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Impact of Brexit on Cross-Cultural Management Practices

3237 words (13 pages) Essay in Management

04/02/19 Management Reference this

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Critically analyse the long-term impact of Brexit for cross-cultural management
practices in Europe. Consider the impact and issues for businesses from both the
UK and other EU-partner perspectives.

On 23rd of June 2016, United Kingdom (UK) had held Brexit referendum in desire of leaving European Union (EU) (Ford and Goodwin, 2017). The outcome of the referendum was 51.9% of British citizens voted leave EU, whilst 48.1% had voted to remain within EU (Hunt and Wheeler, 2017). The verdict of referendum to withdraw from the membership of EU, will have a huge impact to the country’s cross cultural relationship with the prime trade partner EU. This assignment has been prepared to critically analyse the long-term impacts of Brexit for cross-cultural management practices; the focus will be on the UK healthcare sector and how they will be enforced to cultural change, (Mundasad, 2017). Following onto UK banking sector and finishing off with summary on the impact of UK airline industry within EU.

This essay will start off by an introduction regarding about the UK’s healthcare sector which will be the main focus of the essay; following on with brief implications on the UK banking sector and Low cost Airline industry. Describing how the healthcare sector will be hugely impacted by losing highly trained staff after Brexit, as majority of the nurses and doctors come from the EU to join UK’s healthcare sector. Furthermore this essay will analyse and identify the major impacts of cross culture management after Brexit. The main three effects of Brexit in the long run will be in regards to international staffing which includes: ‘immigration’,‘re-expatriation’ and ‘labour market’. These three difficulties will be linked to the long term impacts of Brexit and on the global staffing issue, this will be backed up with models to interpret and recognise the disputes.

The word Brexit has been used throughout media and is a media terminology which has been used to show the exit of UK from EU. ‘Brexit’ has been created by combining two of the initial words of Britain with the word exit (James, 2016). The main question that was brought up to British citizens for the referendum was: “Should the United Kingdom remain a member of the European Union or leave the European Union?” (Green, 2017).  The parliament gave the option for the public to decide whether it is best to leave EU, knowing the fact that the general public had no knowledge on the long-term impacts of Brexit and how it will bring challenges for the upcoming generations.  

One of the challenges for Brexit that will impact the health care sector is global staffing that will be ‘immigration’. Before Brexit, UK was part of the EU and participated within the EU’s policies in relation to free movement of people. This allowed the healthcare sector to recruit their employees from any country within EU and permitted the citizens to move freely between EU and UK so they could work and live in their desired place. The latest statistics shows that the healthcare sector, has roughly around 55,000 recruits which come from EU countries (Fenton, 2016).  Conversely, because of the impact of Brexit there is a vulnerability that the privilege to freedom of movement would still relate to the EU citizens (Rankin, 2016). Many of the employees who work within the healthcare sector are categorised as ‘third-country nationals’ on their applications, these employees are mainly on a work visa in the UK.  However, after Brexit things will change and many of these ‘third-country nationals’ would be hugely impacted than the EU citizens that work in UK (Barnard, 2017). Because of this, the effects on global staffing of talent and ability planning within the healthcare sector occurs. Knowing that the implication of Brexit will lead to immigration issues, causing staff shortage within different industries, the healthcare sector should look into this matter and decide on different recruitment procedures whether they should make or buy the skilled force.

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Altogether, for a short period of time it will be best for the healthcare sector to make their talent rather than buying. It is smarter for the healthcare sector to concentrate on the internal labour markets after Brexit, on the grounds that this will build the dedication of employees in the job they do and giving them greater security so that they do not fear the consequences of Brexit. Since the matter of Brexit arose, the healthcare sector would in any case still want to keep their staff, as majority of these are EU national staff and are usually doctors or nurses that are highly skilled and qualified to serve the people of UK. For the healthcare sector to avoid any negative consequences which will begin to impact after the negotiations and agreement of Brexit, they should prepare themselves beforehand in regards to handling the workforce and retaining employees.

