CEO’s Letter: Two Thousand Years Before Article 50

By Elliot Clark

Two thousand seventy one years ago, Julius Caesar launched his first expedition to invade the British Isles. As usual, Rome was looking for hostages, tribute, and diplomatic relations with the island’s inhabitants. Rome quickly found out that the Britons were divided into tribes with fierce loyalties and deep factional dissents. Caesar may have been one of the few pundits who, based upon this early foray into these lands, could have predicted the mess that became the Brexit vote.

Far be it for an American to opine on life in the EU, but I come to you today from the perspective of someone who studied economics (that means I have no loyalty, sensitivity, or obligation to be correct in any assertion as long as I can express it in an equation).

I started with a quick history of Caesar 11 years before the senate turned his body into convenient dagger storage to highlight one quick point. Trade and labor mobility have been going on between the United Kingdom and the European continent for 2,000 years. The facts are that the inevitable needs of trade, labor availability, and the market have always operated with or without government support or trade alliances. In my opinion, in the long term, Brexit will have some immediate effect that will diminish over time. The impact on HR in the short term (once Article 50 in invoked) will be a real pain in the, well, you get the general idea.

Mobility will be the first casualty. Moving employees from the United Kingdom to any EU country will get harder for two reasons. One is it will require working visas, etc. Two is it will remain unclear for years as to what will happen to people in transition. So, already, transfers that were subject to old EU structures may be delayed or canceled. The relocation service providers will develop strategies for their clients to address this issue. Mobility is critical to the global management of culture and balancing the leadership team of an enterprise around the world.

Talent Acquisition will be much, much harder to plan. After all, inside the EU you could recruit in France for a job in London. Now that will be seen as a less appealing option making talent markets for both the UK and the other EU countries much narrower. This will particularly impact the financial services and FMCG markets which have strong presence in the UK economy. For both markets, expect average costs per hire to rise, particularly in those industries as jobs will be harder to fill. Recruitment service providers will be hard at work to both mitigate and simultaneously capitalize on this issue as an explanation for changing fee structures. Big firms like, for example, Deutsche Bank, BNP Paribas, Lloyds of London, and Aviva will all suffer regardless of which side of the English Channel they are on. In fact, if they have not already discussed alternatives with their recruiting service providers by the time they read this column they already need a new recruiting service provider.

Career planning will become more complicated. Related to the issue of mobility above is the often overlooked fact that Millennial workers like the idea of relocation. It is one of the few things that bind them to a company for the long term. This “stickiness” to the employer will be adversely affected and could lead to a more fluid labor pool in the UK with shorter tenures than their EU member counterparts. This may seem like a silly stretch, but these “cohort” gaps can play havoc with the labor markets. The lower birth rate of Generation X versus the Baby Boomers has left tens of thousands of leadership boxes blank on succession planning charts around the globe.

On the whole, global companies go to the path of least resistance but also greatest “talent” value for their workforce. It is unclear what the long term effects of Brexit will be, but, in the short term, the HR leaders and the HR service providers better figure out how to deal with the known and the currently and vastly unknown.

Elliot H. Clark, CEO

Tags: Global Summer 2016

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