Two recent corporate events highlight the increasing need for the Board to pro-actively manage workforce/ stakeholder engagement and the culture of their business.
Capita plc announced their intention to appoint two employee directors as non-executives to the Board. The same week, Ted Baker plc faced accusations of a damaging corporate culture. Stakeholder engagement and culture have now become regular high-profile corporate events. As the new UK Corporate Governance Code and the Wates Principles for private companies come into effect on 1 January 2019, the exposure and pressure on every Board to explain their approach to these intangible assets will increase.
The new Code is going to require Board practice to change. The traditional response to describe the process of stakeholder engagement and culture will no longer be adequate. The Board must now explain issues of importance to the business and report on how this influences their decision making.
We recommend every Board ask itself four questions. The answers will determine their preparedness for the new Corporate Governance Code requirements and future best practice.