for HR, as part of the workforce planning process, to conclude that all Millennials will leave if they don’t have a career conversation every three months. I think it is really dangerous to generalise like that.
Nick Henley: In Talent Development there is no measure, in my experience. Talent Development looks at the change of behaviours that drives higher engagement. Engagement and behaviours are completely separate, because engagement is one silo and talent development is another. The question is, is Ulrich relevant?
Ian Dowd: Some of the theoretical concepts have had their day. Some of the traditional methods of talent management I think are changing.
Dimitris Tsouroplis: We need to identify what talent means because how you identify, manage and retain, attract and recruit comes in waves. At the moment I am really struggling to find good IT people, I worry this could get worse after Brexit, if people see it is as so dramatic. It is difficult to plan ahead but this is a heavy topic at this stage. I don’t honestly know if the greater talent pipeline issue is about people moving out of your market or simply finding the right people for certain jobs.
Caroline Bowes: Our talent pipeline for graduates remains our two-year training programme which leads to qualification as a lawyer. However, as we manage talent from junior associate through partner, we see that many valuable contributors may not aspire to be a law firm partner.
Dimitris Tsouroplis: When we talk about talent, we need to be clear about newcomers who are either up for promotion or moving on and employees who are doing a really good job, and they don’t necessarily want promotion but are happy to stay where they are and you can retain them there for years.
Michael Doolin: I think that’s the conundrum, I think there’s a massive assumption that talent exists in people under the age of 25. It doesn’t, there is talent at all levels. Capturing that talent, harnessing that talent and positioning it on the right fields of play would score you some goals.
Nick Henley: A business’ internal promotion rate is telling. I’m looking at one part of the talent pipeline and this is measuring how many of your people in new roles are being moved in from the organisation and how many are being brought in from outside.
Dimitris Tsouroplis: We have to be optimistic; there is a light at the end of the tunnel. Definitely we have to retain our talent. People look to us as Human Resources experts for our reaction, and that influences how they react in a crisis. We should be calm.
Nick Henley: I think Brexit, and change in general, is really an opportunity for great HR practitioners to prove their worth. I think it’s a moment for rolling our sleeves up and saying “bring it on”! It’s going to be a real challenge of HR to be able to navigate perspective companies through that in a way that we haven’t had that level of challenge before.
Stella Dixon: So long as HR practitioners are engaged in the business, whatever Brexit brings, the challenges that technology or finding the right digital talent, if we are actively engaged in the business then we can support it and make a success of it.
Ian Johnston: Agreed, if we are fully engaged, fully understanding our businesses, there’s no reason why, as usual, we are a function that comes up with solutions to help the business, not just navigate through but be even more successful.
Beverley Vince: I am more sanguine about Brexit insomuch as, as big part of HR’s job is change management and change is constantly coming at us from different angles, so we need to find solutions to enable our businesses to prosper. We need to get in the thick of it, not sit in our ivory tower.
Robin Parkinson: Leaving aside the uncertainty that the referendum has created generally, we should look at the opportunities this brings for HR to raise its profile within its organisations. There are an enormous amount of challenges anyway, Brexit will be another. But it brings opportunity for HR to engage with business colleagues, and be seen to be a positive catalyst for change and optimism. There is a lot for HR to bring to the table.
Helen Budd: It’ll be horses for courses, and the solution is TBC.
Ian Dowd: I am a non-HR person sitting in a room full of HR people, but HR is fantastic within a box, but going outside that box, sometimes, not so much so. I wonder if there is an opportunity for HR people to take more of a lead and to shape some of the debate around Brexit, particularly when it comes to the people issues, rather than just waiting. There is an opportunity for more strategic leadership from HR.
Steve Foster: At the heart of Brexit is an HR issue – it’s primarily about the movement of people. If we get that highly sensitive issue wrong, then it will cause a lot of dissatisfaction and unrest in the country. This is HR’s big opportunity to get it right and I believe HR will be judged on how it handles this matter – a chance to lead rather than follow and prepare for all outcomes. After the events of 2016, we should always now expect the unexpected!
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