What Scottish Independence could mean for HR


With the September 18th Scottish Independence Referendum nearly upon us and the “yes” and “no” polls neck and neck, political tensions are running high in what may be Scotland’s last days as part of the United Kingdom.

In the past few months arguments surrounding currency, national debt and EU membership have monopolised the headlines, but it’s been the past week that has seen British business on the “no” side really speak up about the shortcomings in the economic case for independence.

BP set the ball rolling with their anti-independence announcement, and the global tier 1 and tier 2 investment banks soon followed, with RBS kicking things off via leaked documents to the BBC stating that in the case of independence, they’d be relocating their registered headquarters to London.

Deutsche Bank’s chief economist followed suit, issuing a report last Friday warning that a “yes” vote for Scotland could mean a Great Depression for the country, stating the move to independence would “go down in history as a political and economic mistake.”

On the “yes” side, many Scottish companies insist they will prosper in a new, independent Scotland, including many entrepreneurs from the technology industry. Scotland’s “Silicon Glen” is a strong and growing part of the UK’s high tech sector. The area, which covers Dundee, Inverclyde, Edinburgh, Fife, Glasgow and Stirling, is home to many thriving high tech businesses that also have branches south of the border.

As we inch towards the referendum, you have to wonder: What would independence mean for IT in these cross-border companies?

The split up of the UK’s tax and benefit infrastructure would be a challenging and critical feat in itself. According to the Telegraph, the Treasury has estimated that setting up a new IT system to pay benefits will cost a Scottish government £400m.

If public IT infrastructure is facing the biggest challenges ever, how is the private sector looking upon a potential split? And specifically, how is a legacy or limited HRMS going to work if Scotland becomes independent? Would your HR system support a cross-border infrastructure with a country not part of the United Kingdom?

Something to think about

In an independent Scotland it’s not clear what the currency will be, but one thing is for sure – currency as Scotland knows it will not be the same. A new, entirely different Scottish pound, pegged to GBP, could emerge as a temporary measure before Scotland goes on to change again to its own currency. This means that HR, salary management and payroll systems will have to be able to accommodate not one, but potentially two new currencies when considering salaries and benefits.

And while the language across the border is arguably still English, a move to independence means an extremely uncertain relationship with the European Union, and a good chance that Scotland would have to reapply to become a member of the EU. Scotland would no longer be bound by EU employment and benefit laws, meaning that an organization’s HRMS may need to accommodate completely different rules and regulations across the border. Beyond that, some companies hold data that must, by EU law, reside within an EU country.

Talent management, for better or for worse, could become more important than ever

Legacy systems may struggle to cope, and companies may begin to seriously consider the cost of cross-border IT support. It’s also important to consider people. According to the “no” side, there may be a braindrain of talent south of the border, making it difficult to attract the right talent to Scottish based companies. The “yes” feels differently of course, indicating that an independent Scotland could become one of the richest countries in the world, which would surely make for an increased flow of talent into the country to pursue career opportunities.

What do you think? Could your system support the cross-border requirements of an independent Scotland? We’d love to hear from you.

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