By Charles Cotton, CIPD Adviser for Performance and Reward
Last week the UK narrowly voted to leave the EU. There are many questions now being asked about what our future might hold, but what are the possible consequences for reward and HR of this decision?
Firstly, we need to help organisations assess the potential impact this decision could have on their demand for employees, the supply of their workers and how we recruit, retain, develop, manage and reward staff.
We also need to help employers think through the various potential business options and employee engagement consequences, such as plans to transfer employees or relocate operations.
The vote is another opportunity for the profession to re-examine the design of organisations, work and jobs to ensure that employers continue to operate as effectively and economically as possible.
We need to recognise that workers within our organisations will have voted for both sides and it is important to respect their decisions. We need to bring people together by emphasising the importance of team work and innovation in dealing with the rapidly evolving economic context.
In addition, our workforce may consist of EU employees, some of whom could now have worries about their prospects regarding living and working in the UK. There is a role for us to ensure that they still feel part of our organisations and be willing to talk to them about their concerns and look at how we may be able to help address them.
There has been higher levels of abuse of foreign workers reported since the vote, and it is important that we are not blind to this when it comes to our own employees. Firms should have robust grievance and disciplinary procedures in place to deal with any incidences that occur in the workplace and support for those who get attacked outside of it.
It is also important for us to deal with employee concerns about their pay and employment prospects. We should act proactively and explain to them what could be the likely employment implications of Brexit for the firm.
In some instances, it will be OK to say that that we don’t know what the consequences of exit may be because it is too early to know and it will depend on a variety of factors including what kind of exit deal is eventually negotiated.
In terms of pensions, defined benefit (DB) plan deficits will have increased on the back of falling stock markets and a potential fall in interest rates. Payroll and reward professionals will need to address employee member concerns about the future viability of pension funds.
There is also the employee relations challenge of explaining to employees that their pay prospects may be diminished as their organisation uses its pay budget to fund pension deficits, especially if a lot of employees are now not members of the DB scheme.
When it comes to defined contribution (DC) pensions some employees approaching the date when they planned to retire may now have to postpone their decision to stop work if the value of their fund has fallen. People managers will need to think about how the workplace can accommodate their needs, such as through work and job redesign.
Young employees may also be concerned about the drop in value of their DC pension, so reward and HR professionals will need to explain to them that over the longer-term it is likely that the economy and their funds will recover.
On the pay front, it is likely that the current economic uncertainty will feed through into low pay growth for the coming year. Employers should explain to their workers what is likely to happen to pay and why, so that employees have an understanding of the context in which salary and bonus decisions are being made.
It would also be wise for people managers to point out the importance of having some alignment between reward decisions between the workforce and their leaders. Employees will rapidly become disillusioned if they see that their chief executives enjoying large salaries and bonuses if they have seen theirs fall.
Overall, it is important for HR and reward professionals to get on the front-foot now and start encouraging our organisations to think through the potential consequences of Brexit, how they may respond, what the alternatives are and how they support their employees physical and mental well-being at this stressful time.
Please let me know if you think there are any other reward implications from Brexit.
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