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Brief 480529
At 11pm on Friday 29th March 2019, the UK will formally leave the European Union and enter a transition period until 31st December 2020 which will allow for further negotiations in areas such as trade deals; border controls for Ireland; and the rights of UK citizens in Europe and EU citizens in the UK (Hunt and Webster 2018). For EU citizens currently working in the UK, the current plan is to allow this group to continue to live and work in the UK after Brexit (Hunt and Webster 2018). However, after the Brexit transition period, there is a suggestion that there will be a work permit system for EU citizens similar to that currently being operated for non-EU citizens (Hunt and Webster 2018). Whilst there is still uncertainty regarding what will happen during this process, one of the issues for human resource management will be undertaking activities to address the potential changes, challenges and opportunities in the labour market which may impact upon an organisation’s talent management (Price Waterhouse Cooper 2016). This brief will therefore examine talent management and the Brexit process.
The use of migrant labour, including both EU and non-EU citizens, in the UK is important across a range of industries, but there are concerns that the impact of Brexit may produce a reduction in migrant workers (Centre for Economic Performance 2016). A shrinking labour market may increase labour costs, both in terms of salary levels and recruitment, and prices which may then be either passed on to the consumer with the potential to reduce sales or profits (Centre for Economic Performance 2016). Changes in the UK labour market are revealed in the recently reported employment figures which reported that the rate of UK unemployment is currently at its lowest rate for 42 years (4.2% as at 15th May 2018) (Guardian 2018). A more detailed analysis of these figures reveals that the current employment rates (defined as the proportion of people aged 16 to 64 years who are in work) are as follows: 81.9% of EU nationals; 75.6% of UK nationals; and 63.0% of non-EU nationals (Guardian 2018). The employment rate for EU nationals is currently the highest, but this may change due to Brexit and evidence of this may have already been seen in the reduction of the EU workforce in the UK which has seen a fall in 28,000 people in the last 12 months (Guardian 2018). This reduction in the workforce due to higher employment rates and EU nationals leaving the UK provides both a short-term and long-term challenges for UK organisations in terms of its human resource management (Price Waterhouse Cooper 2016). The short-term challenges for organisations may arise due to the current high rate of employment and the loss of 28,000 EU workers which has reduced the size of the labour market (Guardian 2018). The longer term challenges may arise from the uncertainty of the potential employment conditions which may be imposed on EU workers in the UK, and the subsequent challenges of being able to fill future vacancies with appropriately qualified people (Hunt and Webster 2018; Price Waterhouse Cooper 2016). These challenges will require human resource management to assess both its current and future talent management strategies.
Talent management strategies cross a number of human resource areas including recruitment and selection; equality and diversity; staff development; and succession planning to enable the organisation to ensure future competitive advantage (Rees and Smith 2017; Armstrong 2016). Talent management, therefore, includes a wide remit of human resource management and includes human resource management across the organisation (Ariss et al 2014). The definitions of talent management can vary but it is seen as a key priority for the organisation in terms of its ability to address the opportunities and challenges in its industry by being able to ‘attract, identify, develop, engage, retain and deploy individuals who are considered particularly valuable to an organisation’ (Chartered Institute of Personnel and Development [CIPD] 2018, n.p.). This focus on the individual in talent management may enable an organisation to develop an individual’s strengths through development and career opportunities designed to retain core personnel across all levels of the organisation (Ariss et al 2014; Dhanabhakyam and Kokilambal 2014). In this context, the focus of talent management is therefore upon the individual who is perceived to be able to create the highest level of value for the organisation (Dhanabhakyam and Kokilambel 2014). However, given the uncertainties of Brexit, talent management also needs to ensure that these individuals are not only able to add value to the organisation in its current context, but to also be able to assist the organisation in meeting the challenges of future changes in both its internal and external context.
Whilst this view of talent management focuses on the end results of the strategy, there is a need for the development of an appropriate strategy by the organisation itself (Armstrong 2016; Boxall and Purcell 2016). This needs to include an assessment of the vital roles in the organisation and the level of development and training required in these areas, particularly given the changing demands of the increasingly competitive national and international context (Armstrong 2016). This competition is not only between organisations in terms of its product and service offering, but also between organisations seeking to employ talented employees. Talent management should therefore consider a range of extrinsic benefits, such as salary and bonuses; and intrinsic benefits, such as status, training and development and career prospects, which not only meet the expected benefits of the industry, but also provide a more attractive package than other organisations (Rees and Smith 2017; Boxall and Purcell 2016). In this context, the talent management of the organisation needs to find a match between its internal and external environment in terms of both attracting and retaining employees (Dhanabhakyam and Kokilambal 2014).
