From offering incentives to setting up a task force, there’s plenty HR can do to build resilience as the political impasse continues
More than two months on from the EU referendum vote, the dust is starting to settle and we are beginning to get some clarity on what the result will mean for UK firms.
While it’s clear little will change in the immediate term, many companies are starting to take practical steps. Here’s how you might consider preparing your organisation for the eventual exit from the EU.
1. Secure your top talent
Attracting and keeping top talent is always top of the HR agenda, and the Brexit vote has added an extra imperative to the issue.
Organisations that are particularly dependent on EU nationals and worried their employees won’t return to work after visiting their home countries over the summer are already offering some workers ‘return bonuses’ in the form of fixed payments or a percentage of their wages.
Employers are linking these bonuses to their recruitment spend, says Alan Price, chief executive of Croner Group. “They are looking at how much it would cost to replace the individual, and are paying employees less than half the recruitment fee as a ‘return bonus’,” he says. “That’s an ingenuous step because they’re just looking at the short term. But I think many more will follow suit.”
And it might not be long before an elite group of highly skilled EU nationals in niche industries are effectively able to name their price to stay, says Steve Rockey of consultancy Esoteric HR. “In the short term, people will be trying to protect themselves against what could happen in the future. Then, in the coming 18-24 months, they will get a clearer idea of how off the scale they need to go with their benefits – or not.”
With global markets reacting negatively to economic uncertainty, Steven Cochrane, a partner at law firm Pinsent Masons, says some financial firms are offering ‘interest rate hedging support’, which protects senior staff from the plummeting pound.
“Globally mobile employees who are paid in sterling are nervous about their commitments in other countries, such as mortgages and school fees,” he says. “The Brexit-related impact on the cost of living in the UK, and the devaluation of the pound, has a disproportionate impact on those individuals. Employees are looking to their employers to effectively insulate them against that effect.”
2. Plan your EU nationals’ future
Some organisations are already going to more extreme lengths to secure the loyalty and continued presence of their EU employees. Dan Mannix, chief executive of investment management firm RWC Partners, and Mark Holman, chief executive at TwentyFour Asset Management, have both promised to pay for visas for their EU workers if necessary.
While AIG is offering ‘Brexit insurance’ that will cover the costs of a legal challenge to rejected applications, Rockey says he wouldn’t recommend it to his clients in the hospitality sector: “They’d laugh in my face. But if I was in a very different industry, I can see the downsides of not having it could be substantial.”
Simple gestures such as reminding employees of their existing benefits packages (without adding to them) are probably enough for most companies at this stage, Rockey says: “This highlights that their organisation is a great place to work and discourages staff from moving on.”
3. Consider added investment in staff
The recent CIPD/Adecco UK and Ireland Labour Market Outlook survey found that 21 per cent of employers are considering reducing their investment in training and skills development and equipment. But economic theory suggests that the greatest returns are made by those that invest in their people during a recession.
“Instead of looking at cuts, now is the time to be talking about investment in people, processes and equipment that will boost productivity and improve the resilience of businesses and our economy,” says Ian Brinkley, acting chief economist at the CIPD.
Price agrees: “Employers are realising that future talent might not come from Europe any more. It needs to come from the UK. Some are starting to talk to schools about career programmes, and are more engaged with apprenticeship opportunities.”
4. Make a move
JPMorgan chief executive Jamie Dimon is considering moving “thousands” of employees to other branches of the bank within the eurozone to address the loss of ‘passporting rights’ (which allow financial services firms to operate throughout the European Economic Area) when the UK exits the EU. And we can expect others to do the same, says Karen Briggs, KPMG’s chief Brexit officer. “Some financial organisations are looking into how Brexit might affect their passporting rights, and whether they may need to transfer employees to the continent to augment their EEA entities,” she says.
For most businesses, however, relocation won’t be the answer – but there may be an added administrative burden. In these cases, it’s important to ensure that employment contracts account for any new immigration rules placed on EU workers. Price says: “A contract with a start date showing pre-exit employment will help to evidence that they were already working in the UK before any ‘cut-off point’ imposed by the government, after which new rules may apply to EU workers wanting to come to the UK.”
5. Form a task force
Open and regular communication with employees will help make the Brexit transition as smooth and pain-free as possible. Management consultancies have been scrambling to set up Brexit teams to overcome immediate issues and plan for the future.
KPMG’s ‘2-2-2 plan’ – looking at the next two weeks, two months and two years – reflects how the business is advising its clients to develop strategies to cope with the EU vote fallout. Briggs says the most immediate issues its clients have been concerned with focus on people and finance issues: “We have seen an immediate tripling in demand for our immigration law advice services as companies have sought to understand the current immigration law framework and how that might change, and what they can do to prepare for a new immigration system.”
Some organisations that had EU residents due to join – either on secondment or on permanent contracts – have seen people decide not to take up posts following the referendum, according to accountancy and business advisory firm BDO. “This is of concern,” says Stuart Lisle, a partner at the firm. “So they are increasing the support to EU employees to ensure that they feel supported.”
Although smaller companies may not have the resources to set up a full-time, dedicated Brexit task force, simple measures such as regular meetings and open Q&A sessions can go a long way to reassure staff.
Saying something to your workforce is better than nothing, points out Cochrane: “If you say nothing, employees might draw conclusions that may be wrong. But if employers overstep the mark and make strong conclusions too early, they can tie themselves up in knots. Nobody knows what anything will look like in two to three years.”