By David Daly, chair of board, Frasers Group
As the chair of Frasers Group, I’m proud that we are among a relatively small number of companies with a Workers Representative elected to our board of directors.
Cally Price was a casual sales assistant who went on to become a store manager and then was voted onto the Board as a non-executive director, after being nominated by our workforce.
Today, it’s an accepted convention that employees are key stakeholders in any business, yet back in the autumn of 2018, a corporate poll estimated that 70% of companies were opposed to the idea of workers on boards. [1]
Since then, Frasers Group has transformed through its ongoing elevation strategy becoming the forward-thinking business that it is today.
Cally has played a vital role in that transformation. In fact, I would go so far as to recommend that every company should choose to embrace having a fully-fledged director drawn from its workforce. Not only has it been a success from the perspective of our employees (judging from high levels of engagement with Cally), but also the Board and company itself have benefitted enormously.
At every board meeting, Cally speaks on behalf of the Group’s workforce to facilitate a healthy and constructive dialogue. She provides a detailed insight into what’s happening within the workforce, collating trends, and providing an unfiltered overview. This gives our employees a voice at the top table and it enables the board to make swift decisions, based on accurate information.
The idea of having workers on company boards originally came from Theresa May in 2016, who whilst campaigning to succeed David Cameron famously said: “If I’m Prime Minister… we’re going to have not just consumers represented on company boards but workers as well.” The proposal received a lukewarm reaction (at best), with many claiming the idea was impractical and unworkable due to the regulatory burden it would impose.
It was argued that in practice a worker-director is likely to be seen as representing employees alone, whereas the law requires a director to act in the interest of all shareholders. [1A]
In fact, our experience at Frasers Group has proved these fears baseless. In a well-run company there is no conflict in striking the correct balance between stakeholders. Our shareholders have subsequently proved to be overwhelmingly in favour of the idea, with 99.9% of votes cast at our Annual General Meeting last autumn, being in favour of re-electing Cally.
Her role as workforce director and workers representative has helped to bring a fresh outlook to the board, thanks to her youth and her experience in retail. Cally originally started as a Saturday assistant in Sports Direct at the age of 16. She joined the company full-time after graduating from university and progressed to become a store manager in Cardiff.
It’s impossible to overstate the value her experience brings to the Board, whether it’s navigating through specific issues, such as how best to configure bonuses to motivate employees, or broader subjects such as health and wellbeing.
We have mechanisms in place to ensure that employees can contact Cally to raise an issue, either in person or anonymously by using our ‘Ask Cally’ app and our digital welfare portal.
Cally’s experience gives her an insight into the challenges that her colleagues in retail may face, and she has the freedom and resources to seamlessly move anywhere within the company. She is connected across the organisation and understands our people – from those who are working just a few hours a week, to the leadership team.
This provides the Board with a phenomenal resource, the reports that she provides are frank and unedited, and the executive team can act immediately. It enables the Board to assess situations that are causing concern for the employees, or to identify things that are working well
Cally was directly involved in the review of retail colleague pay during FY23 and she was also instrumental in helping to implement our Ride to Work initiative, which provides employees with discounted bicycles.
When she was first elected to the board in 2018, she was 29, at a time when there was not a single director aged under 30 in the whole of the FTSE 350. [2]
Cally’s appointment followed a successful 12-month pilot, during which another young member of staff, Alex Balacki, sat on the Board at the age of 30 (although Alex did not have director status). He continues to play an important role in the Group as a manager of one of our newly elevated stores.
Frasers Group was among the very first to go down this route of having a Workers Representative on the Board. Other early adopters included Capita, FirstGroup, Mears Group and Wetherspoons. [3]
The UK Corporate Governance Code (as subsequently revised in 2018) makes it clear that in order to succeed in the long term, companies need to build successful relationships with stakeholders based on trust and mutual benefit. [4]
For engagement with the workforce, the Code recommends one, or a combination of, the following three methods:
A director appointed from the workforce
A formal workforce advisory panel
A designated Non-Executive Director (NED)
A report published by the Financial Reporting Council (FRC) in May 2021 suggests that by far the most common option has been a designated director (in other words a non-employee who is designated as being responsible for workforce engagement).
Out of the firms that took part in the FRC’s sample, 40% had appointed a designated NED, 12% had established an advisory panel and 16% had combined an advisory panel with a designated NED. [5]
At the time the research was conducted, only one company had appointed a Worker-director following the issuance of the revised Code, adding to the four FTSE 350 firms with Worker-directors that pre-date the Code.
Of course, others may have decided to go down the same path since then but given the huge positives that the role brings to all parties, I am amazed that more companies do not choose to reap the benefits of having a Workers Representative.
[1] Source: Chartered Governance Institute UK & Ireland
https://www.cgi.org.uk/about-us/press-office/news-releases/70-of-companies-oppose-the-idea-of-workers-on-boards-new-poll-finds
[1a] Source: https://www.pinsentmasons.com/out-law/analysis/what-to-consider-appointing-employees-boards-in-the-uk
[2] Source: https://savannah-group.com/category/functions/board/page/3/
[3] Source: FT and
https://enterprise.ft.com/en-gb/blog/the-case-for-appointing-employees-to-board-positions/#
[4] Source: FRC https://www.frc.org.uk/directors/corporate-governance/uk-corporate-governance-code#current-edition
[5] https://www.frc.org.uk/getattachment/56bdd5ed-3b2d-4a6f-a62b-979910a90a10/FRC-Workforce-Engagement-Report_May-2021.pdf