I’m hardly the first to observe the similarities between Brexit and the election of Donald Trump. For business leaders, one thing these events have in common is that they both have created uncertainty. Companies operating in the UK and US are unsure of how trade, immigration, and numerous other regulations will change in the next few years.
The advice that many executives have been given in both markets is to take a “wait and see” approach, which at first glance seems to make sense: Why invest resources in planning for something when you don’t know what will occur? The problem is that this is exactly the approach many companies in the UK have taken toward Brexit, and now, the CIPD’s Greg Pitcher notes, they find themselves unprepared for the changes ahead:
A poll of just over 1,000 HR professionals found that just 15 per cent of organisations had started to prepare for the impact of restrictions on EU labour – despite 42 per cent of employers expecting such restrictions to damage their UK operations. … Adecco Group UK and Ireland chief executive John L Marshall III said the referendum outcome should be a “wake-up call for employers”.
Indeed it should. This lack of preparation creates a business risk. In today’s business environment, being right is only half of the battle. Companies also need to be fast. When the rules do change, the companies that are fast at making adjustments are the ones that will win. While no one can predict exactly how regulations will change, “waiting and seeing” is a surefire way to get caught flat-footed when they do. Executives within the US need to now start a process of scenario planning based on potential outcomes associated with some of the major policy changes that are likely to occur in the new presidential administration. For example:
- It is likely that there will be changes to the Affordable Care Act. If certain changes are made, what will you do in terms of the health benefits you provide for your employees?
- The overtime rule that is set to go into place on December 1 may be changed in a Trump administration. Companies should be asking themselves what they will do in terms of pay if the threshold for exemption from overtime pay is lowered back to its previous level.
- The CEO pay ratio disclosure may be overturned. However, with increased transparency on what the median employee is paid via online compensation benchmarking platforms, this information may become available in the public domain anyway. What should you do if a third party starts sharing the information more broadly?
- There are likely to be changes to immigration regulations. Depending on the different scenarios that could play out, how should your talent strategy evolve?
These are just a handful of the regulations that may or may not change. The broader point is that HR executives need to stay aware of what could be changing and be prepared with an action plan for every likely scenario. While scenario planning does require some wasted effort (after all, most scenarios don’t play out), the benefit of being able to respond quickly no matter the outcome will enable those companies to win in the new marketplace. In other words, it’s better to prepare for a couple of events that don’t happen than to get caught unprepared for one that does.
For more insight into using scenario planning in talent strategy to navigate periods of uncertainty, CEB Corporate Leadership Council members can read our case study on how MTS India aligns succession plans with future needs by identifying future leadership requirements and prototyping potential critical roles.
Have a comment or concern? Drop us an email.