Another challenge of Brexit that impacts the healthcare sector is ‘flexible to labour market’. The meaning of this is that the organisations have more freedom to hire and provide contracts to employees when the demands of work increases, and they have the power to fire the workers when demand of work decreases. On the other hand, healthcare sector has been in stress many times because of shortage in staff to fulfil the needs and providing service to the citizens of UK (Mundasad, 2017). Besides, the verdict of referendum could prompt to having a bigger number of issues than before on recruiting workers in the healthcare sector as majority of these workers are doctors and nurses who are recruited from EU nations (Triggle, 2016). When non-EU nationals apply to work within UK, they have to follow the ‘points-based system’ which causes difficulties in recruiting employees other than EU nationals (Landou, 2016). Once the Brexit is settled, there will be a risk off EU’s freedom of movement to be removed and this could cause huge implications on the healthcare sector as this will put on boundaries on recruiting employees, therefore this will lead to a huge deficiency of workers. These implications will affect the capacity of the employees who bring the right skills and abilities that is required by the healthcare sector. Therefore, to beat this issue it will be best for the healthcare sector to send their employees on an international project so they could develop on their skills and knowledge.

The final implication after Brexit for the healthcare sector is ‘re-expatriation’, where the organisation will need to take to think through. The issues about freedom of movement as specified above, British residents who have decided to work and live in another country within Europe will fear their healthcare and right to remain will vanish post-Brexit (Carroll, 2016). Furthermore, British expats who work abroad within the EU could face difficulties if the country they’re at ask the expats to comply and act upon their prohibitive guidelines with regards to licenses, permits and setting up firms. Therefore, this could cause them in losing their right to work in EU countries and will need to gain a permitted stay to continue staying within the EU area because of the new policy that may be applied after Brexit. Thus, the effects of global staffing within the healthcare sector will be influenced. Conversely, if all the UK expats that live and work within EU nations are to return back to the UK following the post-Brexit, then it is conceivable that it will make it more difficult for new expats to look for some kind of employment within UK (Burton, 2016).

Furthermore, the UK expats who work and live within the EU nations are entitled to free healthcare service but once Brexit is completed and agreed this will be affected and the right for free healthcare could be taken away (Parfitt, 2016). Expatriates give a lot of benefits to the firms which incorporates more prominent parent control and the right sets of aptitudes. It is believed that this is seen to provide greater prospects for personal and career development. With the post-Brexit, the expats are disturbed on playing out their parts and tasks bringing about the disappointment of expatriates. Precisely, re-expatriations will have complications on adjusting themselves when they return to UK. For instance, after the referendum and agreements majority of the expats will be required to return back to their birth country which will have an impact on culture, causing an experience of reverse culture shock by getting a habit of working and adjusting their life in the foreign country they have been sent to work at (Skyes, 2011). Therefore, this will cause the healthcare sector to experience a huge loss on collaboration and investments on expats who are sent to work from different EU countries. Overall, ‘re-expatriation’ will be a big test within the healthcare sector after Brexit primarily looking at the employment and managing role. Additionally, the healthcare sector should look into these long term impacts that have been mentioned above and plan into the future so they could avoid the consequences of managing global staff after Brexit.

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Now there will be analysis regarding about the banking sector and how Brexit will impact the cross cultural management style. The banking sector is a big sector within the EU and UK, majority of the UK banks work across EU and other international countries such as China and Japan as it is cheaper for non-EU countries to collaborate and work with EU countries rather than individual countries. The main impact on the UK banking sector will be in regards to the loss of “passporting rights”, a recent report has shown that almost 5,500 organisations in UK mainly rely on the passporting so that they could do business with the EU nations, and over 8,000 organisations of EU rely on passporting for trade with UK (Toptal Finance Blog, 2017). Majority of the banks within the UK are known for working cross-border to provide banking services to people across the globe. With regards to these services, the UK banks cover the needs of borrowing of the firms in various nations; thus, by losing the ‘passporting right’, it will hugely impact the banking sector and will be a challenge to overcome as they will have to terminate their cooperation’s with overseas consumers, a reality that could undermine the banks’ dependability in the market (Ford and Goodwin, 2017; Walsh, 2017). Hence, the banks will suffer a big loss towards cross-border collaboration and investments; so it will be a challenge to bring this up in the negotiations towards Brexit, however UK is leaving the EU so there will be less goodwill towards the negotiations and it will be tough. UK might have two options either to use the Swiss-style or the Norwegian way for Britain to benefit the passporting trade. Therefore the banking sector will need to look into this matter and come up with a solution so that they do not lose their overseas consumers.

