A recent speech by the Prime Minister on worker representation on boards has brought into focus the whole issue of employee engagement.
For many businesses, their main asset is their people and the knowledge and commitment that they have. How to harness that is a question that many business struggle with and a whole industry of consultants has grown up, seeking to improve the performance of employers in this area.
From a legal perspective, there are two main ways of engaging with employees. The more traditional structure has been entirely based around money, with employees being rewarded with cold, hard cash. This can either be in the form of performance related pay, a commission structure or a more flexible bonus scheme.
However, with the economic downturn and businesses not having as much cash around to incentivise employees, focus has moved more towards employee involvement. This could be in the form of representation at a senior level or the use of options or shares to bind employees to a business and provide reward when there is some money available, normally on an exit. Whether this is done through a tax efficient scheme such as EMI or on a more informal basis, employee involvement can be a very effective way of retaining people within the business and making them feel valued.
Theresa May has told business leaders that her government will not force companies to directly appoint workers or consumers on to their boards, watering down an earlier pledge on the issue. “While it is important that the voices of workers and consumers should be represented, I can categorically tell you that this is not about mandating works councils, or the direct appointment of workers or trade union representatives on boards,” the prime minister told a packed room in central London. “Some companies may find that these models work best for them – but there are other routes that use existing board structures, complemented or supplemented by advisory councils or panels, to ensure all those with a stake in the company are properly represented. It will be a question of finding the model that works.”