Employee Voice — What Difference Will the Reforms Make to the Board Conversation?

Our first Think Tank topic of 2019 was prompted by the requirement of listed companies to ensure employees’ views are heard in the boardroom. We were joined by Chairmen from listed and private companies and a sprinkling of board, union, and government advisors.

What’s the problem?

Our participants weren’t all convinced by the merits of the new regulations but were agreed on one thing: if they approached employee engagement as an exercise in compliance, the reforms would fall short of their intent. The objective must be to gain a better understanding of the workforce’s views, to ensure that people feel listened to, and importantly, that the board responds to those concerns.

“Meaningful employee engagement gives insight. You make different decisions as a result. And build trust through ‘you said, we did’.”

From 2019, the UK Corporate Governance Code asks organisations to adopt one or a combination of the following methods to engage the workforce:

• A director appointed from the workforce;
• A formal workforce advisory panel;
• A designated non-executive director.

But our research shows that 30% of organisations are engaging their employees using a different method entirely (see chart). The diverse needs of organisations drive the need for bespoke solutions.

Employee Voice:
What Have Organisations Opted To Do?

Source: Board Intelligence research based on 23 companies.

For a global company, a single works council or representative on the board is not effective at capturing the range of concerns from different countries. Or, in an organisation with one-third home workers, direct engagement with the board in the workplace (which is highly effective), is unsuitable. How can you have a fireside chat when you are all sat beside different fireplaces?

Our key message: do what’s right to achieve the intent, not for the sake of compliance. And know that might not be what the regulator suggested!

“Care should be taken not to aggregate different voices into one view — key issues will be missed, and you may just get noise.”

Despite the differences, there were plenty of useful suggestions. Here are some from the discussion:

• Be visible and accessible.
  Board and employee communication needs to be two-way. “Take the board to the people, rather than bring the people to the board.”
• Act on what you hear.
  “Nothing erodes trust more quickly than a feeling that the board has simply been going through the motions. Then after consulting, nothing changes.”
• Think local.
  There is no single employee voice, but a cacophony of voices. The issues that affect employees differ depending on location, role, seniority. The board needs to access the whole organisation, not just the top few layers and “find a way to get past the impenetrable middle”.
• Devolve more decision making to the coal face.
  And if that is not practical, consult with those at the coal face. Collective bargaining can be very powerful.
• Retain the nuance.
  Aggregating views to a point of abstraction is unhelpful. “Summarise general sentiment but also draw out the differences.”
• Boards needs better information on people and culture.
  Monitor employee sentiment frequently (more than once a year). Factor in Glassdoor and social media sentiment. And “don’t dodge or hide bad news!” 80% of our Think Tank participants wanted better information on culture.
• Don’t second-guess what matters.
  Pre-supposing it’s about pay or that employees have little to contribute on strategy is a mistake. “Sometimes the most helpful insights come from the shop floor, not management.”
• Support your employee directors.
  If you’ve opted to have an employee on the board, will they have the same compensation as a NED, how might that affect their peers? They will need extra support e.g. a pre-meeting with the Chairman to run through any concerns. “Having a single employee voice is not enough, you need more than one ideally.”

What more do we need to do? Reform needs to focus on purpose. “Boards and organisations need to have a greater focus on purpose to take the right decisions for all stakeholders not just a view of employee voice.” We couldn’t agree more — more on that at a future Think Tank.