Ashurst (2016) clarified that the UK banks signifies high percentage of activities with regards to cross-cultural services. The activities are depended on the EU legislations. When the legislations are modernised and amended after Brexit, it could terminate the activities of the banks, this impact would be very hard to be overseen and managed, in both areas of lawful and as of its financial aspects (Ashurst, 2016). Simultaneously, the volume of bad loan under the impact of Brexit is predicted to be profoundly enlarged. The statistics shows that these loans in 2017, was expected to reach up to £6.9 billion and in 2018 to reach up at £9.7 billion; this impact will increase the loans by £2.8 billion within one year (Gros, 2016). The Bank of England had made an announcement on March 2017, warning the banks within UK that they should be well prepared in the case of severe turbulence with the UK’s economy due to the Brexit outcomes; the Bank of England described the turbulences as “knee-jerk reactions” (Burton, 2017).  This statement that the Bank of England has stated has a negative connotation, they are giving a warning to banks that there will be sudden change within the economy and there will be no time to think about a solution because we do not know what the outcome will turn out to be.

The UK is still undergoing their bill with negotiations, this bill will cover all the issues of Brexit and how UK could overcome it by EU been lenient to the bill, however it is predicted that this will cost the UK between £66 and £111 billion to complete the process (Lowe, 2017). Furthermore, the foreign investments within the UK business industry has been predicted to reduce by 25% by 2019, because of Brexit effect (Cox et al., 2017). This figure includes one of the Brexit cost. A survey conducted amongst the UK’s most influential businesses have exposed that the impact of Brexit on businesses within UK have been negative by far (Ross & Meakin, 2017). At the moment only in the result of the verdict UK have had negative effects on businesses but when the negotiations have been completed and Brexit is finalised this will severely impact the UK’s economy.

Conversely, it is believed that the exit of EU will benefit the UK but in the long term. As the withdrawal from EU nations could potentially increase the UK’s economy as UK will not be included to contribute towards the EU’s assets and expenses. For instance, in 2016 UK had given an amount of £13.2 billion to EU for the expenses and assets (Begg, 2017). But this benefit to Brexit on UK will take a while to appear. Certainly, UK’s growth has been predicted to be 1.6% in 2018 from 2% in 2017 having a decrease (Kottasova, 2017). PWC a leading accounting firm has produced a report, which the Bank of England has anticipated that they would avoid making any changes to Britain’s financial regulatory policy for a certain amount of time, mainly up until they get closer to the progression of Brexit negotiations (PWC, 2017).

In conclusion Brexit will cause several implications on UK, both in a positive and negative scopes. Mainly in the context of economy, as there will be a potential increase of UK to do trade with other countries around the globe as the restrictions to legislations provided by EU will not be applied in UK. However, the Bill may create traffics and barriers between UK and EU trade and would potentially decrease the advantages of UK’s trade liberalisation. Simultaneously, the power of UK to make critical decisions on issues such as immigration, introduction of economy restrictions and involvement with conflicts around the globe would be unconditional.

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Additionally, it cannot be determined whether the full independency of UK from the rules of EU will be a condition of ‘hard’ Brexit or ‘soft’, if ‘hard’ Brexit is opted then this could potentially be dangerous for UK in several ways, mainly with the issues that have been analysed above. As a matter of fact, the aspects of UK’s economic, political and social environment has created awareness that the benefits of Brexit to the UK is virtually the same to it disadvantages. Therefore, with this nature the accomplishment of ‘soft’ Brexit through the negotiations should be the main aim for the UK’s government so that they could avoid complications in the future.

Reference list:

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