Making internal preparations for a change of government in the UK
The Labour party has made bold claims about its transformative agenda should it enter government. This includes significant changes for UK business, especially public companies, such as transferring shares to employees and giving workers mandatory representation on boards.
Changes to executive pay and bonuses, stronger employee rights, corporate tax, a potential four-day week and the ability of unions to be recognised for collective bargaining purposes and to initiate strike action more readily should also be expected as part of this agenda.
Whatever a company’s view of these proposals and of the likelihood of their being implemented, it’s important to plan for the potential impact and to start getting ready now. While Labour is currently not tipped to win an outright majority in a near-term election, it is open to collaboration with other parties on the centre-left.
Companies need to consider their position on Labour’s proposals, and whether to share that position more broadly; and how they can prepare for implementation.
At the same time, it’s important to remember that, even if the proposals don’t end up being put into practice, the issues of employee ownership and greater representation at board level are on the rise.
So, companies should also consider carefully how their position and actions affect the way they’re perceived by their own employees – both as an employer and as a contributor to society. It’s clear that Labour’s proposals have resonated with people and, to some, feel like a natural evolution of employees’ rights. There is a potential employee relations risk of being seen to ‘go against the grain’ of these proposals.
Brunswick is helping clients consider the proposals by addressing the following interconnected questions
1: What’s our position?
It’s vital that your board and executive reflect on and agree their position with regard to each Labour proposal, so that it’s commonly understood among the leadership team where you stand, not only from a policy perspective, but also with regard to the implications for the business and all its stakeholders. There should be no ambiguity about the company’s position, although it may be reviewed on a regular basis as circumstances change. This position could include the company’s own policy response to the proposals which better suits its circumstances. Labour is as much testing the water with its thinking, in the hope of a reaction, as it is planning for government.
An internal review would typically take place during horizon-scanning sessions facilitated by the risk and corporate communication functions. Labour’s proposals should be recorded on the company’s risk register, tested against its risk appetite, with stated operational, financial and reputational risks.
It‘s fair to say that Labour has put much of its thinking on corporate reform out there in order to stimulate change, and part of the process of mitigation will lie in demonstrating that businesses are taking appropriate action which obviates the need for draconian and inflexible legislation.
2: Do we state our position?
Once the company’s position is clear, a decision about whether to communicate it, how, when and by whom should be taken (and regularly reviewed). It may seem obvious not proactively to communicate, but this decision may be taken out of your hands. With an early General Election a distinct possibility, business leaders may be asked for their views on Labour’s proposals.
It’s worth recognising that polls suggest the chances of a Labour majority are slim. A General Election may well produce another coalition government based around centre-left policies. If that’s the case, then Labour’s proposals may end up watered down. It may be premature to talk about them publicly before we know exactly what will happen.
Nevertheless, leaders should be prepared, media trained and aware of the implications of their stated position for their stakeholders. Ahead of the Brexit referendum several large UK companies took a public remain position, perhaps without realising that many of their customers and employees held a different view. Your views on, for example, worker representation on boards, will be viewed with great interest by employees.
And it’s not just your leaders who may be required to communicate about these issues. Your position will be reflected in your annual report and other corporate announcements that are fully ‘on the record’.
3: Do we want to get ahead of the change?
There may be changes you can make now that take you some way towards Labour’s proposals. If (or when) those proposals are implemented, you’ll be able to show that you’re already taking steps in their direction and they’re not being ‘forced’ on you.
For example, some companies have appointed employee engagement champions to represent employees’ views at board level, in line with Section 172 of the Companies Act. Others are going further by establishing employee panels who are consulted on important company initiatives and represent their colleagues’ views and concerns – to be discussed by the executive team.
Remember though that Labour’s proposals are truly radical and represent a fundamental shift from the status quo. If they’re implemented in full then directional tweaks made now will only take you so far. There’s a delicate balance between signalling intent, while not going so far towards radical change that you inadvertently undermine your ability to make decisions and manage your business
4: How do we prepare for the change?
The first step is to consider Labour’s proposals in the same way you do for all risks – from a financial, operational and reputational standpoint. In doing so, you should map the implications for all your stakeholders including their current and potential views and ways they interact with your business.
The board and executive team will need to be fully briefed on the proposals – typically by a combination of the risk and corporate communications functions. Those briefing sessions should be used to analyse insights into your stakeholders’ perspectives on the proposals and to develop a clear, agreed position for each. At the same time, there should be agreement on the communications approach for your position – based around timing and pro- or reactivity.
And your public affairs professionals should start engaging with the Labour party now. Sharing your positional thinking, as it develops, presents an opportunity to test ideas with the party, to demonstrate action, and (perhaps to a lesser extent) to influence policy.
Brunswick’s political, media, employee and societal experts are currently helping clients navigate these challenging issues and answer the interconnected questions described above. We work closely with boards, executive teams, the corporate affairs and risk functions. Our support includes:
• Developing a clear understanding of political and regulatory proposals, and how they may affect your business from a financial, operational and reputational perspective.
• Facilitating working sessions to identify and agree your position on these proposals, including the potential impact of this position on all your stakeholders.
• Developing a communications approach for your position (pro- and/or reactive) including the most appropriate ways for sharing your position with a range of stakeholders.
• Training leaders and other spokespeople in articulating your position, both outside the business and with your own employees.
• Planning for implementation of the proposals and/or interim steps that signal intent while, at the same time, improving employee engagement.
• Ongoing reviews of the proposals as the political environment shifts and evolves, along with recommendations on how this may affect your own position.