The UK — and everyone else – are anxiously awaiting March 29 when Article 50 will either be extended or revoked. If neither occurs, the UK must leave, deal or no deal. Only a few weeks away, one thing is certain. Everything will change. Brexit could turn UK trade on its head.
Brexit is forcing organizations to cope with immense uncertainty. How does a business strategically plan with an unknown number of unknowns? The anxiety of Brexit has halted UK companies’ transformative efforts in their tracks. Many experts are hypothesizing just what consequences will result, from ports unable to process inbound or outbound shipments, to decreased operational inefficiencies, to economic stagnation.
“Scenario planning in today’s 24-hour information culture and the dynamic global nature of business means that CEOs are being pressured by investors, the business media as well as the increasingly influential special public bodies, to explain their strategic direction and the benefits this will bring to customers as well as shareholders. This was challenging before Brexit but is now more so and a lot of CEOs are struggling with this,” explains Gaby Weidlich, a UK-based interim CEO.
Regardless of the vague and unsettling future that Brexit may cause in the UK, Europe and trading markets around the world, some organizations are proactively planning. They are leveraging the expertise of seasoned interim executives. Interim management is a source of fresh, objective leadership that can come in without legacy mindsets, and begin disentangling imminent problems like lower investments and stalling rates of growth.
Companies are at risk as they attempt to develop long term business plans, operations strategies, or financial plans that are based on the unpredictable outcomes of Brexit. Without valid market data and trade projections, they are vulnerable. An interim executive brings a lifelong track record of game theory, planning for wide-ranging circumstances, often present in turnaround and presenting similarly with the current Brexit panic.
With acquisition activity declining, many organizations have postponed making long-term investment decisions. The default is bare bones operational decisions. Meanwhile, other companies have decided to withdraw operations from the UK.
Large corporations whose livelihood depends on global trade and logistics are especially stymied. Certain industries are also more susceptible to the negative consequences of Brexit.
“Several industries are biding their time and not investing, such as private equity and car manufacturers. The amount of business in terms of deals being cut has reduced substantially. Inward investment, has roughly reduced by a third, and is trending toward decreased investments coming into Great Britain.” said Tony Evans, a UK-based interim executive.
There are some industries that are at particularly high risk. The logistics industry must quickly adapt to changes that could result from new unknown cross-border arrangements.
The componentry nature of the automotive industry makes them more susceptible to losses. Similar to the automotive industry, components are manufactured globally in the aerospace and aviation industry. Both civilian and military aviation could be affected, but just how?
The greatest resource for companies — top-notch talent — may become scarce in the shadow of Brexit. Talent acquisitions directors, employees, and potential candidates could be affected by possible new regulations. With the future so unclear in the global talent mobility industry, there’s a massive shift.
With Brexit, the hesitancy of potential candidates to make a career transition is at an all-time high. Individuals in the EU have historically enjoyed the flexibility of moving between EU member countries. It’s anyone’s guess on what if any restrictions will be imposed on the 3.8 million EU citizens living in the UK or the 1.2 million British citizens that now live in other EU countries.
With the future so unclear, there’s a massive shift of workforce leaving the UK. A study by the Chartered Institute of Procurement and Supply revealed that 11% of companies had moved a portion of their workforce out of the UK.
This uncertainty has potential candidates hunkering down and not making career changes. As a result, organizations are finding that the talent pool is drying up as the natural flow of high-quality candidates comes to a hard stop. The bind is that many organizations desperately need top executive talent to guide them through the unpredictable complexities of Brexit. The irony is that senior talent that could help navigate uncharted waters of Brexit aren’t keen to uproot their current roles.
Whether a company works with an interim CEO, COO, or CFO they benefit from the knowledge, network, and strategic approach an interim executive offers. Interim executives have the ability to make quick assessments and immediately translate their findings into actionable and strategic implementations.
The Good Friday Agreement between Britain, Northern Ireland, and the Republic of Ireland established a peace that has lasted well for 21 years. Brexit could disrupt current dynamics across the borders.
“What happens between the EU and UK on that land border is politically relevant. Neither side wants to put a restriction on the border, but at the same time, the EU is saying you can’t have access to the European market so there is a major problem. A Catch 22,” said Evans.
Commerce is unavoidably affected. In highly unstable and volatile times, a strong organizational culture is the cement that keeps the corporate foundation intact. Interim executives are cognizant of organizational culture, and factor in the strength of culture when they create sustainable strategies. From on-demand CEOs, and COOs, to strategists, interim leaders can shed light and clarity on the most complicated situations – including Brexit.
“Businesses now more than ever need to stay true to their purpose and plan strategically around that. This is important for all stakeholders, particularly customers, staff, and supply partners or collaborators. Whichever way Brexit works out, businesses need to scenario-plan for the future – competition does not sleep,” said Weidlich.