Theresa May’s plan to put workers on company boards has been criticised and met with resistance from senior cabinet ministers and the business world in general. During last week’s Conservative party conference, Mrs May stated, “Later this year we will publish our plans to have not just consumers represented on company boards, but workers as well.” The plan is part of a wider package of reforms to improve corporate governance, including annual binding shareholder votes on pay and imposing requirements on companies to disclose the pay rations between executives and shop-floor staff.
Several ministers have expressed the view that the plan could be either dropped or moderated. Furthermore, its practical applicability has been doubted. Carolyn Fairbairn, director-general of the CBI employers’ organisation, suggested last week that the idea could “look good on paper” without making a significant difference in practice. She said, “Placing workers or consumers on boards can be a solution for some firms, but may not be the only or even best way of changing company culture.”
However, the Prime Minister’s plans have been publicly welcomed by the Institute of Directors. Nonetheless, it maintains a caveat that workers should be involved in boards voluntarily rather than by compulsion. The government is expected to open a consultation in the coming weeks regarding the intricacies of implementing the policy, which will initially only apply to listed companies.