This is the fifth of five pieces from an internal audit perspective on the 2018 UK Corporate Governance Code: Non-executive recruitment (1), Viability statements (2), Audit committee effectiveness (3), Culture (4) and the Workforce voice (5).
The board and the workforce operate at different ends of the corporate spectrum yet effective corporate governance expects them to have the same purpose, values and culture; a common strategic goal. A new requirement in the Code addresses this by promoting the workforce view/employee voice to the boardroom.
This paper focuses on the requirement for board engagement with the workforce view of the organisation. It encourages audit leaders to think about what new assurances or consulting activity may be needed.
|RECAP. On 16 July 2018 the Financial Reporting Council (FRC) published its long awaited update to the UK Corporate Governance Code together with revised Guidance on Board Effectiveness.
The revisions support the government’s vision of restoring trust in the corporate organisations and the broader social reform agenda which aims to improve the standard of living and quality of life for ordinary working people.
Defining the workforce
The workforce includes all employees whether permanent, part-time or on zero-hours contracts. Boards should also consider including individuals engaged under contracts of service, agency workers, and remote workers, regardless of their geographical location. A clear rationale should be available as to who has been included and why.
There has long been a requirement for boards to have dialogue with stakeholders in relation to its objectives. The new Code takes this much further. It differentiates shareholders from stakeholders to emphasis the broader population and requires boards to engage with them and encourage their participation in the organisation.
It is often said that people are an organisations greatest asset. Boards are now required to gain a deeper understanding of their…