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FRC publishes report on workforce engagement

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26 May 2021

The Financial Reporting Council (FRC) has published the results of research carried out by Royal Holloway, University of London and the Involvement and Participation Association into workforce engagement.

The report aims to provide a deeper understanding of the current intersection of corporate governance with employee voice, in the light of requirements in the 2018 UK Corporate Governance Code for boards to ensure effective workforce engagement. The research conducted includes analysis of company reports, a survey of FTSE 350 firms, and a series of interviews with directors, executives and workforce representatives.  It explores approaches companies have taken to providing a workforce voice in the boardroom, why different approaches have been chosen, what these changes have meant in practice and how effective they have been both from a managament and workforce perspective. 

The report suggests a number of key lessons which companies should consider.  They include the following:

  • Representativeness and breadth of coverage - ensuring that the employee voice reflects the geography and demography of the workforce.
  • Depth of coverage - properly integrating different engagement and voice channels with each other, including collective forms of employee representation.
  • Providing for regular and structured input from the workforce, especially during periods of rapid change.
  • Workforce representatives, whether sitting on a panel or as worker directors, should be chosen with some input from the workforce.
  • Energies should be focused principally on the substance of workforce engagement, not the process.
  • Agenda setting is best when there is a balance between topics of management interest and topics of workforce interest.
  • A meaningful dialogue with the workforce also requires an effective feedback loop, based on informed employee voice.

The report stresses that in order to make workforce engagement effective, boards first need to reflect on the purpose they want that engagement to serve.  Whilst the report indicates that there is innovation and fresh thinking in this area it does indicate that many FTSE 350 companies appear to downplay the importance of workforce engagement and in many cases "relegating it to boilerplate language in a formulaic table of stakeholders". 

The press release, report and a podcast are available on the FRC website.

The FRC will also host a webinar on this topic on the 10th June.  

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