As one country after another eases out of lockdown and companies and employees eye working conditions in the months ahead, there is one certainty – the ‘S’ in ESG has moved centre stage. Employee concerns and employee welfare are priorities. Any Board or leadership team that lacks the channels and tools to listen carefully and engage effectively with employees will run a very substantial risk. Through our Search, Evaluation and ESG assignments, Fidelio sees employee representation as being firmly on the Board Agenda. In many countries on the European continent, there is a tradition of formal employee representation, typically at Supervisory Board level, embedded both in company law and industrial practice. Curiously, following the 2016 Brexit Referendum, the British Government also became interested in exploring a form of worker representation, and so looked to Europe. Consequently, after much debate, the 2018 UK Corporate Governance Code introduced a requirement for listed companies to adopt a form of employee engagement and to report on this. There were many concerns when this requirement was introduced, as the UK had no tradition of formal representation; a range of approaches have subsequently been adopted by FTSE Boards. Arguably, the timing was invaluable. Boards that didn’t previously have mechanisms for engaging with employees certainly need communication channels in the current pandemic. And many Boards have simply upped their game. A key question that Fidelio is frequently asked is who does this well. In the attached overview, Fidelio explores:
The international background to employee representation in the Boardroom
The introduction of employee representation into UK Corporate Governance
Board-level reservations and concerns
Models of employee engagement and representation in leading Boardrooms
Covid-19 and employee engagement
Leading companies are adopting a wide variety of practices in order to engage with their employees and comply with the Code. Without a doubt, employee engagement is a core strand of ESG and a hugely important mechanism that will enable companies to navigate the complexity of the return to work.
In our advisory and Evaluation assignments with leading Boards, Fidelio sees an increased focus on employee representation and engagement and we provide guidance as to what works. A Board’s ability to connect effectively with employees also forms an important component of Fidelio’s ESG leadership grid.
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