While many boards feel their communication with—and understanding of—their workforces has improved, a significant number appear to be still coming to terms with the process of worker engagement.
A survey, for the Chartered Governance Institute’s annual FTSE 350 Boardroom Bellwether report, reveals that 22% of company secretaries polled are “not sure” if their boards are more aware of opinions on the shop floor, while 8% say their boards are “not more aware”.
The UK’s corporate governance code offers companies three options for engaging with worker views: a director appointed from the workforce, an advisory panel or a designated non-executive director. The Chartered Governance Institute found in 2019 that 43% of companies have a designated non-executive director.
The good news from the new survey is that 53% of FTSE 350 companies have also changed their approach to “workforce voice” during the course of the pandemic. More than two-thirds of boards, 68%, believe they are “more aware” of employee opinion.
According to the report: “Employee engagement has never been more important that at the current time. The Covid-19 pandemic has shown just how vital employees are to corporate success and keeping lines of communication open has been a crucial part of the business response to the pandemic.”
Climate and cyber risks
The report comes as the COP26 climate conference in Glasgow approaches an end, and provides some insight into corporate attitudes to the climate crisis.
Survey respondents revealed they see climate and cyber as their two biggest risks. Back in 2019 the biggest fear was global economic upheaval.
The report says this is “unsurprising” given recent weather events, and the current focus on climate change at COP26, while cyber attacks have increased after the pandemic forced vast numbers of people around the world to work from home.
But while climate may be a top item on the risk register, the boardroom response doesn’t entirely match. The report reveals that while 69% of companies have published climate change plans, 29% have not. Of those yet to reveal their to climate plans, 80% are in the FTSE 250 while 20% are FTSE 100.
Unsurprisingly, 96% of boards say they’ve discussed climate change at least once. But, according to the figures, at least 12% have only discussed it once. While that shows many boards return to the subject frequently, it is surprising many companies have only raised the climate crisis once in the past year given the topic’s importance. The survey gives no indication of the quality or content of those conversations.
One big story from COP26 last week was Rishi Sunak’s announcement that publishing a plan to get to “net zero” would soon become mandatory for some UK companies. According to the Chartered Governance Institute’s survey, just 57% of companies have published an “ambition” to achieve net zero, let alone a plan.
Corporate culture has become a fixture of boardroom discussion. The survey says it’s being treated “extremely seriously”, with 39% of board having chewed it over two or three times, while 37% had raised in discussion four to six times, and 16% more than six times—though 8% only discussed it once.
“Corporate culture is one area that has been under intense scrutiny in recent years and never more so than at the start of the pandemic when corporate commentators were watching closely to see how businesses were treating employees, customers, suppliers and local communities.”
If the Chartered Governance Institute’s survey shows anything it is that companies are in a state of transition. Climate is on their agenda, but many have much to do to truly come to terms with the changes needed. Employees have become more important and boards are communicating with them more. Corporate culture is a frequent topic of boardroom deliberation. These are signs of boards in the process of an adjustment. It’s the speed and depth of that adjustment that will be critical.