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Why May Must Say Yes To Worker Directors

29/11/2016 13:05

Industrial democracy has made a welcome return to the political front line. With positive news for workers and the economy in general hard to come by, this could be a glimmer of good news in a fairly bleak winter.

I'm talking of course about the idea of Worker Directors. Theresa May has been tying herself in knots on this - showing rather less poise than Ed on Strictly - having first pinched the idea from Ed Miliband, going big on it on her way to Downing Street, pulled the plug on it in front of the CBI and finally rekindled interest in response to a question from Gloria del Piero at the fag-end of last week's PMQs on Wednesday.

But the idea of worker directors is not new - the modern era opened with the Bullock Report into industrial democracy in 1977. As debates at the time illustrate, then, as now, this was seen as something of a magic bullet for solving deficiencies in employee engagement and boardroom arrogance.

Bullock directly lead to six worker directors being appointed to the board of the then-state run forerunner to BT. The experiment ran from 1978 to 1980, all concerned felt it was successful, but it was allowed to lapse by the in-coming Thatcher government who perhaps already had privatisation in mind.

The value of the worker director concept works on two levels. On the plus side, they have important symbolism. A witness in the boardroom. A civilizing influence to curb corporate excess. An advocate of realism to speak truth unto power.

But a more inclusive approach can also lead to real change, especially as part of a wider democratization of workplaces. The TUC's 2014 report on workplace democracy set out clearly and convincingly how and why more inclusive employers would also be more effective and efficient.

Both the symbolism and practical effects of Worker Directors speak to issues regarded by employees and workers as being important. UKCES survey work paints a picture of "a climate of fear [as] employees face greater stress and job insecurity while working harder."

But nor should the potential of worker directors be over-stated : They can only ever be one part of effective employee relations. And they can actually be very damaging to industry if mistakenly seen as a panacea.

You can immediately see the limitations: What are the terms of reference? What is off-limits? What information has to be disclosed - and when? Is there enough time and detail to form the basis for a proper discussion? The fundamental constraint is that worker directors are always, always "playing away" - the agenda is set, predetermined. They cannot on their own bridge the gap between boardroom and shop floor. They do not replace effective communications within a company and they are too restricted in number and scope to be a truly effective tool for employee engagement.

And the very real risk is that this then becomes a tick-box exercise. "We've got a worker on the board, what more do we need to do?" The answer is likely to be "nothing".

So worker directors need to sit alongside effective collective bargaining arrangements. They can certainly add value and encourage dialogue at a strategic level. But we need to be aware of the capacity for worker director arrangements to act as black holes - sucking everything in, generating no light or understanding, leaving nothing outside.

Quite apart from the PM's acrobatics, the high level of interest in the latest Government consultation on corporate governance shows it remains a live issue. But if employers try to weaken consultative strictures in favour of more limited and regulated dialogue with worker directors, they should not be surprised to find poorer outcomes as a result.

And we may not even get as far as this debate on practicalities. As the TUC's Janet Williamson observes, "appointing a non-executive director to speak on behalf of the workforce or setting up a stakeholder advisory body are not the same as putting workers on company boards. Don't think that working people won't notice the difference."

In this era of post-truth left-behind politics, worker directors would seem to be a straightforward win-win issue. The PM has a choice to make here; I hope she makes the right one.

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