For many employees, the board of directors of a company or organisation, can seem very distant from the day-to-day life of the organisation. While the traditional legacy model of a board of directors “away in an ivory tower” and filled with “Nine white men with an average age of 62” has slowly changed in recent decades, one area that has been particularly slow to change is the engagement and partnership model between the board and its employees. Many boards have traditionally had a poor engagement model with and respect for their employees and it’s fair to say that in many cases, the voice of the employees has not been heard in the boardroom and properly integrated into the major decision-making of the organisation. We have all witnessed employees being treated terribly in redundancy and restructuring situations all justified by the board on the “altar of financial expediency and shareholder returns”.
A serious change is now starting to take place in boardrooms in the UK and internationally whereby boards are starting to finally acknowledge the absolute critical role of their employees as a key stakeholder. The advent of Environment, Social and Governance (ESG) as a big focus for institutional Investors investing in stock-market companies has been the biggest catalyst for this change along with government and societal pressures. We are slowly moving to an era of “Stakeholder Capitalism” which significantly elevates the importance of employees in terms of the board’s responsibilities and actions. The Covid-19 crisis has accelerated this shift as boards recognised the incredible efforts and sacrifices of their employees to keep their organisation going, supporting customers and enduring in many cases significant pay cuts.
Progressive boards are now engaging with and genuinely partnering with their employees. The most important aspect of this is that these boards are properly respecting the critical role of their employees, understanding their voice and incorporating the needs and concerns of their employees in terms of major decision making. This partnership model is translating to a lot more engagement between the board members and employees. Employee AGMs are now becoming more common where the whole board stands up in front of the employees annually to first and foremost thank and acknowledge all their efforts and support, to share what the board has been focused on and importantly to provide all the employees the opportunity to ask any open questions to the board members. This will take some time to evolve but the genie is out of the bottle and a new era is beginning in terms of the board engaging with and partnering with their most important stakeholder of all, their employees.