Against the odds, Britain has voted Brexit. While theoretically, the Government could choose to ignore the results of the referendum, such a move is unthinkable. The new reality is out.
Markets have already been hit hard, with Sterling and major global indices down significantly. Prior experience has shown that this could worsen in the next few days.
So what are the implications for businesses from a communications perspective?
Fielding media questions over business impact
The media are rightly concerned about the impact of Brexit on businesses. This is magnified for listed businesses, whose share prices may have been significantly hit by volatile trading conditions.
The key for any business is to contextualise short term stock market movements with the long term prospects for the business. The impact of Brexit is still fundamentally unknown – negotiations may take up to two years, and the deal that Britain ends up with may be substantially similar to what has gone before.
Projections of doom and gloom are likely to be more feverish in the days following the referendum, but this will calm down over time. In this context, it is important for companies to explain the impact of Brexit on their businesses, any contingency plans they have in place, and how they intend to deliver value going forward.
The businesses that are likely to face questions particularly are those with large exports, those that receive EU funding, those involved in EU procurement and those with large workforces of EEA origin.
Beware hidden reputational impacts
There are many other “hidden” business impacts which could affect your business reputation.
The market volatility associated with Brexit can have significant business impacts. For example, volatility in the market can lead to exposures in derivatives positions that require increased margin calls or impact a company’s balance sheets.
Equally market volatility could impact company pension schemes, triggering reporting or funding requirements which will attract scrutiny.
Finance costs are also likely to rise – at least in the short term – so companies dependant on borrowing may face increased costs, which may in turn impact business performance.
Another potential risk is on pan-European intellectual property rights which would not cover the UK post exit.
Employees may face significant uncertainty about the impact of Brexit on their business and job security. This may be especially acute for those of European origin.
It’s important to communicate effectively and openly with employees to reassure them of the potential Brexit impacts. In particular, it is important to stress that there is a significant two year period of negotiation and that nobody can tell the full impact yet.
It is also essential to reiterate to employees the importance of keeping working. Regardless of any future impacts of Brexit, businesses will be in a stronger position if they can keep their workforce motivated and focussed.
Communicating with customers and suppliers
Communicating with customers presents a specific challenge; they themselves may be struggling to understand and quantify the impact of Brexit. Likewise suppliers may be facing impacts from Brexit too.
It is important to stress that in all communications with these key stakeholders that there will not be immediate changes. Companies should be reassuring clients or providers of the existence of their ongoing commitment to relationships, and any contingency plans they might have.
Although, in theory, Brexit means that in future public policy won’t have to consider the EU and the impact of its rules and regulations, in practice it will be the opposite.
During the next two years of negotiation over the terms of a Brexit, companies need to work exceptionally hard to achieve the best outcomes for them. This involves engaging with both UK and European public policymakers and influencers.
Equally they need to understand the potential impact of Brexit on regulation, and how their strategic focus on engaging with regulators might need to change.
Other reputational considerations post Brexit
There are many other important considerations that companies need to think about post Brexit. If your company has taken a public view (either for Remain or Brexit), you may face specific scrutiny over your view subsequent to this result.
Equally, many Remain voters are from relatively young demographics; initial signs on social media are that they aren’t happy with the result, and may target companies that have been publically pro Brexit via social media and digital campaigns.
Information rush post Brexit
From a communications perspective, many companies have held fire on campaigns, launches and other key marketing activities while the Referendum has dominated the agenda.
Following the initial post Referendum analysis and reflection, we anticipate a glut of media activity up to the traditional summer holiday period, with activity falling off from late July to the end of August. This also means that September is likely to be unusually busy also as companies defer their major announcements to miss the initial rush.
In such a competitive environment, expert stakeholder management, creativity and tenacity are essential to get results. The alternative is to wait until the rush has subsided, though October may be too late for companies to achieve their full year targets.
Communications implications for the UK financial services industry
The significant market and currency volatility associated with the Referendum will continue for some time. The media will want to know from asset managers, pension funds, stockbrokers and sell side analysts what the impact will be on different companies and sectors.
Equally volatility may have an impact on fund (and company) performance for asset managers, a reputational impact that they will have to manage (which will be worse if they are listed).
In a similar vein, currency providers are likely to be in demand for their expert insight and commentary as volatility continues around currency.
Insurers are likely to be questioned on the impact of Brexit on premium costs and may be asked about provisions/ T&Cs which refer to the EU.
Banks, in particular international/ global banks, are likely to be asked about whether or not they plan to keep their headquarters in London. Equally, they will be asked about increased financing costs for both individuals and companies following Brexit. They may also face questions around their hedging and derivative positions.
All industries are likely to be asked about the impact on employees, especially if they have large EEA origin workforces.
Communications implications for the property industry
The media will want to know the impact of Brexit on the UK property market. Already, both the commercial and residential markets have been affected in the lead-up to the referendum. Commercial property deals have slowed as potential tenants choose to wait until there is more certainty before signing long-term leases. In the residential market too, while domestic owner occupiers have been less concerned about making purchases ahead of the referendum, investment buyers – and particularly those from overseas investing in prime central London – have understandably been thin on the ground, concerned that an exit from the EU would mean fewer people coming into the country and more people leaving, meaning a less buoyant market.
This uncertainty is likely to continue, as everyone holds off to find out what exiting the EU really means for the property industry. Journalists will want to know how long this stand-off will continue. On the commercial side, they will want to know whether international businesses will still see London as a place to do business. On the residential side, the focus will be on how house prices will be affected, both in London and regionally, and whether new policies on immigration will affect both demand for new homes and our ability to construct them.
Readjusting to normality
Since it may take some time to return to the stability of the pre Referendum world, the uncertainty of a vote for Brexit does require companies to manage their communications effectively. Companies need to put in place rapidly a multi-stakeholder strategy – with a particular focus on employee communications.
There is no doubt, however, that many companies may have put off business decisions because of the uncertainty around the process itself, and may now find themselves having to achieve their targets in a compressed timeframe. In this environment, being bold and proactive in communications and marketing is essential to recapture the initiative in the post Referendum world.
Despite the many uncertainties, there remain significant opportunities for the brave to build their reputation, to win business and to lead.