Workers on boards is an idea whose time has come

When Theresa May first floated the idea of workers on boards, there were howls of outrage from the business lobby and her proposals were very rapidly watered down.

Under the reformed UK corporate governance code, companies now can now pick from a menu of options, the least radical of which is assigning the role of pretending to care about employees to an existing non executive director.

Care to guess which most have opted for? The doctrine of comply or explain underpinning the code means they don’t even have to go that far. They can simply “explain” why they’ve chosen to dismiss the idea.

Pirc, the voting adviser, has been monitoring the issue. The number of companies opting for full-on worker directors amounts to just a handful. Among them are First Group (which has had one for years and proves how stupid the objections to the idea are), Capita, Mears Group and Sports Direct.

However, the main opposition parties have all pledged to force the issue.

The Liberal Democrats would have staff representation on remuneration committees and require all UK-listed companies and all private companies with more than 250 employees to have at least one employee representative on their boards, with the same legal duties and responsibilities as other directors.

Labour goes further. It would “require one-third of boards to be reserved for elected worker-directors and give them more control over executive pay”.

The SNP is less specific. It simply says it will “back moves to increase worker representation on company boards – a practice common place amongst our more productive, investment-rich European competitors”. But that’s fine. It’s the principle that matters.

The Tory manifesto is, as with much else, silent on the issue. The party has been trying to court working-class voters. But it doesn't seem too keen on allowing any scruffy oiks to actually be given a say in running things.

It isn’t hard to envisage this continuing if it returns to power. Boris Johnson and co are already planning to kick the economy in the guts, with the possibility of a no-deal Brexit very real.

Given that business will be screaming, it’s not hard to see the Department for Business, Energy and Industrial Strategy leaving the idea of moving further on worker directors alone as a sop to the business lobby, even if it presses ahead with a more interventionist economic strategy than we’ve seen to date.

And yet, given that the idea of employee directors is now entrenched in the thinking of every opposition party, it will continue to gain ground.

It’s inching forward in America too. That’s worthy of note because it’s to where the Tory party looks for most of its ideas.

Northstar, a “socially responsible investment firm” in Boston, has this year submitted resolutions for employee representation on the boards of Microsoft and FedEx.

Alphabet, Google’s parent company, has also come under pressure on this front, with a number of large US and UK pension funds backing a campaign calling upon it to adopt a worker director.

Employees have clout at big tech, where businesses run on their brain power, and they've been flexing their muscles on a number of issues of late. Perhaps the first domino will fall in Silicon Valley.

But perhaps it will be pushed over in Washington. Senator Elizabeth Warren, one of the leading Democratic presidential candidates, has submitted a plan that would require 40 per cent of board directors to be selected by employees at big American businesses. Her progressive rival Senator Bernie Sanders has called for 45 per cent.

You would think smart businesses would see the way the wind was blowing and seek to get ahead of this. Worker directors are entirely uncontroversial in Europe, and there is no evidence that they impede corporate performance. To the contrary.

But no. There is a mulish Anglo-Saxon business conservatism that refuses to cede any ground on this issue, suggesting that change will have to be forced.

Sooner or later it will be. The problem for the business lobby is that it is forfeiting the right to be a part of the conversation with its attitude.

Here’s something Britain’s corporate titans might also like to consider. They are being made to look bad by none other than Sports Direct founder Mike Ashley. Is that somewhere they really want to be?