A suite of corporate governance reforms proposed by the UK government will not require companies to have employee representatives on their boards after all. A slimmed-down version of the proposed revisions to the UK Corporate Governance Code, just issued by the Financial Reporting Council, instead proposes to require “the adoption, on a ‘comply or explain’ basis, of one of three employee engagement mechanisms”: a director appointed from the workforce, a formal workforce advisory council, or a designated non-executive director.
The revisions will not mandate direct employee representation on boards, as Prime Minister Theresa May had briefly suggested last year, but will start putting pressure on organizations to devise their own ways of making employees’ voices heard in the boardroom. This will give businesses the flexibility to design the right solution for their organization, Rob Moss reports at Personnel Today:
Peter Cheese, chief executive of the CIPD, said: “This is a significant step forward in recognising the value of the workforce and the need for its voice to be heard at board level. The FRC rightly recognises that in order to drive sustainable culture change and build trust in business, boards must focus more on values, behaviours and a wider stakeholder voice beyond that of shareholders, with particular attention to the voice of the workforce.”