58% of companies have a designated non-executive director (NED) who is responsible for workforce engagement. That’s one of the findings of the Financial Reporting Council’s (FRC) latest Annual Review of Corporate Governance Reporting which was released on 16^th November 2023.

Appointing a dedicated workforce NED is one of the ways in which organisations can signal their commitment to employee wellbeing and engagement. And whilst such an approach is welcome, it is perhaps concerning that the percentage of companies with a workforce NED is little changed from previous years.

It may well be that the business sphere and organisational structure of some organisations leads naturally to an alternative employee engagement model; such as the deployment of a workforce advisory panel. The FRC also notes that a number of companies have also looked to strengthen workforce engagement through the use of KPIs.

Whatever the method of engagement, the FRC report highlights the importance of keeping chosen mechanisms under review to ensure that they remain effective. The report also notes that whilst company reporting on engagement is improving, the explanations given on why a company believes their approach to be effective leaves much to be desired. Reports are often lacking in detail with boilerplate comments very much in evidence. The danger is that where stock phrasing is deployed, the commitment to engagement may be less than ideal. This could raise questions not only at a workforce level but also in the minds of potential investors and other stakeholders.

So what can organisations do to improve their focus on engagement?

The FRC found that those companies which fared better examined a wide range of issues and their potential impact on employees. These included:

• IT upgrades
• Communications
• Employee benefits and wellbeing
• Learning and development

In fact, those companies which not only raised multiple issues but also the actions taken to meet those issues tended to provide more meaningful reports. Perhaps that’s not surprising when you consider that employee engagement spans a far wider sphere than pay or conditions. Every action and change of direction within an organisation can have consequences for employee wellbeing and satisfaction. Whether it be a new process or a restructure, a new product or a change of reporting line; every decision taken by the board can unsettle and negatively impact staff unless that impact is considered as part of the change plan.

That’s where an employee engagement NED comes into their own; championing the needs of employees, ensuring that they are central to the change process, and making sure that effective communication and appropriate training is provided as required.