A company’s workers are fundamental to its long-term success. Intentionally including the workforce perspective in strategic decision-making and corporate governance processes, is integral to a company’s performance.
Led by Railpen, the Workforce Directors Coalition (WDC) was formed in 2023 to encourage companies to take a more meaningful approach to the way they engage with their workforce, including through workforce directors.
The WDC brings together the collective experience of asset owners and asset managers who've signed up to the following commitments in our Investor Statement on Workforce Directors:
- Engage productively with companies and/or our managers on workforce directors
- Bring either our own experience, or perspectives drawn from discussions with a wide range of other firms, organisations and our investment managers to conversations on this issue
- Listen to companies’ perspectives and explanations, and be vocal in our support where we think a meaningful approach has been undertaken on workforce directors
Learn more about why we set up the WDC in our interview with Railpen’s Senior Investment Manager and Active Ownership Lead, Caroline Escott…
Workforce directors
As investors, we don't believe there's a single 'right' way to incorporate the worker perspective that suits every company, in every sector. We do however believe that more companies in the UK and US could, for example, consider appointing a workforce director – a director of a company board drawn from the company's workforce - to achieve benefits over and above (and ideally in combination with) other workforce engagement mechanisms.
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What is a workforce director? A workforce director, also known as a worker or employee director, is a director of a company board that is drawn from the company's wider workforce or employee base. In our definition, we do not consider the workforce director to be a representative of the workforce. Rather, they have the same set of fiduciary duties and stakeholders to consider as any other director, but they also have current experience being part of the firm's broader workforce. |
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Four key reasons to appoint a workforce director
Here are four key reasons why we think more companies should at least consider appointing one or more workforce directors to their boards:
- Improved decision-making: The executive board can draw on workforce directors’ new perspectives, ideas, and experiences to aid decision-making, leading to the kind of well-rounded and effective decisions provided by cognitively diverse boards.
- Improved employee morale: The appointment of a workforce director can demonstrate to employees that their opinions and perspectives are valued and can contribute to a more positive workplace culture and increased employee morale.
- Increased understanding of the workforce: Providing insight into the daily experiences and challenges employees face can help the executive board make informed decisions that align with the needs and concerns of the workforce.
- Improved communication: Where part of their role involves acting as a liaison between the executive board and the rest of the workforce, workforce directors can improve communication and help to build trust and understanding between both groups.
Practical guidance for companies
Workforce Inclusion and Voice: Investor Guidance on Workforce Directors explains how companies can take a meaningful approach to including the worker voice at board level.
This guidance has been created following discussions with companies, regulators and workforce representatives and is intended to help companies think about the workforce engagement approach that will work best for them. This includes circumstances in which it might be useful to consider appointing workforce directors to company boards.
This guidance on workforce directors is split into four areas:
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ROLE
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RECRUITMENT
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RETENTION
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REPORTING
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The Coalition's approach
The WDC seeks constructive dialogue with three groups of companies:
- Those who already have workforce directors – to aid our understanding and express our support
- Those who are interested in workforce directors – to help them understand what institutional investors consider to be good practice and feed through practical examples from companies that already have workforce directors
- Those where workforce is a material issue and we deem current employee engagement mechanisms to be insufficient
We also engage with policymakers to help create a supportive environment for workforce directors specifically but also to support companies to pursue whatever workforce engagement mechanisms works best for them.
The Coalition's members
Members include the following asset owners and asset managers:
- Border to Coast
- Brunel Pension Partnership
- Church of England Pension Board
- Federated Hermes
- Merseyside Pension Fund
- New York City Comptroller
- Northern Local Government Pension Scheme
- Rathbone Greenbank Investments
- Royal London Asset Management
- Universities Superannuation Scheme
Become a member of the Coalition
WDC membership is available to the following:
- Long-term institutional investors, including asset owners and asset managers
- Investor-governed, non-profit organisations
Founding members signed up to the Coalition’s Investor Statement, which sets out our shared commitments. While we encourage new members to review and sign the Investor Statement, it is not essential to becoming a member.
Interested in joining? Email SO@railpen.com
Antitrust disclaimer
The responsibility lies with each of the individual WDC members to understand and adhere to all laws and regulations applicable to them. This includes, but is not limited to, relevant antitrust and competition laws. WDC members explicitly avoid coordinating on company-specific investment decisions, meeting-specific proxy voting decisions or any other business-related decisions. WDC members are responsible for their own investment, voting and business decisions and must always act completely independently to set their own strategies, policies and practices based on their own best interests. The WDC facilitates the exchange of public information, but members must avoid the exchange (including one-way disclosure) of non-public, competitively sensitive information, including with other members and participants in engagements.
Useful links
Investor Statement on Workforce Directors – Investor Statement which sets out our shared commitments as a Coalition.
Worthwhile Workforce Reporting: Good practice examples from the UK's biggest examples – guidance on what constitutes good workforce reporting, highlighting examples of best practice
How do companies report on their ‘most important asset’? – an analysis of workforce reporting in the FTSE 100 and recommendations for action
AGM Statements – Railpen’s Annual General Meetings (AGM) questions, statements and letters which include our engagements with companies on workforce directors
Fair Reward Framework – assesses the UK’s biggest companies on a variety of pay metrics, including whether or not the company has a workforce director.
Get in touch
To learn more about the Coalition, our guidance and/or to provide feedback, please get in touch with us at SO@railpen.com
@railpen
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