The Board As An Agent of Change

The war for talent has become the top business issue of the moment, and in response to it many business leaders are reviewing their overall business model and employee value proposition.?

Handling this challenge requires strong leadership from both the executive team and the board. The board, as custodians of the business brand, reputation, and organisational culture, is key to this process. Boards can be powerful 'agents of change’.

In this podcast, I talk to Denis Woulfe MBE, someone who has extensive experience serving on boards of public interest organisations.

Denis Woulfe is the Co-Chair and sits on the board of 'Leaders As Change Agents' (LACA). He’s a Trustee at The Royal National Lifeboat Institute (RNLI), where he also serves as the Chair of the Audit and Risk Committee. He has served on numerous public and private boards and is a former governor at the University of the West of England.?

Until 2017, Denis was a Partner and Vice Chairman of Deloitte LLP, holding many leadership roles with the firm. His roles included serving as a board member and on the Audit and Risk Committee for eight years. In 2018 Denis was awarded an MBE for services to Women and Equality.

Here are some of the key takeaways from what was a wide ranging and insightful conversation.?

‘Share best practice rather than just call for change.’

We started the conversation talking about diverse and inclusive workplace cultures.?

Denis has a keen interest in diversity and inclusion at work and its role in delivering fairness, opportunity, and competitive advantage. Denis has in the past worked as a member of the UK government-sponsored Women's Business Council board.?

Co-Chairing the 'Leaders As Change Agents' (LACA) board now provides him a new opportunity to put to work what he believes in and act as an agent of change himself.

Denis explained that LACA noticed (particularly post-pandemic) that change has and is being accelerated. But he wanted to make sure that change was actually taking place - rather than just being ’called for’!?

As a result, he and his colleagues felt the time had come for research and development of a framework as to how to make changes effectively and to share best practice. This has been translated into LACA's 'Employer & Employee Guide', a framework with eight principles, which we’ll talk more about below.

‘We're not asking businesses to do anything they're probably not already doing.’

Denis shared that because there’s now a sense of urgency around business change, many businesses are currently reviewing both their business models and their employee value proposition. Both of these initiatives are driven both by changes revealed by the pandemic and changes in market forces.?

He pointed out that the LACA ‘Employer & Employee Guide' framework provides the opportunity to improve diversity, inclusion, and fairness in the workplace during the review by considering the principles from LACA's best practices research.?

‘We're not putting forward a 'one size fits all' for all businesses.’

Denis noted that every business is different in terms of geography, scale, industry, ownership structure, so a 'one size fits all' approach to change would be impossible to implement as well as being totally inappropriate.?

He described LACA's eight foundational principles, which executive teams and boards may wish to consider when developing their plans. Those principles are drawn from best practice research.?

The first principle is?empowerment and choice. Denis explained that this is about giving employees an appropriate voice and enabling them to feel connected to the business, which is key to their commitment and support.?

The second principle is to have?diversity, equality, and inclusion?as a foundation of the workplace culture, so everybody feels welcome and included.?

The third principle is?growth and development?because everybody wishes to progress in their job and be given opportunities to develop their skills and experience. Denis explained that this provokes employers to look at all their workers and ask whether they have an appropriate growth and development policy that touches everybody in the business.?

Fourth is?commitment and engagement,?which is gaining the views of employees and engaging them in certain decisions that affect them.

Denis describes?participation in decisions?as the fifth principle which is key for employees to feel involved.?

The sixth is?work-life balance, which he explains will be different in different organisations. Still, businesses need to ensure that people's work-life balance is respected, giving them time and the ability to recharge and be more effective at work.?

Seventh is?fairness,?and Denis said that this is fairness for both sides. Employers must understand they need to be fair to their employees in terms of the employer-employee value proposition they offer. Still, employees also need to be fair to their employer and perform the tasks they have been engaged and paid to perform.??

The final point he outlined is?recognition and reward, not just in terms of pay, but in ensuring employees are recognised and rewarded for their contribution.

'The board's role is to support the executive team and to inspire and challenge?them to take these principles into account.'

Denis believes that the board's role is usually to oversee the business as custodians of the business on behalf of the shareholders and the broader stakeholders.?

The executive team's role is to run the business day to day and present policies, strategies, and investments to the board. So he believes that the board's role is to support the executive team and challenge them to consider these principles when presenting proposals.?

So the board, armed with the relevant information and experience, can support the executive team and, if appropriate, challenge the executive team more effectively as they bring proposals to them.

'I'm not suggesting that the raw data is presented to the board, and a board is required to wade through it!'?

Denis stated that it is the job of the executive team to demonstrate they have assembled and consulted appropriate data in coming up with the proposals they submit to the board. Then the board's role is to question what data has been included and then to judge whether or not that data is of sufficient quality and quantity to underpin the decisions the board is being asked to make. If the board feels that that isn't the case, their role is to ask the executive team to look at that issue again.

'There's only one opportunity in a business cycle to get this right.'

Denis shared that good quality, empirical data to support policies, investments, and practices is key. Some of that data will come from within the business around engagement with employees, both formal and informal, but he pointed out that some data comes from external sources.???

What are these external sources? Here, we’re talking about information on best practices, pay and condition surveys, what your competitors are doing and other businesses you measure yourself against. All this data can help the board understand that the proposals being put forward by the executives are appropriate to the business but also sit well within the broader commercial and societal comparisons to which the board also has a duty.

‘Look at these issues carefully, not only from the fairness and inclusivity point of view but also as a source of competitive advantage.’

Denis noted that the expectations of external stakeholders such as governments, regulators and shareholders have accelerated due to the pandemic. However, in many areas, it was well advanced before that.?

Governments and regulators, particularly in the listed environment and regulated industries, are taking more interest in workplace culture and expecting the organisations that they regulate to take these principles into account to try and deliver a fair and inclusive workplace culture.???

He observed that employees and their groups also have higher expectations that their employer will deliver a fair employee value proposition.?

He said that employers who fail to address this will find themselves at a competitive disadvantage for key people who are increasingly willing to move to employers they believe will give them a better offering. Denis only sees these issues increasing and accelerating. He encourages businesses to look at these issues carefully, from the fairness and inclusivity point of view and as a source of competitive advantage.

In a nutshell.?

1. It has never been more important to try and address these workplace challenges, and this is very firmly a leadership issue that requires a strong and consistent leadership response.
2. Getting this right can be a crucial source of competitive advantage for individual businesses, and it goes to the heart of the strategy and culture of the business. The board has a pivotal role in driving and overseeing this change.
3. There is an opportunity for business leaders to influence their broader networks by supporting these principles and encouraging others to do so by being active change agents themselves.

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