A light touch is needed for workers on boards

 
Tracey Boles
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Last year the government launched a green paper entitled Corporate Governance Reform (Source: Getty)

At first sight, having workers on boards does not seem a deeply divisive or highly political issue but, as a central plank of Mayism, it has become so.

Prime Minister Theresa May originally promised to tackle “runaway” corporate salaries by offering both consumers and workers representation on boards as part of last summer’s campaign to lead her party.

However, following pushback from business groups and a rumoured Cabinet split, by November she had watered down her fledgling proposals, saying that firms would not be forced to comply.

Read more: Calls grow for major reform of business governance and pay ratios

Then late last year the government launched a green paper entitled Corporate Governance Reform. In terms of giving employees a greater voice, there are several options on the table. These include creating stakeholder advisory panels, and having employee representatives on boards.

The green paper remains open to feedback until next month. Given there are wildly differing views on how workers on boards will operate, the responses should make for interesting reading.

The Institute of Directors has publicly welcomed the idea but with the caveat that it should be voluntary. The CBI has expressed concerns about effectiveness.

Read more: Business backs May's new plan for exec pay as green paper hints at u-turns

Meanwhile, the Trades Union Congress (TUC) is calling for a third of boards to be made up of workers. What is needed is a middle ground between the hardline stance of the TUC, which is wildly over the top, and the head in the sand approach found at a handful of boards resistant to change.

A good business will be in touch and in tune with workers at all levels, and advisory boards are a positive step at ensuring staff input at a senior level. But a board of directors itself should be comprised of individuals who are there on merit and ability. Being a board member is serious business.

In certain sectors and at certain companies employee board representation has proved successful. But in other businesses, employees who join the boardroom may need training and guidance. One size will not fit all.

Read more: Firms should embrace the PM's radical corporate governance reform proposals

Having workers on boards has the noble aim of diversifying institutions and challenging group-think. There a number of ways to achieve this and the composition of a board should not be determined by a government box-ticking exercise.

A heavy-handed government policy is therefore the wrong instrument with which to deliver reform.

Let us hope that May studies the feedback from her consultation, and proceeds with a light touch.

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