In response to the Financial Reporting Council’s (FRC) proposals for a revised UK Corporate Governance Code, Peter Cheese, chief executive of the CIPD, the professional body for HR and people development, comments:
“The FRC’s proposals are a welcome move to improve corporate governance in the UK. The proposals place a much greater focus on organisational culture and employee voice, meaning that company boards will need to invest more time and thought on strategic workforce issues than ever before. This is a significant step forward in recognising the value of the workforce and the need for its voice to be heard at board level.
“The FRC rightly recognises that in order to drive sustainable culture change and build trust in business, boards must focus more on values, behaviours and a wider stakeholder voice beyond that of shareholders, with particular attention to the voice of the workforce. We support the plans to encourage companies to enhance employee voice by either appointing a director from within the workforce, a formal workforce advisory council, or a designated non-executive director with responsibility for representing and understanding the wider workforce. No single approach can suit all firms’ situations so it’s important that there is flexibility for businesses in choosing an option that is most appropriate for them.
“We also strongly support the proposal to broaden the role of the remuneration committee to oversee pay and incentives across the wider workforce rather than just focusing on executive pay. This is an important step in encouraging businesses to be more active in capturing and acting on their people data and for boards and the remuneration committee to improve their understanding and oversight of people data. Such a move will require fundamentally changing the role and makeup of the remuneration committee to ensure it has the right levels of expertise and necessary time and support to carry out its expanded remit.
“The CIPD welcomes the FRC’s efforts to evolve the UK’s corporate governance system and these latest proposals reflect many of the recommendations that the CIPD has made in various consultations to government, including those directly linked to the UK Corporate Governance Code.”