This perspective of talent management sees it as a process which needs to develop its activities in response to changes in both its internal and external environment (Rees and Smith 2017; Dhanabhakyam and Kokilambal 2014). This process may start at recruitment which will need to not only set clear objectives for the vacancy through the development of job descriptions and specifications but to also ensure that it undertakes a transparent process to prevent any inequality for candidates in the recruitment process (Boxall and Purcell 2016; Armstrong 2016). This recruitment policy therefore not only needs to consider the organisation’s micro context, but also address the legislative framework of its macro context (Rees and Smith 2017). This legislative framework is subject to change during and after the Brexit process and it is therefore important for human resources management to ensure that the organisation not only adheres to these changes, but to also plan for these (Price Waterhouse Cooper 2016; Centre for Economic Performance 2016). Planning is therefore a vital component of talent management and needs to undertake a proactive response to ensure that the organisation can recruit and retain staff to enable value to continue to be added (Rees and Smith 2017). In the context of Brexit, it is therefore essential that talent management considers the following four issues (Price Waterhouse Cooper 2016). Firstly, which of its employees may be impacted by the potential changes to their immigration status given the expected changes to the migrant workforce (Hunt and Webster 2018; Price Waterhouse Cooper 2016). Secondly, scenario planning should be undertaken to assess future changes in the labour market, such as staff turnover; labour market size and costs of recruitment and retention; which will assist in providing information for business decisions (Price Waterhouse Cooper 2016). Thirdly, key positions in the organisation will need to be assessed in terms of succession planning, especially if immigration policy shifts to greater restrictions on migrant workers (Price Waterhouse Cooper 2016). This will mean that organisations will either have to look at alternative areas of recruitment or allow additional time for visa applications. Fourthly, there will be a need for specialist skills during the Brexit process and this will need to include how this can be obtained for the organisation (Price Waterhouse Cooper 2016). This level of knowledge may also need to undertake a cross-organisation approach as the Brexit process will impact, to varying degrees, across the organisation (Centre for Economic Performance 2016).
The impact of Brexit upon the labour force is presenting challenges which may be outside of the direct control of organisation, but there are also actions which the organisation can undertake to address some of these challenges by reassessing its talent management strategies. These actions may include assessing the impact of more restrictive immigration policies on its current workforce and how these can be addressed by seeking alternative recruitment strategies in different markets. Talent management also focuses on the essential roles in the organisation and, in the context of Brexit, this will need to include what theses essential roles are and how the organisation can develop other employees to undertake these roles. In the context of Brexit, an organisation’s talent management not only needs to assess the changes in the macro environment, but to also assess how its internal context can meet these challenges in order to remain successful. This will need to undertake scenario planning to ensure that a proactive and appropriate response is undertaken.
References
Ariss, A.A., Cascio, W.F. and Paauwe, J. (2014) ‘Talent Management: Current theories and future research directions,’ Journal of World Business, Vol.49(2), pp.173-179
Armstrong, M., (2016) Armstrong's handbook of strategic human resource management (6th ed.) London: Kogan Page
Boxall, P. and Purcell, J., (2016) Strategy and Human Resource Management (4th ed.) Basingstoke: Palgrave Macmillan
Centre for Economic Performance (2016) ‘Brexit 2016’ [online] Available from http://www.kenwitsconsultancy.co.uk/wp-content/uploads/2016/09/BREXIT-2016-Policy-Analysis-from-the-Centre-for-Economic-Performance.pdf#page=40http://www.kenwitsconsultancy.co.uk/wp-content/uploads/2016/09/BREXIT-2016-Policy-Analysis-from-the-Centre-for-Economic-Performance.pdf#page=40
Chartered Institute of Personnel Development (2018) ‘Talent Management’ [online] Available from https://www.cipd.co.uk/knowledge/strategy/resourcing/talent-factsheethttps://www.cipd.co.uk/knowledge/strategy/resourcing/talent-factsheet
Dhanabhakyam, M. and Kokilambal, K. (2014) ‘A study on existing talent management practice and its benefits across industries.’ International Journal of Research in Business Management, Vol.2(7), pp.23-36
Guardian (2018) ‘UK Real wages rise, but drop in EU workers could hurt NHS - as it happened’ Guardian Business, May 15 [online] Available from https://www.theguardian.com/business/live/2018/may/15/german-growth-slows-trade-uk-unemployment-wage-growth-business-live?page=with:block-5afaa007e4b02d1f3350f9e7#block-5afaa007e4b02d1f3350f9e7https://www.theguardian.com/business/live/2018/may/15/german-growth-slows-trade-uk-unemployment-wage-growth-business-live?page=with:block-5afaa007e4b02d1f3350f9e7#block-5afaa007e4b02d1f3350f9e7
Hunt, A. and Webster, B. (2018) ‘Brexit: All you need to know about the UK leaving the EU’ BBC News, June 5 [online] Available from http://www.bbc.co.uk/news/uk-politics-32810887http://www.bbc.co.uk/news/uk-politics-32810887
Price Waterhouse Cooper (2016) ‘Brexit - A key role for HR’ [online] Available from https://www.pwc.co.uk/eu-referendum/po-summary-of-brexit-and-hr-related-issues-september-2016.pdfhttps://www.pwc.co.uk/eu-referendum/po-summary-of-brexit-and-hr-related-issues-september-2016.pdf
Rees, G and Smith, P. (2017) Strategic and Human Resource Management. An international Perspective. (2nd ed.) London: Sage