Governance Watch - Issue 7

By Dina Medland in London

Employment practices

The rise of the so-called ‘gig economy’ has focused fresh attention on worker’s rights in Britain at a time when corporate governance reform is on the agenda. Since the last Governance Watch, there have been many stories in the media headlines focusing on employees at a variety of businesses from the point of view of how they are treated on worker’s rights. At time of writing the latest media coverage is of the delivery company Hermes.

Not only has HM Revenue & Customs stepped up its investigation into its couriers being classified as ‘self-employed,’ but Hermes has also been hit with an employment rights lawsuit from the GMB trade union.

The FTSE 350 may consider itself to be too grand for such deliberations. But businesses that spend a lot of time and resource working towards employee engagement as well as finding ways to offer flexible working to attract the best talent might learn a few lessons from this debate. As values are at the heart of it, it is also one that should come up in Britain’s boardrooms. Prime Minister Theresa May has made ‘fairness for all’ a campaign slogan, but a report just out by the National Institute for Economic And Social Research (NIESR) for the TUC shows that although insecure work has proliferated across Europe, it is especially marked in the UK. I covered the report and some of its implications in my independent blog, Board Talk.

#TimeForAction: Inclusion

Diversity – when it goes beyond gender – has tended not to grab the headlines, unless strategically placed there by intense lobbying. But, following an independent review on the need for inclusion in the workplace and its potential benefit to the UK economy, the CBI has made it a priority. It is urging businesses to make swifter progress on creating more inclusive workplaces and to not allow this to slip down the agenda in the face of competing priorities.

At a diversity and inclusion conference, the CBI argued that greater diversity in the workplace is not just a matter of ‘fairness’ but a hard-nosed business case in the face of major changes in demographics and technology.

Changing Business Models

Digital transformation remains a challenge for business reflected both in the media coverage of Responsible Business Week – including by me on Forbes – and by each news story documenting new business models.

The retail sector is one that has been hit hard by judgement calls around digital, and around changing customer expectations, as well as more fickle customers. Last week Marks & Spencer said it was going to trial an online food delivery service soon: many wondered what took it so long.

This week it emerged that Lidl is on track to overtake Waitrose to become the UK’s seventh-biggest grocer as early as this summer. There are multiple reasons for this, clearly – but you can’t shop at Lidl online. I covered the rise of Lidl in an unlikely location – in my hometown in well-heeled Sevenoaks in Kent – in 2015, and I have to say I am not surprised by its success, based on popping in at least once a week since it opened.

As I wrote then on Forbes: “At a time of fast changing markets and heightened competition, there is growing recognition of the need to re-think business models….It is particularly interesting to watch in the UK retail sector, where markets have perhaps been closely aligned by affluence as well as aspiration on the part of consumers - a factor that seems to have changed rapidly in the years since the financial crisis.”

Investors beware? In more from the retail sector, Sainsbury’s – in reporting a third straight fall in annual profit earlier this week, has warned that a challenging market meant it could take up to five years to deliver sustainable profit growth.

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