Corporate governance is an integral component of running a business, particularly when it comes to maintaining compliance with legal standards and keeping company leadership accountable. Employees are often affected by decisions made with respect to how a corporation is governed, but they typically don’t have much say in the matter.
Here, we’ll look into the role employees can have in corporate governance and how they can impact it in a positive way.
The Interest Employees Have in a Company’s Success
A company’s success stems largely from effective corporate governance and management, and employees have a very high interest in that. If the company is successful, employees can continue reaping benefits in the form of remuneration for the time they spend at work. If the company fails, they stand to lose a great deal—potentially more than anyone else in the company.
Employees therefore have an interest in the corporation’s wellbeing, and as such, it’s fair that they should have a say in decisions that impact them.
Advantages of Involving Employees in Corporate Governance
Organizations that involve their employees in corporate governance often see positive results, both in terms of their staff and their business’s overall success. Some common benefits include the following:
Increased Employee Engagement
When employees feel that they have a role in informing decision making in their organization, they are more engaged in reaching corporate goals. They have a great deal more motivation, which means enhanced productivity and more “above-and-beyond” behavior.
Retention of Talent
An employee-centered business also tends to attract and retain more talent. Skilled workers are drawn to environments that value their employees, and getting input from your staff on corporate matters is one way to do that. It also creates an environment where your staff is more likely to develop their skills more—they’re willing to put more of themselves into their work, and they get more out of it.
More Efficient Change Management
Given how fast paced many industries are these days, effective change management is vital to continued success. This is particularly true when it comes to the ever-changing regulations developing around growing industries. However, if employees don’t feel like they have much say in the changes your company makes, they’re more likely to drag their feet, hampering your company’s adaptability.
Making employees part of the process, on the other hand, gets more staff buy-in, thereby improving change management throughout the organization.
How to Include Employees in Corporate Governance
As important as involving employees in corporate governance may be, it often isn’t immediately obvious how that is to be accomplished. Here are a few tactics to try when involving employees in corporate decision making:
- Survey employees for feedback on corporate decisions.
- Create employee councils that act as representatives on employee-related matters.
- Get some staff representation on the board.
- Focus on treating employees fairly. Doing so makes it more likely that employees will be heard on important matters while also supporting compliance with employment law.
An environment where employees can be heard not only helps improve compliance with employment regulations, but it also improves regulatory compliance throughout the organization while enhancing corporate governance.