Why Brexit uncertainty means trouble for L&D

By John Helmer

Man with umbrella in waist-deep water in the rain to illustrate Brexit uncertaintyHR’s recent drive to develop ‘VUCA’ leadership turns out to have been timely: the situation created by Brexit is volatile, uncertain, complex and ambiguous. And of the four letters making up that acronym it is the ‘U’ – uncertainty – that is currently causing most concern for the People function.

On a webinar given by Lumesse partners IEDP I learned that HR people are ‘hungry for certainty’ over Brexit. With the March 2019 deadline set by the UK government’s triggering of Article 50 beginning to loom unpleasantly, we find ourselves 25% of the way through the process but with no clarity at all about which of the various possible leaving scenarios will prevail.

IEDP’s Roddy Millar asked guest presenter Michael Skapinker (Executive Editor Financial Times / IE Business School Corporate Learning Alliance) whether he was seeing any specific solutions or approaches that HR departments were putting in place to prepare themselves for leaving: ‘How can one prepare oneself for something that one doesn’t know?’ replied Skapinker; ‘we don’t know what the situation will be.’

At time of writing, everything still seems to be in play; meaning anything from a Norway-style scenario where the UK retains some access to the single market, through a transitional period of as-yet-undetermined length which might smooth out the lumps and bumps, to a so-called ‘train-crash’ Brexit where Britain leaves without a trade deal and operates under WTO rules.

Whether you’re a beleaver or a remoaner – whether or not you think suffering the pain of divorce is worth the eventual rewards we might reap from leaving the EU – it is hard to deny that there will be pain.

So where are the problem areas for L&D?

Brexit fallout begins

Businesses – even those with VUCA-ready leaders – hate uncertainty. If we find ourselves in Quarter One 2018 with no clearer idea about what the shape of the endgame is liable to be, some organisations are going to start making moves based on what many see as the worst-case scenario – ‘train-crash’ Brexit. According to Skapinker, WTO rules represent a known quantity: ‘one can prepare for those’. But this could mean, for instance, investment banks beginning to move people out of London to alternative financial centres as early as the beginning of next year. And it would seem that contingency plans for eventualities such as this are already being made, to judge by controversial tweeting from Goldman Sachs CEO Lloyd Blankfein.

Skapinker exampled other business sectors that face particular challenges from Brexit uncertainty:

Manufacturing

44 years of EU co-operation added to globalisation and the growth of agile, just-in time manufacturing processes have given us tangled cross-border supply chains that run Europe-wide. The bumper on a Bentley crosses an EU border three times before it is properly fitted to a car. The prospect of having to unpick this complexity in the short timeframe available is providing huge headaches for companies such as Toyota, and throwing doubt on the future of whole workforces in the UK.

Agriculture / food processing

Some UK food businesses employ very high percentages of EU citizens in their workforces – up to 100% in the cases of fruit-picking. If these workers need to be replaced in whole or in part by UK workers, it will have big impacts on recruitment and training, and this is an issue which also affect sectors like Health, where up to a third of the workforce are EU citizens.

Aviation

The Chancellor Philip Hammond himself warned that it was ‘theoretically conceivable’ a train-crash Brexit could bring air traffic between the UK and EU to a halt on March 29, 2019, though most people feel this is unlikely. However there are no WTO-rules equivalent of the Open Skies agreement that all UK airlines fly under, and in the absence of any established rules, something would have to be negotiated very quickly. As FT aviation correspondent in the 1990s, Skapinker covered negotiations between the UK and the US over Open Skies and he feels the question has not been covered nearly enough: ‘and I have to say one thing: for all of us in the UK, if we think the EU are tough negotiators, we haven’t met the Americans yet … they’re going to give no quarter.’ He cited the recent threat to 4,000 Bombardier jobs in Northern Ireland posed by the threat of a 219% tariff imposed by the US as giving a taste of how life under WTO rules might look.

Glimmers of hope

In all these changes, Skapinker sees HR taking a central role, whatever the exit route turns out to be. On the question of the status of EU citizens post-Brexit, a company might find it has to move operations elsewhere in EU, recruit more workers in UK, and/or start some sort of intensive training programme in the UK: each of these options would involve intensive work for L&D, quite possibly with an onerous deadline attached.

There are glimmers of hope in this picture. The status of EU citizens who are already here should be settled by the end of 2017, since the EU has insisted this happen before moving on to trade talks. However future recruitment could still remain unclear. We don’t yet know what is going to replace freedom of movement, but it may well involve some sort of work permit system such as the one currently used for non-EU workers.

The IT industry, for example, employs many workers from India and the US on this basis. Skapinker reported the words of one IT director from a large company who said would be perfectly feasible to get work permits for EU citizens, but it is costly – in the region of £4,000 per person. Large enterprises in particular are going to have to factor it into their planning if they are going to have extra costs like this.

An agile response

An unpredictable situation leading to possible new process and compliance requirements, the prospect of large and diverse workforces needing to be onboarded and trained against tight deadlines – all of this paints a worrying picture for learning departments in the New Year. This in turn throws a challenge out to the provider community who support them to provide an agile and flexible response.

The power of digital to offer a rapid response at scale will be critical; the capability to mobilize learning spaces for particular cohorts and contingent workforces, relevant ready-to go and custom-designed content, and the skills to wrap it up in a coherent learner journey with excellent comms. These will be the core capabilities to look for in a learning partner who can help bring about a softer landing to your Brexit journey.

If you would like to talk to a Lumesse Learning consultant about your Brexit needs, get in touch today.

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