Theresa May’s idea of more employees could sound like a German supervisory idea but let’s explore what this is really about.
It is about governance, accountability and ensuring boards are not too isolated. Employee representation is enshrined in the public sector. Advisory committees work in many professional services firms, but is compulsory employee board representative right in listed companies?
Leaving aside fiduciary duties and conflict of interest, what investors want is for boards to know the business, review finances, discuss strategy and report openly. Employees have a role but I wonder if it is best served instead via a requirement for the non-executive directors (NEDs) to meet a quasi-senate or council of employees twice a year to discuss matters. Executives should have their own channels of communication which NEDs should check.
Multinationals can’t appoint an employee from one country to represent all employees but adapting works councils to report to independent directors may be better governance.
Nigel Wilson, chief executive of Legal & General Group, today gave the thumbs up to workers getting more involved at company board level.