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Edward Houghton


Senior Research Adviser - Human Capital and Governance

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Brexit and business planning: do you know who your workers are?


As the impact of Brexit and the recent UK general election slowly become clear, now is the perfect time for organisations to take stock of their strategies and business models, and embrace people data to its full potential.

The UK’s decision to leave the European Union has highlighted just how few organisations consider the long-term and prepare for unexpected events. The months following the vote have shown a mix of reactionary and planned announcements from large organisations considering significant restructuring following the vote.

Many cited uncertainty and costs as reasons for important new planning to take place. Other organisations have had an immediate reaction of battening down the hatches and continue ahead. In both of these scenarios there is an important component to understand: the nature of the workforce.

There’s never been a more crucial time for HR professionals to get to grips with data analytics to better understand the workforce, how and where people are delivering value and the skills that will be needed to move the business forward.

Historically, much of the rhetoric around workforce planning and applying HR analytics has been led by an explosion in expertise at the ‘leading-edge’ of the field, exploring predictive and prescriptive forms of data analytics.

For many HR professionals that level of capability is still out of reach but the HR community is certainly building momentum by starting to explore data management systems and apply simple analytical approaches to data.

In many ways, Brexit should act as a catalyst for this kind of thinking as organisations need to start thinking about the composition of their workforce as it currently stands and how any restrictions to migrant labour and skills might have an effect on this. 

Is the data up to scratch?

Better data means better businesses decisions but for now there’s still considerable distance between the value of insights that HR delivers for HR to use, and the value of insights that directly relate to and can be easily mapped onto key business issues.

Just 14% of business leaders recently surveyed by the CIPD said they were satisfied with the data they were receiving from HR, so there’s a good deal of work to be done to improve confidence in people data.

When it comes to making workforce decisions with data, quality is paramount but many organisations are flying blind.

Many don’t know the mix of their full-time and contingency workforce, who don’t know the skills that are available to them to leverage and action throughout the business model and, crucially in light of Brexit, how much of the business is dependent on bringing in labour and skills from outside of the UK.

Building a clear case for investment

If organisations aren’t actively capturing this data, analysing it and making sense of it within the context of their business model, then it will prove difficult to build the case for a clear workforce strategy and be confident on key areas for investment moving forward.

While there are still many uncertainties around what Brexit may look like, one thing that is clear is that investment decisions are going to be increasingly under the microscope in the months and years ahead so it’s critical that businesses understand how and where they need to invest in their workforce.

Our Labour Market Outlook research has shown that many organisations expect that Brexit will result in increased costs for their business and an early reaction to this is that one in five organisations plan to reduce their investment in skills and development in the months ahead.

However, talent isn’t something that can just appear at a flick of a switch.

It can take months or even years to build and develop key capabilities in the workforce so it’s vital that, in the face of possible restrictions to essential migrant workers, HR professionals apply human capital metrics to better understand where possible skills gaps exist in their business, so they can take necessary steps to secure continued investment in these areas.

Use data to shape the future

It’s a challenging time but rather than pressing pause and waiting for certainty, the best way to predict the future is to shape it, starting with clear understanding of how and where value is being created in an organisation.

Human capital metrics and data analysis have an essential role to play in joining up the dots across the business and planning for a variety of different possible outcomes and how different parts of the business, and the workforce might be affected.

One way that organisations can better understand the relationship between their business models and how they make the most of their workforce is to apply an analytical model or framework that helps them understand the kind of data which is available to them and the workplace issues it can help to address.

These frameworks should aim to connect the many variables produced by the business in a way which creates robust insights for the organisation.

Whether you’re looking to better understand engagement levels in the business, or where your skills are coming from, where possible capability gaps are, workforce composition and diversity or who tomorrow’s leaders will be: there’s a data point that can be captured.

What gets measured, gets managed

There are a number of categories which help us to understand the nature of our workforce.

At an inputs level we can draw on the fundamental people measures that HR professionals should have ready access to such as workforce composition and diversity and workforce potential.

This is useful in helping us to know the complexity of the people side of our business and will be vital for strategic workforce planning as the UK prepares for Brexit and beyond.

For example, since the EU referendum many UK organisations have been highlighting issues in attracting and retaining high quality talent in uncertain times, so it is likely that processes around recruitment and selection may be under pressure to deliver.

Data can easily indicate whether or not this is the case.

Ultimately human capital metrics should show not just HR outputs but actual outcomes for the business – and it is this information which the C-suite often is most interested in, and what is often lacking.

Many organisations are good at showing what they are doing to address an issue, few can prove whether those measures are having any tangible effect on the business which can hinder future investments in key areas such as people and skills development.

CIPD research – Human capital analytics and reporting: exploring theory and evidence  – found that there is evidence of the importance of good quality people data – and that this emerging field continues to gain traction.

The post-Brexit constructs

Post-Brexit constructs such as culture and innovation, agility and resilience are going to be fundamental for leaders looking to navigate the complexities of the new economic climate.

By applying and reporting on relevant human capital metrics, HR professionals can help organisations to weather turbulent times and navigate considerable political, economic and social uncertainty.

There will be many important questions they must answer.

Those that are able to address the fundamental questions about their workforce, about what makes them valuable, and how better the business can drive both wellbeing and performance, will undoubtedly find themselves in a stronger position to emerge ahead of the pack in the post-Brexit world, whatever shape it takes.

Author Profile Picture
Edward Houghton

Senior Research Adviser - Human Capital and Governance

Read more from Edward Houghton

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