COST-OF-LIVING - STILL IN CRISIS
“For any company purporting to embrace ESG, it would be difficult for Board and management to be deaf to the very real pressures created by high levels of inflation.”
– Gillian Karran-Cumberlege, Fidelio Partners
The inflation rate may be subsiding across Europe, the UK and the US, but the cost-of-living crisis continues to be a reality for many in society, and for politicians.
The cost-of-living crisis is also very much on the Board Agenda and this has been evident in Fidelio’s work with Boards over the past year, in particular in the context of Board Evaluation. With this and the inflationary backdrop in mind, Fidelio has recently conducted primary research over the Winter 2022/23, exploring with Chairs and seasoned Board Directors three key questions:
How are companies responding to the cost-of-living crisis?
What is the role of the Board?
How are views on accountability changing?
In addition to multiple interviews and insights gained through our regular engagement and assignments supporting Boards, Fidelio also held a Roundtable Breakfast to explore how Boards across a range of sectors have responded to the cost-of-living crisis.
From Fidelio’s research it is clear that Boards have been engaging with the cost-of-living challenge both for employees and customers.
SUMMARY - WHAT BEHOVES A BOARD
Typically Boards and management have engaged collaboratively on the cost-of-living crisis, recognising its importance and urgency with the only debate and challenge focused on what is possible and the timing of implementation. There is no question about whether the Board and the company should be supporting employees and consumers.
"I wouldn't join a company [as a Non-Executive] that did not have a clear purpose that included commitments to employees, customers and other stakeholders”
– FTSE Non-Executive Director
With regard to employees, the Board focus is understandably principally, but not only, around compensation; with customers the Board discussion focuses most frequently on pricing and support-mechanisms. Boards across a range of sectors are concerned about the cost-of-living crisis. Clearly companies with a large operational workforce, many of whom may be close to the minimum wage, are particularly focused. But equally, Financial Services Boards are also alert to the impact of inflation on their customers, as well as what was described as an effective gap in the market for financial products that reflect “the reality of how people live.” While all companies included in Fidelio’s research recognised that many of the aspects driving the cost-of-living crisis lie well beyond the remit of an individual company or sector, there was a general acceptance that business needs to demonstrate accountability and provide support when possible to help employees, customers and communities navigate difficult times. Interestingly, in the course of our research, Boards made relatively little reference to suppliers and their role in maintaining the business ecosystem. Larger companies almost certainly need to provide support to the supply chain as it deals the current macro-economic challenges, one of which is clearly the cost-of-living crisis.
To read Fidelio’s ‘The Cost-of-Living Crisis & The Role of the Board’ report, please click here.
Fidelio fully recognises the importance of Board contribution as companies look to do the right thing, including in the cost-of-living crisis. To be part of this discussion and to learn more about how Fidelio can help your Board to develop its capability, through Evaluation, Development and Search, please contact Gillian at gkarrancumberlege@fideliopartners.com.
