11 April 2017
The latest survey of the Governance and Compliance/Core community
The Government’s recent Green Paper on corporate governance reform voiced concerns that some boards may be paying too little attention to the impact of their actions on their stakeholders.
We decided to survey the Governance and Compliance/Core community about the issue and asked whether their boards actively considered the views of their wider stakeholder base. There was a generally positive response to the question, with 73% saying they do consider stakeholders’ views, while 11% answered ‘no’ and 16% ‘maybe’.
‘The board considers the views of management through a management committee structure in relation to a range of matters, including strategy and commercial issues,’ one person noted. ‘The views of the wider stakeholder population are taken into account for a narrower range of decisions.’
Another person qualified the amount of stakeholder consideration offered saying: ‘It’s more so for the big decisions. I think perhaps with the less high-profile work there is a tendency to overlook some stakeholder groups.’
However, one respondent was unconvinced that his organisation was genuine in its stakeholder concern. He said: ‘I feel that it’s done with a view to satisfying regulatory requirements, for instance, conduct risk, rather than a genuine desire to include them.’
We then asked how our community’s companies captured wider stakeholder views. Responses showed a considerable degree of uniformity, with a familiar list of methods for gathering information and views: regular engagement surveys, feedback, focus groups, networking and executive management updates.
However, there were some more colourful responses including one person who when asked how views were captured replied: ‘Inadequately. Stakeholder views appear to be limited to those who are accessible in the City only, hence institutional shareholders, lenders and senior managers are heard to the exclusion of others.’ Another was similarly disillusioned saying: ‘As with many companies there is a great deal of “communication” with employees initiatives of diversity and inclusion and employee forums, but ultimately it always looks like ticking a box with no material differences in how employees are treated. Customer focus is driven by regulatory concerns.’
But not everyone was so downbeat. On person said: ‘It’s all about culture. The directors empower the employees to speak up when something isn’t working, provided that the employee in question is willing to be challenged on the point in question.’
We also asked how companies could better improve their stakeholder engagement. ‘Directors need to spend more time in the business and speaking with stakeholders in the communities that the business works in,’ said one. Another added: ‘A comprehensive stakeholder engagement strategy is essential. This should include responsibility for the different types of, or individual, stakeholders, allocated to executive directors, with pairings with non-executive directors where appropriate.’
There were other opinions. One respondent said: ‘Making companies and their advisors believe the need to better comply with section 172 of the Companies Act, which frankly is widely ignored.’
Yet another person believes ‘in the value of PR. The more people are aware of what you are doing, the more questions they will ask, and the more interested they will be. In turn, this will help drive improvements as the company strives to get better and better.’
Finally, one person said better engagement could be achieved by ‘putting employees higher up the list of priorities. If they are onside it will help with other stakeholder engagement.’
Conducted in association with The Core Partnership