Corporate Boards Grapple With Emerging Workforce Culture Concerns

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Corporate Boards Grapple With Emerging Workforce Culture Concerns

Written by: Michael Peregrine, Senior Contributor




A return-to-work strategy is emblematic of many new agenda items competing for immediate board … [+] attention.

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Add another major new responsibility to the already stressed corporate board agenda.

The last few weeks have seen the emergence of several important new concerns that require the board’s attention. Each of these fall under the general heading of ‘corporate’ or ‘workforce’ culture, and all of these call upon the board to make, or ratify, important decisions on subjects with which they understandably may have little familiarity or comfort.

These concerns include when employees may safely to return to work; board oversight of potential management fatigue; and efforts to address the social justice concerns of employees. How directors will approach these concerns and adjust the board agenda to accommodate them (and others) will be an important governance challenge for the balance of the year. All of these find their way to the agenda by virtue of the board’s responsibility to exercise oversight of organizational culture.

As noted by the National Association of Corporate Directors (NACD), a positive organizational culture can be a meaningful corporate asset in a variety of ways (e.g., influencing operational performance, talent development and organizational reputation). Organizational culture can be particularly evaluated through workforce-related topics such as employee morale, prevention of sexual discrimination and harassment, promotion of gender equality and inclusion, employee health and safety and other related topics.

For example, the focus on post-pandemic return to work is a subject of significant interest to both corporate leadership and employees. According to a recent The Wall Street Journal article, some of the initial satisfaction with the work-from-home experiment has faded due to concerns with the sustainability of the model. Permanent remote work models are often perceived as harmful to employee morale and integration, work quality and productivity and talent development.

Yet two new separately conducted surveys of corporate leaders report that over 80% plan to allow flexible work-from-home policies on a going-forward basis. This, together with soaring infection rates and uncertainty concerning school reopening, suggests that there remain divergent opinions on any unified return-to-work strategy.

Decisions concerning return-to-work and work-from-home strategies are complex and carry the potential for significant workforce culture and talent development impact, as well as legal considerations for the corporation. The appropriateness of a particular corporate decision may vary according to industry sector, and should be made by corporate leadership in a careful and informed manner.

Notably, with its recent decision to maintain a work-from-home approach at least until July of 2021, Google became the first major U.S. corporation to establish a long-term timetable in response to the continuing pandemic. This reflected in part a desire to reduce uncertainties for employees seeking to make education and housing choices given the scope of its workforce. Google’s decision may inform the thinking of other major corporations.

Another emerging workforce concern is that of management fatigue, and the board’s obligation to identify and address it. This concern arises from the perception that the unrelenting demands of the COVID-19 pandemic are placing unpreceded pressure on corporate management. Such pressure is likely to increase as corporations seek to address the latest wave of the pandemic and as boards seek to more closely engage with management to help formulate and guide effective responses.

Two particular risks may arise from a crisis-fatigued management team. First, their effectiveness in terms of directing corporate operations may be negatively impacted. Second, their ability to support the board in connection with its crisis-affected oversight and decision-making may become similarly limited.

NACD has appropriately identified management fatigue as a material operational risk to which the governing board should be particularly attentive. In its new publication, “Identifying and Reducing Management Fatigue”, NACD offers a process by which management fatigue can be identified; healthy board-management communication on the subject can proceed; and some assignments of management can be “offloaded” to reduce the workload burden of management.

Some management teams might find the board’s attentiveness to fatigue indicators as overly paternalistic to their leadership, or as a misdirected effort to engage more directly in day-to-day operations. To the contrary, it is an increasingly important demonstration of the board’s ability to adapt to continued crisis operations, and to remain faithful to its core workforce oversight duties.

A third major concern is the pressure on corporations to address social justice issues internally, within the workforce, as they may have externally, with the broader community. As The New York TimesDealBook recently noted, an increasing number of companies are making special efforts to address the social justice concerns of their employees, and to provide a cultural environment in which conversations regarding social justice, racism and similar issues are encouraged and protected. These are above and beyond current and planned initiatives relating to board and executive diversity and inclusion—which require continued board attention.

Given the potential impact of such internal initiatives on workforce culture, the board should be closely involved in their development. Indeed, NACD has observed that “business has a crucial role to play in creating the proverbial seat at the table for all who want to participate freely and equitably in our society.” Accordingly, NACD recommends that companies and boards closely evaluate the efficacy of their prior efforts to address racism, diversity, inclusion and corporate social responsibility issues, and what actions might be needed going forward.

Examples of internal initiatives promoted by other companies include recognizing culturally significant events or holidays with closures or employee time off; allowing the wearing of politically-oriented pins and clothing and other political messaging by individual employees; facilitating workplace conversations on current indicators of social responsibility; and prohibiting use of symbols widely recognized as racially insensitive.

These can be supplemented by governance measures such as the formation of special task forces, as well as committees with delegated authority, intended to address issues associated with social justice, diversity and inclusion throughout the organization. These bodies are also often made responsible for implementation of related company-wide policies and procedures.

Individually and collectively, these concerns aren’t standard fare for the board agenda. Rather, they’re the byproduct of the extraordinary health care, financial and social environment which companies have been forced to confront in 2020. Yet individual directors could be excused for questioning their agenda relevance. These are management issues; we’ve never had to address them at the board level before. And we don’t have time to do that now.

But the simple fact is that they do have to be addressed by the board. Each of these developments—and the broader interests they represent—is foundational to the culture of high-performing companies operating in a pandemic-shaped environment. And that’s very much a board-level concern. And it’s also consistent with the Business Roundtable’s “Statement of Purposes of a Corporation”, and its focus on delivering value to all corporate stakeholders (including employees).

So it makes sense for the board to work with management on these and other cultural issues likely to arise over the coming years. That could include refining corporate culture and purpose goals; defining the respective culture-related roles of the board and management; providing culture-related information flow to the board and establishing a broader leadership focus on the issue of workforce culture. There’s no “best practices” direction at this point.

But one thing’s for sure—boards need to make room on the agenda for workforce culture issues.

via Forbes – Leadership “https://ift.tt/35Uaszf”

August 6, 2020 at 03:43AM

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Dr. Sharon Lamm-Hartman

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