Sometimes for boards, no news is bad news.
Improving safety statistics, workplace diversity reporting, industry remuneration statistics and ‘good’ employee turnover levels are ‘people’ matters that board members are usually informed about. But are there matters that Boards don’t hear about because their executives don’t want to trouble them with problems or be the bearers of bad news?
There would be very few workplaces in Australia with 100 or more employees that are not subject to at least one claim by a current or former employee at any point in time. The number and nature of employment-related claims can be instructive to directors about what is going on within the organisation. Common claims include unfair or unlawful dismissal, adverse action, discrimination and bullying. At an individual level, one nasty employee claim can seriously damage an organisation’s reputation regardless of whether it is material from a monetary perspective. A series of similar claims could be even more difficult to recover from.
Directors should consider whether they need to be better informed of the details of employee claims, even where they do not result in legal action, to ensure the systems and processes within the organisation are being appropriately managed and director duties are being satisfied. For example:
- A number of unfair dismissal claims (or threats) may indicate a restructure has been poorly implemented
- Repeated claims of sexual harassment may indicate a poor culture and the potential for significant damage to the brand (and the possibility of personal liability)
- A series of bullying claims or departures in one part of a business may indicate a change management program has failed or a need for further training, and
- An increase in ‘voluntary’ turnover of women in the workplace may hide a problem with implementation of flexible work practices with consequences for attracting and retaining the right people.
If directors are not being informed of the number and nature of employee and former employee claims and complaints then further questions of the company’s executives may be necessary. The best company directors make a point of scratching beyond the surface (at least annually) to ensure that none of the above items point to a deeper trend.