The UK Corporate Governance Code requires companies to adopt one of three options to formally engage with its workforce: (i) appoint a board director from the workforce, (ii) establish a formal workforce advisory panel or (iii) designate a workforce engagement non-executive director. The “comply or explain” principle applies.
Most boards (53%) in our sample chose one of the three recommended options. Appointing a designated NED for workforce engagement continues to be the most common approach adopted by 47% (70) of companies.
Eight companies have designated more than one non-executive director for the role. Glencore’s board designated all three members of the ethics, compliance, and culture committee as workforce engagement NEDs. Unite appointed two sustainability committee members to engage with employees and report back to the committee. Rolls-Royce, Man Group, IAG and easyJet considered it necessary to designate more than one NED due to the geographic spread and size of their respective workforces. Unilever and BAT designated all board members as responsible for engagement with the workforce.
Most companies not adopting one of the three recommended options (see “Other” category in the chart below) approach workforce engagement by combining their board’s efforts with existing senior leadership activities, such as site visits, engagement surveys, panels and forums.
British Land, Lloyds, Smurfit Kappa, and Standard Chartered have declared workforce engagement to be one of the duties of the social responsibility or sustainability committee.
During the year Prudential transitioned from the “designated NED” option to “Other’” and created a Responsibility & Sustainability Working Group composed of four NEDs. This working group is not a board committee and is mandated to oversee the company’s ESG strategy and includes workforce engagement in its remit.
Workforce engagement by type
|
2020 |
2021 |
2022 |
| Designated non-executive director |
49% |
47% |
47% |
| Formal workforce advisory panel |
7% |
5% |
3% |
| Director appointed from the workforce |
0% |
0% |
0% |
| Designated non-executive director and a workforce advisory panel |
1% |
1% |
3% |
| Other |
36% |
40% |
42% |
| Did not disclose |
7% |
7% |
5% |
66% of non-executive directors designated to lead workforce engagement are women and 40% are non-UK nationals.
51% of companies that have designated non-executive directors created an additional fee for the role (£13,065 on average).