TheCorporateCounsel.net

America’s labor shortage is getting lots of attention – here’s a recent analysis from the US Chamber that points out some industry differences, while Forbes blames retiring Boomers. One thing is pretty clear – the strategic importance of “human capital” isn’t going to fade anytime soon.

That may be why more companies are now disclosing board involvement in things like “talent management” and “employee engagement” – even though hearing & responding to “worker voice” has not traditionally been viewed as part of the oversight role of the board. Boards that are able to keep their finger on the pulse of worker sentiment are better positioned to chart corporate HR strategies and monitor when things might be getting off-course.

Yet, just how boards can do that is pretty murky. Most information gets filtered through management. I blogged last fall about several ideas for incorporating “worker voice” into the boardroom. Now, “friend of the sites” and PracticalESG.com Advisory Board member Doug Chia has republished his full analysis & recommendations on the topic – “Reimagining Board Committees to Accommodate Worker Voice.” Here are Doug’s concluding recommendations:

If worker voice is to be made a board priority, that initiative should start with a dedicated board committee with worker engagement specifically in mind. A board typically creates committees, either standing or ad hoc, for a subset of the board to dive deep into particular board responsibilities or subject matters and report back to the full board, sometimes with recommendations for board action. Many public company boards maintain standing committees (in addition to the obligatory audit, compensation, and nominating committees) that focus on finance, risk, science and technology, and environmental health and safety.

Board committees are of particular interest because, unlike so many other areas of corporate governance, boards have unencumbered power to form their own committees for specific purposes. Boards are in control their own committee structures, charters, members, and agendas. Boards also have authority to retain independent experts to serve as resources to its committees, thereby reducing its otherwise exclusive reliance on senior management for information and engagement with employees.

Board committees dedicated to hearing and understanding worker voice can be creative in how they approach their task. This could be done through a combination of employee advisory committees, focus groups, site visits, town hall meetings, and other forms of engagement, both formal and informal. While many experts and policymakers are calling for worker representation on boards in the form of directors who are selected by the employees, creating and effectively using board committees dedicated to worker voice is a more practical and achievable means of hearing worker sentiment to inform board oversight, decision-making, and CEO evaluation.

– Liz Dunshee