01 October 2018
Do you believe that having workers on your board would be a good idea?
With new recommendations from think-tank IPPR’s ‘Commission on Economic Justice’ advising that workers should be included on company boards, we asked the Governance and Compliance and Core community to look at the systems they are implementing to gather the workforce.
When asked if they believe that having workers on their board is a good idea, the vast majority (70%) said no, with around a sixth (16%) unsure. Only 13% think it is a good idea.
The practicalities of such measures for companies with a high number of staff was queried, with one respondent questioning how it would work when there are ‘a very large number of employees across multiple sites’ and when the ‘workforce is diverse in terms of skill base and level of technical or professional expertise with different needs, interests and priorities.’
‘Confidentiality issues’ were considered a barrier by many, with one stating ‘I struggle with this proposal. In theory I can see why it would be beneficial but from a practical standpoint it is difficult. For example, at what point do they become shadow directors and how do you handle workers hearing confidential or price sensitive information?’ Another said that ‘there are too many confidential matters discussed at board meetings and inclusion of workers would inhibit consideration of such matters and wider strategic debate.’
Others were concerned that it would be difficult to find workers with the required expertise. One person opined that ‘workers should not automatically have a board seat. Board seats should be allocated on the basis of skills experience and knowledge best suited to the specific role and company.’ Another was in favour of the proposals ‘Provided they [the worker] have the necessary skills, knowledge and experience.’
Although many respondents mentioned that they have thought about the idea of adding workers to their boards, 91% are not considering implementing it, as other forums for employee engagement better suit their objectives.
Getting the workforce voice into the boardroom has now been included as a provision in the UK Corporate Governance Code, with several methods mentioned. We asked our respondents which they were considering and the most popular is a designated NED, which a quarter of our respondents are considering. One respondent explained this rationale stating: ‘an issue is boards should gain more oversight of the business (so NEDs can see around the executive directors).’
The unsuitability of having a worker on the board was echoed by others through statements such as: ‘we have considered and rejected [having a worker on the board]. We do not believe it is the best method to adhere to the principle of the code’; ‘this is not something I believe our company which is a private limited company will consider’; and ‘have considered and will recommend against it.’
One stated that: ‘The board has considered a variety of options, including an employee on the board, for ensuring the employee voice is understood by directors. It has concluded that employee voice is best obtained through employee forums which are attended by a NED who will report back to the board.’
Another respondent stated that ‘We have two members of staff on our board. Although they are elected by other staff and provide a different perspective, they do not necessarily reflect the views of other staff. There is a risk that other directors will take less notice of staff surveys etc.’
If you are a company secretary or governance professional at a leading UK business, and you would like to take part in or comment on future surveys, email email@example.com