The employee voice is making itself heard

Posted in Reporting on 12 November 2018 By Henry Ker, Stakeholder Communications Lead

The Google walkouts highlight the importance of companies engaging with their workforces, particularly with the wave of new reporting requirements approaching.

It is one of the world’s most valuable brands – in second place, behind Amazon, according to Forbes – while it also frequently tops the list of best companies to work for (number one for the UK in this year’s Glassdoor Employees’ Choice Awards). Yet while for many Google may be seen as the pinnacle of modern, employee-centric and inclusive organisations, that has not made it impervious to problems.

The other week, Google employees across the world walked out as part of a planned protest (#GoogleWalkout). The action stemmed from several issues, but came to a head after a recent New York Times article about the company’s handling of sexual harassment complaints (with a particular concern being mandatory arbitration clauses in employment contracts), including the payout to Andy Rubin, one of the creators of Google’s Android mobile operating system, following his departure. Rubin has denied any allegations of sexual misconduct.

In an internal memo, Google CEO Sundar Pichai revealed that 48 people had been fired in the past two years over sexual misconduct.

Campaigners posted a list of five (technically six) demands, which included an end to forced arbitration; pay and opportunity equality; a public sexual harassment transparency report; a clear, uniform, and globally inclusive process for reporting sexual misconduct; to promote the Chief Diversity Officer to answer directly to the CEO; and, in addition, to appoint an employee representative to the board.

A precedent for change

The world is in a heightened state of focus around harassment in the workplace, following the #MeToo movement and serious allegations against high-profile figures, such as movie-mogul Harvey Weinstein. More recently, Topshop boss Sir Philip Green was named as the man at the centre of a super-injunction-silenced Telegraph investigation (he denies the newspaper’s allegations).

Indeed, ‘MeToo’ was just shortlisted for the Collins Dictionary Word of the Year (‘single-use’ was the winner, in case you were wondering).1

And what the Google case confirms is that, as the public increasingly refuses to turn a blind eye to injustice, they are also prepared to take action in their own workplaces.

However, as Quartz journalist Cassie Werber wrote, perhaps the biggest impact of the strikes "will be in providing precedent and a framework for change to the thousands of other companies globally where discrimination is still rife, pay gaps even more egregious, and workers less able to articulate their experience."2

That is, if the supposed best company to work for can experience this level of internal conflict, anyone can, and more will.

Culture gap

Darryl Mead, Emperor's Head of Employee Communications & Engagement, explains: "If Google had the open and transparent culture we assumed they had, one that is about values, ideas and innovation and is people-centric, it shouldn’t really have got to this stage."

"This is arguably a real life example of a culture gap. A lot of companies talk about wanting to be transparent and collaborative – it seems to be the desired state that organisations hope to achieve, where people are free to ask questions, interrogate the state of play, all while being supported by the company."

"But it is one thing to talk about a certain kind of culture and another to implement it in a way that is meaningful for everybody."

Google’s Pichai confirmed this view, writing that "If even one person experiences Google the way the New York Times article described, we are not the company we aspire to be."

This is not the first time Google’s internal culture has come under fire. Last year, Google engineer James Damore published a now infamous manifesto, seemingly attributing the lack of women in tech and leadership to biological differences, while the US Department of Labor also investigated the company and, just last month, a group of women revived an initially-dismissed class-action lawsuit over alleged pay discrimination.

The Google case reinforces the importance of companies living values rather than just stating them. Empty words or superficial statements will be called out for what they are – evidential support will be expected by stakeholders and wider society.

There are positive to be drawn from this for Google, however, as Darryl states: "The fact that employees felt empowered to go out and strike is actually a positive indicator of culture. At what other company would the employees be prepared to do that (other than in those which are highly unionised)?"

Speaking with one voice

While the strikes were addressing very real concerns about culture and harassment, the protesters’ other demands also merit serious discussion. Particularly, the call for an employee representative to be appointed to the board.

Bringing the employee voice into the boardroom has been a high-profile area of discussion in corporate governance for a while now. Prime Minister Theresa May included it as part of her speech to launch her Conservative party leadership campaign in 2016 and it has remained a component of the government’s corporate governance reforms since – leading to last year’s guidance from the Investment Association and ICSA: The Governance Institute on ‘The Stakeholder Voice in Board Decision Making’.3

The recently revised UK Corporate Governance Code has since cemented its status under provision five: 'For engagement with the workforce, one or a combination of the following methods should be used: a director appointed from the workforce; a formal workforce advisory panel; a designated non-executive director.’4

"The revised code and other reporting requirements are a consideration in all of this," Darryl explains, "Particularly in the context of workforce engagement and how the employee voice is considered in decision making. This could be an example of a breakdown in the existing processes in place for that."

The code takes effect from 1 January 2019, with companies required to report on it the following year. Alongside the code, the recent Companies (Miscellaneous) Reporting Regulations 2018 will require companies with more than 250 UK employees to include a statement as part of their directors’ report, summarising how the directors have engaged with employees, how they have had regard to employee interests, including on the principal decisions taken by the company in the financial year.5

The regulations also introduced the new section 172(1) statement, which will ask directors to set out how they have had consideration of a company’s wider stakeholders in strategic decisions.

Most companies will already have mechanisms in place for ensuring they take account of employee views, but as the Google story shows, even companies with good systems and processes must ensure they do not get complacent and allow issues to fester and escalate.

And even if processes are up to scratch, companies have not had to report on them to this extent before. Identifying the necessary information and forming the right narrative for the reporting process will be a time-consuming exercise.

This raft of new regulations and reporting requirements – which will also include mandatory reporting on the ratio of the CEO to average workers' pay and, in April 2019, the second round of gender pay gap reporting – confirms that consideration of employees is not a flash-in-the-pan soapbox issue, but rather a fundamental expectation of how companies conduct their business for the years to come – not least if they want to continue to attract and retain the best possible talent.

"There is an increasing need to listen to employees and consider the employee/employer deal. The nature of the working relationship is changing and it is changing because it is a candidate's market. The war for talent is very much on," Darryl says. "The Google strikes, as well as being about employees voicing serious concerns, have provided a brilliant platform and reason to talk about this issue – and it has elevated the profile of the conversation."

But what this story proves, more than anything, is the employee voice will make itself heard – and companies would do well to listen.

 

The Collins Dictionary Word of the Year
2 Cassie Werber for Quartz
3 The Stakeholder Voice in Board Decision Making, ICSA
4 Revised UK Corporate Governance Code, FRC
5 The Companies (Miscellaneous Reporting) Regulations 2018

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