FTSE 350 annual reports: Stakeholder engagement
Among FTSE 350 fi rms there are now:
Three employee directors
37 workforce advisory panels
71 NEDs with responsibility for
18% explain what
key issues were raised by
their stakeholders and
how the organisation
33% report meetings between
non-executives and shareholders
26% of senior independent
directors met with shareholders
Companies providing good disclosures
on shareholder engagement
2016 2017 2018 2019
The light
is now
being
shone on
this area
Analysing culture Strategic HR
has responded
50
40
30
20
10
0
that it’s not all about profit but also how
you make it.
“Where we still have a slight
disconnect, however, is that the
expectation of returns and margins is
too challenging for companies,” she
adds, highlighting the damagingly
short-term cultures and behaviours
this creates.
Pitcher is hopeful that recent
instances of high-profile governance
failures have brought the careerdestroying
effects of being associated
with them into sharper focus for
boards and investors. “The people on
Carillion’s board will struggle to get
another board role,” she comments.
On the more positive side,
organisations are hopefully starting to
see firsthand the value created by a
strong ethical culture aligned to
business purpose and strategy, says
The Weir Group’s McGinness:
“Companies will have to get more
serious about culture if they want
to attract the workforce of the
future. I don’t think regulation
will change things necessarily,
but demand from the
workforce will.
“And it takes quite a
bit of time to tick a box,
so if you can get
matters in the new regulations is having
an impact, says Lowe. He points to
Grant Thornton’s 2019 Corporate
Governance Review of FTSE 350
annual reports, seen exclusively by HR
magazine for this piece.
The annual research is conducted in
a way designed to ensure superficial
detail is clearly differentiated from that
expressive of a genuine strategy, he
says. Culture is a good example of the
significant impact regulatory emphasis
has on what people put sustained effort
into, he says.
“In 2015 across the FTSE 350 19%
gave a good detailed description of
their culture. That leapt up to 38% in
2017 after the FRC had issued its report
on culture because that raised the bar
and profile,” he explains. “But then the
pressure went off in the following year
and detailed disclosures dropped again
to 33%. It’s only this year it’s risen to
45% – because now it’s in the Code.”
It’s a similar cautiously positive story
on other people-related fronts (see boxout
above). But “there’s still a long way
to go”, Lowe concedes, explaining that
overnight change was always going to
be unlikely, with success confined to
“the early adopters”.
Investor awareness
A critical part of the shift now will be
shareholders. Corporate governance
will only become more people- and
culture-focused when these vital
components of the corporate ecosystem
change the way they approach business
and are open to more nuanced and
sophisticated ways of understanding
corporate culture, many feel.
Again there’s a long way to go,
believes Pitcher. “If the company’s
performing well the AGM is a pretty
easy ride. If it’s performing badly
shareholders normally go for the
obvious things like cutting the
remuneration of the CEO, rather than
asking ‘what is this telling us about
your culture?’ But it would be helpful if
they were asking those questions.”
Foster Back is slightly more
optimistic. “We used to talk about the
usual suspects,” she says. “Now the level
of awareness among investors is much
higher… The light is now being shone
on this area and people are recognising
engaging with employees
59% state that their chair met
with shareholders
Source: Grant Thornton’s 2019 Corporate Governance Review
something back from it why wouldn’t
you?” she adds.
A conversation starter
So will new much more culture- and
people-focused corporate governance
regulations be the silver bullet for
fixing corporate life? Perhaps not. And
should organisations approach efforts
to assess the slippery concept of culture
with caution? Absolutely.
But that’s not to say including
people-related areas in matters of
governance won’t be meaningful given
time. While unlikely to change the
fortunes and organisational health of
UK plc alone, new reporting
requirements could act as a powerful
catalyst for people and culture to break
triumphantly out of the HR
department to become everyone’s
business. They could be
a helpful reminder of the importance
of sustained efforts here, and a
conversation-starter for nuanced indepth
discussion of culture.
And HR are hopefully the experts in
all of this. So it’s time to seize the
mantle. And in response to the
cry ‘WE NEED MEASURES!’
offer the equally-assertive: ‘I
have a better way. Let’s do
this properly…’ HR
%
hrmagazine.co.uk November 2019 HR 23
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