In the aftermath of the EU referendum, the most oft used phrase trotted out by MPs of all political hues was: “It’s the will of the British people”. Whether or not, in voting to exit the EU, the British people also wanted to significantly devalue the pound and cause economic uncertainty, cause severe ructions in the Labour party and spur David Cameron to resign from his post, is highly debatable.
What’s also in doubt is whether or not the majority of the British public wanted to elect Theresa May as the nation’s new prime minister. Yet less than one month after the Brexit vote, that’s exactly how things played out.
In a display of ruthless efficiency, within hours of taking the keys to Number 10, May had filled key ministerial positions, clearing the decks and bringing in her own new-look Cabinet. It’s still too early to predict whether or not May will look to change or even ditch long-standing Tory Party policies, although she has pledged to serve on the mandate that was put forth before the last general election.
However, based on comments May made during her tenure as Home Secretary and in the brief period she spent campaigning for the Tory leadership, some clues have emerged about what her appointment might mean for UK businesses, and the issues that HR directors could encounter in the future.
Just a few days prior to May’s ascension to Number 10, the prime minister in waiting offered the biggest sense yet as to what we can expect.
Speaking shortly before her main rival, Andrea Leadsom, withdrew from the leadership contest, May said she wanted to put workers on company boards and make shareholder votes legally binding on executive pay, with the aim of making business fairer and providing work for the many and not for the few. “It is not anti-business to suggest that big business needs to change,” she said.
Her ideas have received a mixed response from industry. Ann Francke, chief executive of the Chartered Management Institute, welcomes May’s proposed changes. “This will place a greater onus on employers to create more inclusive workplaces, tackle stubborn problems like the gender pay gap and confront excessive executive high pay,” she says.
The new PM’s vision for business has also struck a chord with David Frost, group HR and OD director at Produce World. He thinks having workers on boards is “a great idea… [It] sits well with the culture we have in our business. We involve people at all levels in giving feedback to the board on how we operate. To formalise it (via regulation) is a fabulous idea.”
But not everyone was so effusive. While many business leaders think that in theory, board representation is a good idea, they argue that in reality introducing such a measure will present many challenges.
“How would you do that in a way that would give them [worker reps] some meaningful influence and make sure that the representative isn’t a management patsy [and doesn’t] feel overwhelmed or dominated by management?” asks Charles Cotton, performance and reward adviser at CIPD.
Tony Burke, assistant general secretary for manufacturing at Unite, is also sceptical. “The idea of worker reps on the boards of companies is something that some trade unions have argued for for a long time,” he says. “We have some experience of this with multinational companies where some people from the UK sit on the main board of companies and I suppose you could say it works really well. But what I don’t think Theresa May is talking about here is the German-style structure of codetermination. And I don’t believe having a few token workers on a few boards will close the pay gap. The only way to do that is through proper collective bargaining, so we’ll have to wait and see.”
Given how fluid the situation surrounding the UK’s political and economic climate is at the moment, ‘time will tell’ is the phrase that many members of the business community are rolling out.
In the past, May has talked about the need for greater clarity around arrangements such as flexible working and the problem of age discrimination in recruitment, but she hasn’t yet put forth any hard and fast ideas as to how she plans to tackle these issues.
One thing that is clear is the new prime minister is committed to closing the gender and CEO pay gap; in the past she has supported businesses introducing the disclosure of pay ratios.
“Businesses on the whole have been reluctant to go along with that and there are some legitimate criticisms surrounding pay ratios, but in principle we think they would be useful,” says Stefan Stern, director at the High Pay Centre. “She’s been very clear that she thinks that top pay isn’t working and boards in general aren’t working as well as they could. The phrase she used about boards is the scrutiny that they provide is just not good enough.”
As far back as 2010, in a comment piece for The Guardian, May expressed concerns about the board structure of many UK businesses, calling for the need for more female board members and a greater diversity at board level.
“It’s common sense – diverse boards should be better boards,” she wrote. “They will have a better understanding of their customers and they will bring fresh perspectives, generate new ideas and ultimately make better decisions based on the views of a broader group of people.”
Pushing through this sort of seismic shift at a boardroom level is not going to be easy, however. But rather than consider May’s ideas a threat, Michael Rose, who heads up Rewards Consulting, sees this as an opportunity for UK businesses to improve their corporate governance.
“Some companies have already increased the number of women who sit on their boards and some are looking to change not only the gender balance, but also to bring in people who are disabled, or who are from different races, religions and sexual orientation,” says Rose. “That’s because having more diverse groups on boards can make organisations more successful because they think about things from a different perspective, so you should be able to get a better quality decision and a more thoughtful decision, which is more likely to lead to better outcomes for businesses.”
It’s still far too early to say with any certainty though which agendas and policies May will look to push through during her premiership – especially with the dark shadow of Brexit looming large over UK businesses and the economy. The only certainty is that whichever path she decides to follow, the new prime minister – and UK organisations – face challenging times ahead.