Blog : BOARD TALK
|Posted on May 3, 2017 at 11:45 AM|
If you are going to stand out, it is best not to do so for all the wrong reasons.
Britian is proud, with good reason, of being a world leader when it comes to standards of corporate governance in business. At the moment the country is in the middle of a review of corporate governance reform which has been inspired by very real events in some of our publicly listed businesses - and in the face of new challenges. Theresa May, the Prime Minister, has championed the importance of corporate governance and building a 'fairer Britain.'
Now, as both a general election and Brexit loom on the horizon, a report just out (and also covered on Forbes) by the NIESR for the TUC points to a fundamental flaw in that vision. The UK stands out - for all the wrong reasons - in the Europe that it is choosing to leave.
Insecure work has proliferated across Europe but is especially marked in the UK, says the report. Its author, Nathan Hudson-Sharp writes:
"Our report shows that, while an increase in insecure forms of work can be identified in most European countries, the UK stands out for two main reasons. The first of these relate to the type of insecure work: while many European countries have seen an increase in more ‘traditional’ forms of insecure work, such as fixed-term contracts and low-hours part-time work, the growth of insecure work in the UK has concentrated in the most atypical and precarious working arrangements. This includes bogus self-employment, temporary agency working and zero-hour contacts.
The second reason the UK stands out is for its weak worker protections. Within the European landscape the UK historically stands out as a highly deregulated labour market, with comparatively low levels of employment protection for both regular and temporary workers. This, coupled with a lack of much needed new legislation, has meant that an increasing number of insecure workers in the UK find themselves at the periphery, or indeed outside, European standards of labour market regulation and social protection. Insecure workers in the UK are therefore more regularly deprived of stability and consistent earnings compared to the rest of Europe, as well as lacking crucial rights such as holiday pay, sick pay, and protections against unfair dismissal through labour market regulations and collective agreements." (my emphasis)
I have covered the corporate governance scandals of the years since the financial crisis and the growing challenges for business including those of diversity and digital transformation, both here and, since late 2013 on my Leadership page on Forbes.
In that time there has been growing debate at the highest levels in both public and private sectors around what constitutes best practice in corporate governance, and how to achieve it. It has gone from being seen as an anorak's pursuit to being identified as the essence, the life blood of any business: what makes it tick, and how it reflects company purpose in both the long, and the short, term.
Over the last six or seven years in particular, we have talked about regulation, about ethics, about behaviour, about accountabilty for senior managers, and there have been changes made in standards and in the regulatory regime for listed businesses.
But it took all that time to come to grips with the need to focus on the importance of company culture, partly I think because there was an assumption that, being made up of human features, it was somehow "nebulous" and difficult to talk about. It is not - it's about the choices we make and the fundamental values we embrace while creating business plans, and setting reasonable, long-term profit targets.
Of course, at a time of rapid change on multiple fronts: technological, political, economic, environmental, demographic....there is always a tendency to dismiss the human factor as somehow less able to be quanitfied. Yet we keep on saying that a business "is only as good as its people."
Important protections for workers - in a bid to create better company culture - were introduced by our regulators. But it remains to be seen how seriously they are taken. For that, see my piece on Barclays, and the great 'corporate governance cop-out.'
If worker's rights are not the fundamental building blocks for best practice in corporate governance, then I do not know what is - only I think it would be pretty near impossible to build a "fairer society" without them.
We have gone from talking about corporate governance as a fluffy subject to linking it to systemic risk - for more on that, see an event coming up soon with Frank Bold and its Purpose of Corporation initiative and Cass Business School (and I am moderating one of two panels.)