By Isabel Collins, Founder, Belonging Space
Capita, the outsourcing company, has appointed two employees to its main board – the first time in 30 years that a UK FTSE 250 company has done this.
Representation at Board level, along with an open means to hear Employee Voice, is an important aspect of belonging. The practice is well established in countries like Sweden, Germany, France and The Netherlands. But UK companies have been reluctant.
Two employees – Lyndsay Browne, a chartered accountant, and Joseph Murphy, a civil engineer, will take on full boardroom non-Exec duties, as well as their main job, at an additional salary of £64,500. Around 400 employees applied for the role, from more than 63,000 around the globe. The process began in December last year. All employees who had served at least two years were eligible for the roles, with an email inviting them to apply.
Capita’s news release shares:
“Lyndsay is a chartered accountant and has been at Capita since 2003. She is currently a finance manager in Insurance Services, where she is responsible for four separate contracts and works closely with the operations directors.
Joseph is a chartered civil engineer and joined the company in 2015. He is a project manager in Real Estate and Infrastructure where he carries out technical due diligence and advises on infrastructure projects.
In their new non-executive roles, they will provide an employee’s perspective and expertise, and input into strategic decision-making with the same level of authority as other directors.”
“I am delighted to welcome Lyndsay and Joseph to the board and proud that Capita is the first FTSE 250 company in many years to make such appointments. We are determined that the employee’s perspective and increased diversity of thought are represented at board level. Lyndsay and Joseph bring very different skills, experience and insights. I have no doubt they will prove strong members of the board.”
Why put employees on the board?
There are several benefits:
- Direct involvement of those most affected by, and able to deliver, the company’s strategy at the front-line
- Check-and-challenge from a perspective more more rooted in practical implications, reducing the risk of board being removed from everyday business
- Diversity of thought, for a balanced consideration of impacts and issues
- Decision making with a view to longer-term sustainable value rather than shorter term
- Direct accountability for equitable strategic management
- Cohesion and belonging across the whole business, above and beyond hierarchy
What are the challenges?
It’s no mean feat to make this work. Challenges include:
- A fair basis of recruitment, and sense of representative view of employees, as well as autonomy of those individuals appointed
- Employees and Directors may have very different experience and perspectives, a risk of ‘Group think’ on either side.
- UK attitudes and preconceptions may be rather fixed: can oil and water mix?
- Avoiding the temptation to stick to partisan views, or pull up a tribal ‘Shield Wall’ on either side, rather than a cohesive boardroom able to flex to different views
- Finding common ground and common language to conduct meaningful discussion
- Building proper partnership and functionality
Pros and cons of employee representation, across perspectives
The pros and cons of employee representation of the board have been explored from very different angles in the last couple of years, with the TUC’s study All Aboard (making worker representation on company boards a reality) in 2016, ‘Good Work’ the Matthew Taylor Review of Modern Working Practices in 2017, the Financial Reporting Council’s new Corporate Governance Code in 2018, and the governments review of stewardship.
In 2016, coming into office as PM, Theresa May pledged to put workers on boards to shake up corporate governance but the proposals were watered down under pressure from the City. A survey by the Local Authority Pension Fund forum found few companies planning to put a worker on the board with most opting to give a director responsibility for representing the workforce.
Although the UK has been reluctant to put employees on boards, it was the British who encouraged the practice in Germany as part of post-war reconstruction – but perhaps it was less favourable to the British own hierarchical tastes?
Capitas’s complex belonging challenges
Capita, founded 35 years ago, provides outsourcing of a panoply of services to public and private businesses, from managing communications for ambulances, to helping the army recruit, to collecting the license fee for the BBC. Many of its employees will be in-house with Capita’s client – so their ID badge or uniform may say they belong to the client company, while their payslip may say they belong to Capita.
This makes for complex belonging challenges, particularly around connection and community within teams, and accountability for code of ethics – Capita has experienced both. It must be hoped that employee representation on the board will help form a more cohesive sense of belonging and clarity around purpose and values for all employees, wherever their posting.
“Doing the right thing”
“This is not a radical move; it’s just the right thing to do. A decade on from the financial crisis and corporate Britain still needs to rebuild trust. Different perspectives at board level are part of that effort. An employee director will bring diversity of thought and strengthen our decision-making. This can only be beneficial for our ongoing transformation programme and, ultimately, shareholders.”
Transport company First Group is the only UK company with a long-standing place the board for an employee – having set this up 30 years ago. The current employee board member brings deep knowledge of employee experience, having been a bus driver with the company for 40 years.
Capita has had its share of challenges in a highly troubled sector: contractors and large government outsourcing companies have been in the headlines for poor cultural practices, profit warnings, ethical issues, and casualties including the collapse of Carillon last year and Interserve taken over by creditors in March this year.
Wishing the new employee Directors every success
At Belonging Space we see great benefits for Capita, and any business, from employee representation on the board. We wish every success to Lyndsay Browne, Joseph Murphy, Jon Lewis, Sir Ian Powell, the board and all employees. As pioneers the journey may mean hacking into a few established forests and charting new waters, but the gain will be worth it.