by Simon Schmidt

Becoming an alien – Brexit closing in on your HCM System

I’m an alien

I’m a legal alien

I’m a Danishman in D.C.

A small adjustment to Sting’s classical hit “Englishman in New York” applies. Recently, I moved from Denmark to Washington D. C. for a duration of at least two years. When you move out of your usual habitat and enter a very different culture, the contrast between the two places becomes very evident. Stuff you have taken for granted but then suddenly needs cumbersome attention makes you appreciate how well off you’ve previously been. Now, you pay when you go to the doctor, school doors get locked when class starts, and everybody greets you with “how are you?” but with little interest in your reply – this I discovered when I, unaccustomed to this exchange, started to state my troubled mind to a surprised mailman. Right now, this is my reality. I’m applying for a US work permit. I have always worked – regardless of where I was! But not here. Here, I am an alien. The amount of regulations, forms and documentation that must be filled out by hand and in several copies – all of course in blue ink. So. Here I am. An alien applying to be a legal alien.

These days, we witness historical challenges in Europe with the United Kingdom’s decision to leave the European Union. With the vote in 2016, the UK invoked Article 50 of the Lisbon Treaty, which meant the two sides (EU and UK) had two years to reach a settlement and the terms of the split. This was set in motion on 29 March 2017, meaning that the UK is to leave at 11 p.m. UK time on Friday, 29 March 2019, regardless of whether a specific deal with the EU is in place – which currently is the case and time is running out. Either way, the impact will be one of multiple layers requiring cooperation on all sides. Organizations should start contingency planning for the changes that will inevitably occur.

Impacts on the workforce – how 2BM thinks you should prepare

Be prepared! Brexit will have an impact on the workforce in companies:

  1. Located in the UK
  2. Having expatriates in the UK
  3. Having inpatriates from the UK

First and foremost, the ability to identify affected employees will be the essence. This might seem a bit obvious, but our experience is, that the need for clean and validated master data is acknowledged once the desire for the same is at its highest. With regards to GDPR, we’ve noticed a trend that companies only start to worry about where the fire hydrant is once the house is actually burning. Why not plan and execute ahead? Plan how to get the nationality, work permit, possible job paths, expatriations etc. updated and validated in your systems.

  • Is your HR system already capable to hold this data in a consolidated manner?
  • Is it time for you to look into the Work Permit functionality?
  • Are the right attributes available for reporting in your SAP HCM / SuccessFactors?

The list is long. A critical success criterion in the Brexit process will be your company’s ability to quickly identify the affected workforce.  The (local) HR organizations must prepare, expected changes must be introduced, and affected employees must be informed of the time to come.

Keep UK employees happy!

Since the expected shape of the labor market is still unclarified including employment law, immigration policy, and the length and operation of any transitional period, businesses should be prepared by proactively ensuring a present and qualified workforce. A probable outcome is a migration adjustment that will cause an alienation of a UK workforce from an EU perspective. That would mean, the scenario I am faced with in the US will become the reality of the UK as well; applying for fundamental permits that today are a given. UK companies with EU employees will be affected. UK expatriations will be perceived as “third country” employees. Customs issues and movement delimitations. Inpatriates in the UK need to apply for permanent resident status and etc. This adds pressure to have a steady UK workforce when the process to join it will be cumbersome for EU employees. To further stress this challenge is the fact that the UK workforce has the characteristics of a smaller segment in combination with an aging population. Therefore, the ability to obtain and retain skilled UK employees will be a yet unseen critical and competitive dimension.

  • What does that mean for your recruitment in the UK?
  • How do you design the processes to strengthen Expatriation and Compensation?
  • What does it do for your Talent Management policy to reduce UK turnover?

There are many aspects to this scenario. Danish companies alone have almost 800 subsidiaries in the UK, so there is a lot of work to do.

Derivatives

Yet another consequence could be within taxation. Indirect tax as a consequence to the movement of goods will be affected when the UK will be “released” from the Free Trade Agreements concluded by the EU. Since the logic to determine the correct tax code is automated in the SAP system, a complete review of the tax determination mechanism will be required. This will probably also affect the good old infotype 17 – I fancy the idea that a high political decision is affecting basic SAP HCM infotypes. The world is connected. If you want the full SAP Finance impact, please read our blog (in Danish).

The 2BM Way

In a recent article, Chairman of the UK & Ireland SAP User Group, Paul Cooper, was quoted saying: “The clock is ticking…It’s a political activity at the moment but once the politicians have agreed what’s going to happen, when and how, organisations are going to have to make decisions about changes they need to make from an SAP and business process perspective.” This statement clearly shows that Brexit is a major concern.

In 2BM’s experience, companies that think ahead, make the contingency plan and follow the development closely, have a stronger outlook. They are confident and have a head start compared to those who “wait and see”. Similarly, we advise companies to start early, depending on their UK engagement, if not the project then at least the task of getting prepared. In that perspective, 2BM offers a “Brexit Readiness Review” in which facilitated workshops will uncover which tasks are relevant to your organization. In the review, we will also evaluate if developments in your HR solutions are beneficial. We have a broad experience within both SAP HCM and SAP SuccessFactors, and we have insights in what SAP is expected to deliver in regard to the upcoming Brexit. Furthermore, 2BM consults a vast collection of major companies that face similar challenges. We’ll be able to answer your question of: “What do other companies do? ”.

Feel free to reach out with further question or remarks.

Well, enough said – I need to return to my forms to become a legal alien….now where did I leave that black pen…?

 

Simon Schmidt

Simon Schmidt

is a Senior Consultant at 2BM. He is highly experienced in SuccessFactors, HCM, and User Interfaces including Fiori.

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