When it comes to employee rights, why is HR being ignored?
Basil leRoux, June 08, 2017
Businesses must act now in recognising the essential role of HR at board level
The workers’ rights pledge in the Conservative party manifesto has captured the attention of big business, with its plans to increase employee representation on the boards of listed companies. However, while tapping into the knowledge of employees is crucial, effectual change can only be achieved when implemented hand in hand with watertight corporate governance.
In a complex employment landscape where key issues such as the criteria for self-employment and use of zero-hours contracts are under increased scrutiny, businesses must act now in recognising the essential role of HR at board level. The days of talented employees working for one organisation throughout their career are gone, and in a knowledge-based economy a renewed focus on staff retention, productivity and employee engagement will drive significant commercial benefits.
For an example of the symbiotic relationship between corporate governance and employment practice in action, HR professionals need look no further than beleaguered FTSE 250 retailer Sports Direct. After a series of exposés highlighted serious shortcomings in the treatment of its temporary warehouse staff – with many being subject to enforced searches at the end of each shift and some being paid under the minimum wage – 30-year-old store manager Alex Balacki was elected as the business’ ‘employee representative’ and invited to attend board meetings.
Although a good gesture in principle, many industry commentators have questioned the efficacy of this appointment in driving tangible benefits for the workforce. In particular, a spokesperson from Unite predicted that Balacki will face an ‘uphill struggle’ to have workers’ concerns heard and to resolve the deep-rooted problems across the business.
In reality if the business had had the right culture from the offset, these issues could have been avoided altogether. As many organisations are discovering, the way to get the culture right from the offset is to hire a HR specialist much earlier on in a company’s development. These individuals can provide diversity of thought, understanding the complex issues, needs and desires of the workforce and how these factors interact with the commercial and financial context of the business.
Despite some anomalies, the majority of businesses are committed to representing the needs of their employees and frontrunners are empowering HR directors to implement innovative and often game changing policies. For example, a move by tyre manufacturing giant Michelin, coined as a ‘trust experiment’ to create ‘self-managing teams’ has led to a significant increase in productivity and wellbeing. Here, workers are handed responsibility to cut waste, plan production activity and solve safety problems themselves as part of a team, while managers are encouraged to step back into a less formal coaching role.
The attraction, retention and management of a new generation of employees also brings with it a unique set of challenges. Whereas in previous decades a graduate entrant could be reasonably expected to stay in a company until mid-career or retirement, younger recruits are likely to change roles and employers much more frequently.
While businesses should not expect to break this pattern altogether, exemplar HR practice (perhaps through the rejuvenation of tailor-made graduate scheme rotations, or through the introduction of innovative employee benefits for on-the-ground-workers) could significantly extend their tenure. Not only does this allow businesses to better recoup the costs of training and development, but it also reduces recruitment costs and increased satisfaction will aid in the attraction of talent.
In today’s marketplace the attraction and retention of talented employees as well as the pursuit of increased productivity are key motivators for business leaders. In achieving exemplary corporate governance, in which both the needs of shareholders and staff retain equal footing, the insight of both employees and HR specialists must take precedent at board level.
Basil leRoux is head of HR practice at executive search firm Berwick Partners