In fewer than seven days, the UK has fallen into a state of political, economic and social pandemonium. The only clear outcome of the referendum on our membership of the EU has been disunity. Disunity within government, between the countries of the United Kingdom, the rest of Europe and within families.
This is intended purely as a statement of fact rather than any political viewpoint. The thing that businesses detest most is uncertainty, something we currently have in abundance. No clear vision of the future is yet to emerge and is unlikely to do so until at least the end of this year.
Both main political parties are in disarray: the Conservative party remains in the midst of a leadership contest; the Labour party isn't providing any form of effective opposition; the SNP are baying for blood, and rightly so. A clear indication has yet to emerge regarding the timeline associated with Article 50, or for that matter, whether Article 50 is likely to be triggered and followed through to full conclusion at all.
Therefore, my last week has been spent in dialogue with business leaders to assess their views on the direction of travel and the associated opportunities and threats identified thus far. It is still very much early days; however, several clear themes have emerged:
1. There will clearly be opportunities, at least in the short to medium-term. Public sector procurement could/will (see above…) change radically; this will be a boon for management consultancies, legal firms and potentially private sector interims.
Relocation companies are preparing for a surge in demand. Contract novation: it is dull but will need to be done. HR is going to come into its own. Supply chains – they tend to be global anyway; however, they are typically very finely tuned and tend not to react well to sudden change with few established precedents.
Structural changes are likely; import/export regulations require clarification in the medium to long-term. Tax efficiencies not previously sought, will be. Companies that trade in dollars are more comfortable than those that trade in sterling; those businesses that had the foresight to hedge dollars are mightily pleased they did so. The less said about financial services the better.
2. The rally in the FTSE 100 and 250 has been a positive indicator; some of this could be due to investors rebalancing and de-risking portfolios. With the weak value of sterling, there are some concerns over possible acquisition attempts; businesses that could be most affected are those that have been undervalued in recent quarters.
3. Senior leaders with origins from continental Europe do not like what they are seeing and hearing. As such, many are seriously reconsidering their place in the UK, questioning its place in the world and its suitability to bring up a family in the long-term. More worrying, still, is the realisation that those least likely to have voted for an EU exit are typically those best equipped to leave the UK in search of opportunities elsewhere. Headcount retention is near the top of list of priorities at this stage; businesses are somewhat fearful of autonomic reactions from employees.
4. Some investment decisions remain on ice pending some clarity. One business that was considering location options for a global shared service centre has firmly struck the UK off the shortlist in favour of either Switzerland or Asia. Another business is considering whether, while its competitors retrench, it might prove fruitful to buck the trend to advance market share.
5. For many organisations, the immediate mantra is business as usual until some clear indications of what the future might look like emerge. Clearly, the UK could be undergoing one of the biggest and most fundamental transformations since the rebalancing away from the Commonwealth to join the EEC.
6. Demand for both interim management and search services remain stable and comparable to the market in the lead-up to the referendum. This is likely to change but is being affected by the current uncertainties.
7. We are in uncharted territories and guidance is needed. Some clients would like peer to peer interaction and a platform for discussion; clarity is required first though, otherwise what can be discussed other than a selection of known unknowns? "Least-likely" vs. "most-likely" scenarios are emerging every day, and promptly dismissed the next.
8. Business leaders are frustrated and, in some instances, bemused by the lack of guidance or clear communication from central government. Enough is enough with political games and folly – just get on with running the country and do it quickly, not in three or six months' time.
In conclusion, the general sentiment is that clarity is required, and soon. Once that clarity has been sought, then businesses can start to plan effectively. These plans will, at least initially, need to be based on a series of most-probable scenario assumptions.
Several issues are in need of immediate attention: in the non-business world, the country requires both effective leadership and opposition, a strategy on how to align a society evenly split on a subject that many hold as superior to political allegiances. In the business world, we need to work to reassure workforces, concentrate on customer relationship management, secure IP in processes, seek ways to cut-cost and increase efficiency and productivity while simultaneously mitigating inherent risks.
Big decisions are unlikely to be made anytime soon, so for the time being it is business as usual, albeit with the addition of some accents. Finally, it might be helpful to ponder some thoughts from Nietzsche: "He who fights with monsters should be careful lest he thereby become a monster. And, if thou gaze long enough into the abyss, then the abyss will also gaze into thee."
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