CIPD viewpoint
Explore the CIPD's collected perspective on the key issues impacting work, including recommendations, supporting evidence and links to resources for policymakers and employers
Explore the CIPD’s point of view on corporate governance and transparent reporting, including actions for Government and recommendations for employers
A number of corporate governance scandals in recent years – and more recently the COVID-19 pandemic – have highlighted the importance of the critical ‘people’ issues organisations face. The value of treating people well, and the associated risks and opportunities, should be central to corporate governance and strategic leadership conversations.
Too many corporate governance disasters are caused by boards and senior management teams failing to recognise the importance of critical ‘people’ issues, such as organisational culture, people management, diversity and inclusion, and investment in workforce skills and capability.
For example, multiple corporate governance scandals on a range of issues, including sexual harassment, poor working conditions, patient care failings in the NHS and phone hacking in the media sector, were primarily the result of organisations failing to live up to stated values, poor leadership and under-investment in high quality people management practices.
The longstanding fall in investment in training, poor productivity growth, and a lack of workforce diversity (particularly at senior levels) are further signals that many organisations are failing to adequately consider the interests of stakeholders (such as employees) in their approach to governance.
These failings have increased the spotlight on sometimes excessive levels of CEO pay, with concerns centred on the often poor link between their rewards and those of the wider workforce, and the value of the personal contribution of executives relative to the performance of the business over the longer-term.
People professionals and HR functions should be at the front and centre of improving corporate governance practices in organisations. This will ensure that people-related issues – such as culture, reward equity, diversity and inclusion, and employee voice – are given appropriate attention at board level, and are factored into the decision-making process of the executive team.
Organisations will not perform well over the long term unless decisions taken at board and executive management level are informed by an in-depth understanding of the value of the workforce, which human capital data and people analytics can provide. This includes:
Recent changes to companies reporting legislation and the UK Corporate Governance Code, aimed at encouraging firms to improve employee voice, fairness on executive reward and enhance workforce reporting (including CEO pay ratio reporting) are welcome, but don’t go far enough to change corporate culture and improve transparency.
Explore the CIPD's collected perspective on the key issues impacting work, including recommendations, supporting evidence and links to resources for policymakers and employers
Engaging with ministers, other policy makers and our membership to inform our views to influence government