Listening to the employee voice

Listening to the employee voice

As most people are aware by now, the new UK Code of Corporate Governance defines an effective board as one which (among a few other things) is serious about listening to the views of employees.  It is also very clear that far more than lip-service and good intentions are required – and the expectation is that “the employee voice“ will be considered in the Board’s decision-making.  The Code asks boards to choose from one of three methods for gathering views: a director appointed from the workforce, a formal workforce advisory panel, or a designated non-executive director (NED).

Boards can choose another method, providing it  delivers “meaningful, regular dialogue with the workforce and is explained effectively”.

So far, our observations tell us the most popular choice is for boards to designate a NED.  It can be implemented fast and reported clearly.  Plus, when the Board can seem a little remote to a lot of the workforce, it has the added advantage of making another NED beside the Chair more visible to staff.  But that doesn’t mean it’s all plain sailing.  Here we take a look at things to bear in mind when it comes to making the most of the “workforce NED”.

Good practices to consider…

Having one NED wearing the “employee voice hat” can really help to keep the subject fresh in everyone’s mind.  They can take responsibility for “calling it out”, making sure everyone is keeping the new Code requirements in mind.  And when one NED is making a particular effort to engage with the workforce, it can help to raise everyone else’s game too.

Things to avoid…

Thinking that by having a designated NED you can put a tick in the box and forget about it.  Listening to the employee voice remains a whole-board responsibility and you need to report that the Board has discussed the options for engaging with the workforce, as well as how it has gone about it in practice.  This means everyone needs to be clear on how the Board is getting a clear picture of values, culture and behaviour.

Good practices to consider…

Hopefully it won’t be difficult to identify the right person for the job.  There’s probably already a director who naturally engages more with employees.  They’re likely to have more insight into the workforce than some other NEDs because that’s where their interests lie.  Formally appointing them to the designated NED role  – and paying them for the extra work – can be a way of recognising their existing commitment and encouraging more of it.  (Some boards are choosing to pay their workforce NED at the same rate as a committee chair.)

Things to avoid…

Underestimating what the role will require.  Make sure the chosen candidate really has the necessary skillset (both communications and background).  And check their ability to meet the time commitment.  If they have an executive role elsewhere, or already chair a committee, they may struggle to find the necessary time.

Good practices to consider…

It’s important to get clear from the start exactly how the designated NED is going to engage with the workforce in an organised way.  It’s likely that clear channels – like focus groups and employee forums – need to be set up if they’re not already in place for gathering views from a wide cross-section of the workforce.

Things to avoid…

Leaving it up to the NED to work it out for themselves.  We’re seeing HR Directors and Company Secretaries playing a major role in planning how the NED can fulfil their responsibilities in the most optimal way.

Good practices to consider…

Think through exactly how the various panels and focus groups will run in practice.  Who is going to chair them, for example?  It’s usually better for the NED to attend and hear views first hand, without the blurring of lines that can occur if they’re perceived to be in a position of executive authority.

Things to avoid…

Assuming membership of focus groups or panels will automatically be representative.  Can anyone put themselves forward?  Are they voted on by the workforce?  Without the necessary care and effort, groups are unlikely to be balanced in terms of the types of work, geography, age and gender they represent, or indeed in the attitudes and experience they bring.

Good practices to consider…

The activities of the designated NED should be supplementing what the Board is already hearing about culture and behaviour.  If the NED’s work isn’t properly integrated into what the Board is doing as a whole, any evidence gathered is likely to be anecdotal and potentially misleading.  The Board needs to get information from a range of sources and triangulate them to get a complete picture.  Looking at internal control failures, HSE incidents and whistleblowing all together, for example, can provide a lot of insight into workplace culture.

Things to avoid…

Ignoring tried and tested methods of engaging with the workforce, many of which provide valuable evidence when considered together through a “culture lens”.  The whole Board should be looking at the results of engagement surveys, for example, to see how well they are working and to hear how management plans to address any issues arising.  And private sessions with internal and external auditors can offer useful insights into culture.

Good practices to consider…

Think through how the designated NED will report back to the Board on their findings.  This will be easier if you’ve been clear from the outset about the objectives for the role.

Things to avoid…

Allowing the feedback to the Board to turn into a pleasant recounting of anecdotes from around the company.  Without clear structures and limits being established, it’s easy for observations and reported conversations (which can be quite interesting) to take up the Board’s time with no definite outcomes.

Good practices to consider…

Work out carefully what you want to say in the Annual Report.  There are different stakeholder groups, with different expectations, and all are starting to take a lot more notice of what you say about your approach to the workforce, including contractors.

Things to avoid…

Writing the Annual Report just for investors.  Employees, Trades Unions, contractors and customers may all be looking at how your Board stacks up.  See our September 2018 bulletin for more on the reporting.

Good practices to consider…

Ensure you are hearing from management about their views on the current culture.  It’s management’s responsibility to ensure that the target culture is developed and embedded throughout the organisation.  So the Board needs to know exactly how they’re going about this, through things like training, communications and HR policies.

Things to avoid…

Assuming that the designated NED can somehow get a better view than the CEO and other full-time executives.  They will hopefully get a good view and some real insight but they’re not there to lead on culture – that’s the job of the executive team.

Good practices to consider…

Keep everyone engaged with the organisation by getting out and about.  The designated NED might be doing much more of it in a systematic way, but other NEDs still need to experience things for themselves, seeing and hearing how people feel and behave in corners of the organisation that aren’t within shouting distance of the C-Suite.

Things to avoid…

Reckoning that having a designated NED means that you no longer need to go anywhere that isn’t air-conditioned or talk to anyone whose job description doesn’t begin with ‘C’… Though come to think of it, you could do worse than start by talking to the contractors, customer service managers and clerks.



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