There is value in giving employees a voice


21 Nov 2019

Scott McKenzie

As the maelstrom of the General Election here in the UK continues to unfold, a clearer picture of the respective policy agendas is emerging. Labour is putting issues of workforce engagement and corporate governance firmly at the centre of its agenda, unveiling a range of measures, including employee ownership schemes, executive pay ratios and employee representation on boards.

This last policy is not a new one. Indeed, Theresa May’s ill-fated premiership began with a similar commitment. And in various countries across Europe, (including France, Germany and the Netherlands) employee representation on boards is a legal requirement.

So does this policy have merit? Academics and HR practitioners have long argued that giving employees a voice can act as a powerful lever of employee engagement. This notion has spread well beyond the realms of academia and HR and is increasingly understood by regulators and policymakers.

Changes to the UK Corporate Governance Code earlier this year set out clear requirements for employees’ voice to be heard at Board level. This is designed to avoid group think and to ensure employee perspectives are fully considered in any major business decision.

Many companies have appointed responsible INEDS to oversee this process, while others, like First Train, have already taken the bold step of appointing or electing employees as board representatives. However, according to Grant Thornton’s annual Corporate Governance Review only 37% have taken one of the three recommended methods outlined in the Code.

In a similar vein there have been recent changes to Part 4 the Companies Act, which set out a number of expectations around ‘systematically’ keeping employees updated on the company’s strategy, business performance and key business decisions.

In effect, companies failing to achieve this would be breaking the law. While enforcing that may of course prove difficult, it does open up legal and reputational risk for those organisations that do not treat employee engagement seriously.

And companies shouldn’t just be looking at bare minimum compliance. There is a wider business value in genuinely engaging with workers around corporate goals. For example, Volkswagen’s turnaround following the emissions scandal has been built on the foundation of a trusted relationship between the company’s new management team and union representatives on the board.

Regulatory and legal changes present an opportunity to re-engage employees with the purpose and strategy of the business.  And for those companies who take this opportunity there are real business benefits including increased productivity, employee retention and company pride. Engaged employees tend to be more active in promoting their workplace. This helps the company establish a reputation as an employer of choice – providing a competitive advantage when attracting talent.

So, irrespective of who holds the keys to 10 Downing Street on 13 December, worker representation will continue to be a live issue for UK plc. Giving employees a voice should not be seen as a ‘nice to have,’ or a regulatory burden. It is a valuable and integral element in the company’s long-term success.

Scott McKenzie leads Montfort’s Change and Employee Engagement practice. He has over 20 years’ experience advising organisations on how to effectively engage employees. If you would like to discuss any aspects of this article with him, please email mckenzie@montfort.london