There has been a lot of discussion about corporate governance in recent years, even more about the place of the workforce within that.
With that in mind, an article in City A.M. caught my eye this week.
What I found particularly interesting in it is Andy Haldane, Chief Economist of the Bank of England, widening the debate on governance to include considerations of wider stakeholders than the shareholders. There have been tentative steps in this direction in the years since the banking crisis of 2008, with some voices calling for a change of approach but there hasn’t been any visible progress to date.
Back in 2016, Theresa May stated “If I’m prime minister, we’re going to change that system – and we’re going to have not just consumers represented on company boards, but workers as well…! ”https://www.independent.co.uk/news/business/news/theresa-may-board-corporate-plan-germany-france-productivity-economics-a7132221.html
She abandoned this commitment to give workers a voice on Boards in 2018, before any details on the plans had been developed, but the basis was apparently similar to arrangements in Germany where worker representation at board level is long established.
As a union officer, I worked with several organisations that had provision for a staff representative on their board, albeit they were reluctant to implement those arrangements. In many respects, given the amount of money organisations invest in recruiting, employing and training their staff, it’s a surprise that they don’t value them as the repository of organisational knowledge that they are. Meanwhile, in relation to the views expressed by Andy Haldane, it would be interesting to see if that reluctance persists should there be a wider change in governance culture.
Other employers with whom I worked had gone down the employee-ownership route. This is an approach that has significant potential, but that can also be fraught with difficulties if it isn’t handled correctly. For one of the companies with which I worked, there was serious upset because they hadn’t prepared properly – because they hadn’t invested the time and effort to build sufficient trust between management and the union representatives, the business saw the collective arrangement as cramping their commercial flexibility, while their staff saw employee ownership as a ‘union busting’ tactic.
There has been a recent upturn in the number of companies moving towards employee-ownership, seemingly in part prompted by Capital Gains Tax relief and increasing drives to improve employee engagement, in part by increasing evidence that properly involving your staff in your business can boost growth. There is certainly evidence that it can be an effective approach in improving business performance, but can it meet Andy Haldane’s aspirations? Perhaps by current measures of success, but are those measures fit for the future?
There has been significant academic research into ways of measuring company performance. One I have been exploring over recent months is the Total Stakeholder Value model developed by the Maturity Institute. Their objective is to “help create the most responsible form of capitalism for Planet, People, Value” by promoting what they call Whole System Management measured through an adapted OMINDEX “AAA” rating system. What does that mean? Essentially, they’re looking at key measures such as customer service, environmental standards and treatment of staff alongside more usual economic measures to establish which approaches are more sustainable in a holistic sense.
From a Strathesk Resolutions perspective, with the direction these conversations suggest, the model of Management-Staff partnership that we help companies to develop would seem to fit well. Staff often hold the key to knowledge that companies need – in that sense, putting in place cultural mechanisms for open dialogue could make a significant difference to business performance (“Strategic Unionism and Partnership” (2004) – Huzzard, Gregory & Scott).
Linking back to role of unions in boards in Germany, while it’s not a perfect model, it is one that shows what could be done with proper Management-Staff partnership and real staff involvement.
Author: Malcolm Currie, Founding Director at Strathesk Resolutions – Mediator, Trainer, Coach, Negotiator & Facilitator.