14 January 2016

The UK’s medium and large firms cannot shy away from the prospect of the UK-wide referendum on EU membership, according to a new report.

Released today, it says the country’s CEOs should learn from the mistakes made by firms adopting a ‘wait and see’ approach in the 2014 Scottish Independence Referendum.

The report argues companies which fail to proactively engage with the debate and make their positions clear to their employees, customers and investors, run the risk of being forced into taking a view point by external factors as polls begin to narrow.

The study suggests UK companies need to begin considering seven key issues now to navigate the referendum.

  • How to address and make contingencies for votes for exit or status quo
  • Whether to take a public point of view on the referendum question, or whether to find an alternative means of exerting influence on the debate
  • Communication with employees to ensure they are engaged in the process
  • Communication with investors
  • Duty to inform shareholders, suppliers or other stakeholders if listed
  • Whether to engage with trade unions
  • What media and communications strategy to pursue if asked for commentary

Professor Brad Mackay, Chair of Strategic Management and Director of Corporate Engagement at University of Edinburgh Business School, co-authored the report. He said:

"Businesses are normally politically neutral, yet profoundly susceptible to constitutional and regulatory changes.

"As primary drivers of employment and wealth creation, large firms’ endorsement on one side or the other of a referendum debate – as we saw in the Scottish Independence debate – are very sought after by opposing campaigns.

"The difficulty for firms is navigating these demands with the need to be transparent in their contingency planning for the vote, to maintain engagement with their stakeholders, while not being forced into positions which can be reputationally damaging."

Report co-author and Associate of University of Edinburgh Business School, Owen Kelly OBE, said:

Large firms are prudent to exercise caution when approaching political uncertainty, as it can have profound effects on their strategies and operations. “As we saw during the Scottish Independence Referendum, failure to prepare for inevitable questions can lead to accusations of lack of transparency and breakdowns in communication with key stakeholders, from employees to suppliers.

Image source: Photo by Ruskpp, @iStockphoto