UK policymakers should do more to motivate businesses to consider the workforce director model and address misconceptions, Railpen has said, arguing that an engaged and fulfilled workforce is a key factor for sustainable financial returns. 

In its latest briefing paper on workforce directors and voice, Railpen argued that, as well as being desirable in its own right, a motivated, engaged and fulfilled workforce is a necessary factor for the generation of sustainable financial return. 

However, it warned that despite progress made by the Workforce Directors Coalition, which was established by Railpen in 2023, and a growing level of investor support for the adoption of the workforce director model, common concerns from companies on the workforce director model continue. 

Given this, Railpen has called on UK policymakers to confirm that the workforce director model aligns with the government’s objectives in relation to making work pay and improving workplace standards, for instance, through the Draft Audit Reform and Corporate Governance Bill, or the Employment Rights Bill. 

It also encouraged policymakers to review existing guidance, such as the workforce engagement section of the UK Corporate Governance Code, with a view to strengthening it where necessary, such as through a comply or explain approach.

In addition, it suggested that policymakers should directly address misperceptions about the impact of workforce directors on board and board committee independence in guidance to companies and investors, and to amend company reporting regulations to require better disclosure on worker voice at the board level. 

Railpen head of investment stewardship and co-head of sustainable ownership, Caroline Escott, said: “There is clear evidence that appointing workforce directors to a company board can be an effective mechanism for ensuring that employees’ voices are heard at a board level and to build trust amongst workforces. This can in turn support long term company performance and value-creation.

"In spite of the evidence, adoption levels remain low, and we believe that companies are unlikely to actively consider adopting the model without further encouragement from UK policymakers.

"At Railpen, we work to protect and enhance member outcomes through proactive and thoughtful stewardship. This is why we are calling on UK policymakers to do more from both a regulatory and education perspective to motivate businesses to consider the workforce director model and address the misconceptions that exist.”
 

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