Society is changing. Organisations are not solely focused on delivering value for their shareholders, they accept they have a wider remit to act as a responsible business and deliver on more than just a financial level. But does this actually happen in reality? Is corporate governance a challenge of compliance or is it really corporate culture that needs to change?
An honest conversation about honest conversations in the workplace
A lively conversation amongst CEOs about how organisations can improve their corporate governance behaviour and address risk, culture, diversity and inclusion.
How can organisations improve their corporate governance behaviour and tackle the key issues of culture, risk and diversity and inclusion? This was the topic of a lively discussion at a recent CIPD CEO Advisory Dinner hosted by Peter Cheese, in which the CIPD convened key partners and leading thinkers to explore important emerging debates which challenge current thinking and demand new approaches and lines of enquiry. It chimed with recent reports from CIPD on both ‘good work’ and trends in data.
To begin, the topic of ‘shareholder spring’ was put on the table, following a provocation from Peter Cheese. AGMs in 2018 saw a notable increase in (institutional) shareholder activism – L&G, among others, taking the lead in voting against the re-appointment of Boards with a poor track-record in gender diversity. In the wake of startling evidence on the gender pay gap, the #MeToo movement, and with BAME pay-gap reporting also on the horizon, business, he argued, should now expect increased levels of activism and possible legislation, too.
Linked to this, UK PLC needs some honest conversations at Board level about what fundamental changes need to happen to support the fair, human workplace - beyond cosmetic CSR initiatives and tick-box compliance. CEOs will be expected to take the lead and to work in partnership with the HR community.
As the conversation widened, it was acknowledged that whilst firms continue to push the boundaries of ‘good behaviour’ on issues such as executive pay and workforce practices, there are significant stakeholders who are reacting to challenge their behaviour and hold them to account. Of particular sway are institutional investors (as per Peter’s introduction) who through firm engagement and voting at AGMs are increasingly exerting pressure on firms to improve their practices. Shareholder voting was considered by the table to be a powerful lever for change, and one which should be encouraged on key workforce topics in which we need to see change.
Next the conversation moved onto the use of people data and people analytics to understand the workforce. A series of questions were put to the group around ‘humanising data’:
- Who is winning – human leadership or algorithms and their creators?
- Is ‘data’ accelerating or eroding human workplace skills?
Do we need to think in terms of good data and bad data (smart cities and healthy living versus Cambridge Analytica and Facebook) and organize / legislate / tax accordingly?
Given the tone of the debate towards appropriate and ethical use of data, the discussion centred on where the line is in collecting workforce data and the value of that data to various internal and external stakeholders. It was noted that investors in particular are keen to uncover some of the key workforce issues facing organisations, but can only do so through continued engagement on key issues. Enhancing their understanding of workforce data, and encouraging firms to report, was one area of agreement for those around the table.
The importance of narrative
The discussion then explored why data alone will not solve the systemic issues facing modern organisations. It was felt that the absence of a strong narrative which clearly describes the meaning of reported data often prevented stakeholders, in particular investors, from making the most of the information provided to them. Instead, organisations should look to compliment the external reporting of their people data with strong, detailed and transparent narrative – avoiding so-called ‘fluff’ PR messaging. The aim, instead, should be to articulate clearly the materiality of the workforce through high quality external reporting.
But whilst people data offers much promise to open up debates and provide evidence for improved decision making, the risk for some around the table was the dehumanisation of the workforce, particularly with regards to ethical issues often presented in a ‘human world of work’. People in the room felt that despite strong action to challenge the status quo, such as the 30% Club for improving female representation at board level, there was still much that could be done. It was agreed that the gender pay-gap reporting regulation, whilst a blunt instrument, offered a useful point from which to build and improve the reporting of important diversity information – and with the potential for ethnicity pay-gap reporting on the horizon, the table was hopeful that organisations would soon be prompted to lead the way towards improved action and reporting in key areas of diversity and inclusion.
The discussion then moved smoothly towards discussing whether or not UK PLC was having honest conversations about what, fundamentally, constituted ‘good work’:
- What have we learned from #MeToo? What comes next?
- How hard will the fight be for fair pay on gender and race?
Leadership must push for greater diversity and inclusion by challenging the privilege which maintains the status quo. The group felt that this activist mentality to challenge current norms was something missing and sorely needed in the senior parts of the HR profession, and across their functional partners in accountancy and finance. Whilst people entering the world of work today may want improved opportunities and fair workplaces, it is in the power of senior leaders to create the environment for this to happen. As such, challenging old-modes of thinking and calling out instances of discrimination, particularly for minorities, was an important role leaders should play.
The evening ended on a positive note, with attendees enthused that whilst there is still much that still needs to be achieved, the route towards a more human world of work is becoming clearer. Whilst there are likely many more challenging issues ahead, the group felt that today is a better time than ever before to be the change in the world that they want to see. The professions and the HR profession specifically, have both a key role and core responsibility to help make this happen. They may need to re-discover their radical roots and help develop and guide new ethical frameworks.