Workforce engagement lies at the heart of good corporate governance
News types: Guidance
Published: 24 May 2021
- An effective feedback loop between boards and the workforce is needed to achieve meaningful dialogue.
- Those who act as an interface between the board and the workforce, whether sitting on a panel or as worker directors, should receive appropriate support.
- Energies should be focussed principally on the substance of the engagement, not the process.
The UK Corporate Governance Code asks companies to report on their engagement with the workforce. The Financial Reporting Council (FRC) has today published research by Royal Holloway, University of London and the Involvement and Participation Association which found that many FTSE 350 annual reports appear to downplay the importance of their workforce engagement.
Changes in workforce engagement have been more an evolution than a revolution, with many companies amending existing practices that have been in place for several years. The case studies included in today’s report set out innovative approaches and fresh thinking that could potentially be applied more widely. Good practice identified in the research shows how the exact mechanism of engagement is less important than companies’ desire to genuinely engage with employee views and recognise the benefits that such engagement can bring.
Sir Jon Thompson, FRC CEO said:
“The report highlights some good examples of productive workforce engagement. It takes time to put in place, and develop, workforce engagement mechanisms, create a feedback loop and see the consequent results. Ultimately the main goal is a better-performing company. I hope companies and boards will consider this research and engage with the good practice examples.”
Chris Rees, Professor of Employment Relations, Royal Holloway, University of London and Patrick Brione, Head of Policy and Research, IPA, said:
“Our review has highlighted some interesting areas of innovation and good practice in how to bring an effective workforce voice into the boardroom. At the same time, we found that there remains much room for improvement for many firms, in both their practice and reporting. We hope to see continued progress in this area, as part of a broader move towards building more purpose-driven companies that reflect the interests of all their stakeholders.”
Notes to editors:
The FRC’s purpose is to serve the public interest by setting high standards of corporate governance, reporting and audit and by holding to account those responsible for delivering them. The FRC sets the UK Corporate Governance and Stewardship Codes and UK standards for accounting and actuarial work; monitors and takes action to promote the quality of corporate reporting; and operates independent enforcement arrangements for accountants and actuaries. As the competent authority for audit in the UK the FRC sets auditing and ethical standards and monitors and enforces audit quality.
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