As of this year, all Public Limited Companies (PLCs) that are premium listed are required to disclose the health of their workplace culture in their annual reports, in order to comply with the Financial Reporting Council’s (FRC) new Corporate Governance Code.
Here’s everything you need to know about the new Code, and what it means for your business.
In July 2018, the FRC – which sets out the principles and standards for corporate reporting in the UK – published a new, updated Code.
It included, for the first time, a requirement for boards to monitor and assess company culture and employee engagement when producing their annual reports. It also recommended that companies review different engagement mechanisms, and enable employees to raise concerns anonymously.
The new Code’s emphasis on culture and people reflects a recent shift in focus – not just at the FRC, but among investors and the broader business landscape.
The new guidelines apply to all companies with a premium listing, whether incorporated in the UK or elsewhere. Applicable firms are required to start reporting as per the new Code in all annual reports published from January 2020 onwards.
What does this mean for businesses?
For some PLCs, adhering to the new requirements will be easy. Indeed, companies that are already employee-centric, and have approved measures in place to monitor and assess culture, need only decide how best to showcase their actions in the annual report.
However, for many others, it will be a stretch to comply with the guidelines in time for their next report. These companies need to act now, or face explaining to investors why they have fallen behind in this crucial element of business today.
The FRC is not draconian in its enforcement of the Code. But PLCs that do not comply will need to state as such in the annual report, and explain what alternative arrangements they have in place.
Employee engagement specialist Peakon is available to support companies struggling to meet the Code’s requirements, as well as those unsure about how to report any positive actions they have already taken.
What does the new people-focussed code say?
The new Code states that company boards should:
- Assess and monitor company culture, and explain actions taken in the annual report
- Describe how they are investing in and rewarding the workforce
- Actively engage the workforce through a variety of methods
- Keep engagement mechanisms under review so they remain effective
- Provide a means for the workforce to raise concerns in confidence
- Set out the company’s purpose, values and strategy, and make sure these align with the culture
- Establish a benchmark against which future monitoring can take place
Why should I act on this?
Companies that do meet, and ultimately exceed, the FRC’s expectations can expect to gain a competitive edge in today’s brutal business landscape.
As the war for talent wages, the ability to attract and retain the best people is an increasingly crucial driver of company success. Businesses that do nurture an employee-centric culture have been proven to reduce staff turnover, improve customer satisfaction and even boost the bottom line.
As well as making good business sense, it reassures investors – in an era of eroding trust – that your company is proactive, well-managed and forward-thinking.
Clearly, this is not just about obediently complying with the Code. It’s about taking your company to the next level.
How can Peakon help?
“Surveys can be a powerful way to engage people and performing them regularly provides valuable trend data. If published – for example, on the company website – the results can also give investors a useful insight into the view of the workforce.”FRC Guidance on Board Effectiveness
Companies that use Peakon’s platform should be in a strong position to meet and even surpass the FRC’s new guidelines around culture and engagement.
Our products empower boards to seamlessly measure employee engagement, and assess the true health of their company culture.
The ‘continuous listening’ approach means employees are able to give frequent, anonymous feedback, while leaders benefit from real-time insights. We can help boards to enact some of the new FRC guidelines around diversity and inclusion reporting too.
Contact us here to find out more: firstname.lastname@example.org