The revised UK Corporate Governance Code put employee engagement at the heart of the agenda by stressing that “employee interests must be considered as corporate governance best practice”. Placing a stronger emphasis on engagement, culture and diversity and inclusion, the Code views employee engagement as a crucial part of a company’s long-term strategy. This makes sense as disengagement can be harmful, ranging from a disengaged employee doing the bare minimum at work to an employee who is actively damaging the company’s output and reputation, neither of which is desirable.
With the focus on driving long-term sustainable growth in the economy, boards are now expected to engage with their workforces to understand their views and include them in the decision-making process by either having a director appointed by the workforce; a formal workforce advisory panel or by having a designated a non-executive director (NED) with responsibility for employee engagement. Companies not selecting one of these options need to explain what alternative arrangement is in place, and why it is more effective.
A poll conducted by ICSA and The Core Partnership in October 2018 revealed that 91% of companies surveyed were not considering having workers on their boards. At that time 70% felt that having workers on boards would not be a good idea. The most favoured option was the designated NED option, which was selected by 25% of respondents, ahead of the 14% who were inclined to combine one or more of the options and the 7% who were in favour of a works council or similar.
ICSA Policy and Research Director Peter Swabey was quoted at the time as saying: “While there is an overall feeling that it is crucial that the board hears and takes note of the views of staff and other stakeholders, respondents believe that there are mechanisms other than a seat at the board table that will allow them to do so. There are some concerns about the practicalities, for example the statutory directors’ duties mean that the individual has wider responsibilities than simply to act as a ‘representative’ of the workforce. Furthermore some companies have a large number of employees across multiple sites and a diverse workforce in terms of skill base and level of technical or professional expertise and they might have different needs, interest and priorities.”
Mathew Davies, HR Director at Addison Lee and Janet Williamson, Senior Policy Officer at the Trades Union Congress will be part of a panel of experts discussing some of the issues around employee engagement and exploring how it can be more effectively promoted.
Join the discussion at 15.30 on 9 July.