Corporate governance – FRC report on workforce engagement

The Financial Reporting Council (FRC) has published a report on Workforce Engagement and the UK Corporate Governance Code: A Review of Company Reporting and Practice.

The report considers the approaches taken to workforce engagement by FTSE 350 companies in light of the requirements introduced in the 2018 edition of the UK Corporate Governance Code (the Code). Provision 5 of the Code requires that companies put in place a mechanism for workforce engagement and gives three core options that companies can use for doing so (a worker director, a designated non-executive director (NED) and an advisory panel).

Based on the annual reports of FTSE 350 companies employing at least 50 staff (excluding investment trusts), the report says that:

• one company appointed a director from the workforce;
• 12% of companies established a formal workforce advisory panel;
• 40% of companies appointed a designated NED for workforce engagement;
• 16% of companies established an advisory panel and designated a NED; and
• 32% of companies adopted alternative workforce engagement arrangements.

The report contains analysis of the approaches that companies have adopted in practice for the different methods of engagement, including the activities being undertaken by a designated NED and how workforce advisory panels operate. It also looks at how boards considered which engagement mechanism to adopt and how the engagement mechanisms support other workforce engagement activities. It also includes case studies highlighting best practice.