Examples of bad leadership have been in plentiful supply in 2021 — and right up until the very last minute, thanks to Number 10’s partygoers and Vishal Garg’s lesson in how not to let people go. But the year has also been rich in insight from more inspirational leaders, and we’ve been lucky to work with many of them across a series of board member interviews, Think Tank roundtables and events.For many of these leaders, one challenge stood out — how to help their organisations thrive while ensuring they act as a force for good, both within their company and wider society. And while the solution is not simple, nor is it limited to just the following, there are three items that we believe should appear at the top of every board’s 2022 agenda, if they are to play their part:
1. Climate change metrics that mean something
After decades of conversation, 2021 felt like the year that finally set the wheels in motion for action towards net-zero.
Investors are asking for the “so what?” around climate change metrics. They want to know what these numbers mean for the environment, for the company strategy and their investment portfolio.
Consequently, we’ve seen the establishment of the International Sustainability Standards Board, to drive more robust and consistent reporting to international investors. And the Financial Reporting Council created a task force for climate-related financial disclosures (TCFD). This task force promotes eleven disclosures for any premium listed commercial company and highlights best practice examples where companies are addressing the questions raised by investors.
Therefore, if they aren’t already, board members should factor these rigorous standards into their assessment of executive performance, and use quality of reporting, and the delivery of the company’s climate change strategy, as key indicators of this performance.
“Investors have galvanised boards to look at this issue. Banks are going to withhold loans to companies that don’t adhere to certain standards. You, as a board member, have a responsibility to make sure you have a CEO who can lead you through uncertainty and get you to the other side in the right place for the low-carbon future.”
2. A game plan for handling the great resignation
#Thegreatresignation is a hashtag that will continue dominating LinkedIn news feeds well into 2022, and with good reason. According to the Office of National Statistics, total job-to-job moves reached a record high during July and September this year — a trend that shows no sign of slowing down. And a more recent survey of over 6,000 UK workers found that nearly a quarter are planning to leave their role in the next few months.
Why? Because the pandemic has been the true test of whether businesses value their people as much as they say they do. What’s more, employees feel more empowered to take a stand against unfair treatment, safe in the knowledge that talent shortages are present in almost every sector, and it’s a jobseeker's market. So, what can businesses and their boards do about it?
A better work/life balance
Firstly, business leaders should prioritise employee wellness. One study by Limeade found that 40% of workers chose to leave their role because of stress, and more than half were attracted to their new one because it offered a better work/life balance and options for remote working.
As such, businesses need to be able to show their boards a robust plan for flexible working and protecting their employees from burnout. In turn, boards should demand honest reporting around insights like employee engagement, attrition and exit interview feedback. Moreover, both teams must take time to discuss this information together, use it in their decision-making, and communicate to employees what they plan to stop, start, or continue doing as a result.
Fairer pay packages
Then there’s the matter of money. Jobseekers are going into 2022 with higher expectations around fair and transparent remuneration. In September the High Pay Centre found that the average FTSE 100 CEO can expect to earn 86 times more per year than the median full-time UK worker. What’s more, Deloitte’s 2021 Millennial and Gen Z report found that, of the 23,000 respondents, two-thirds were worried about income inequality, and would actively shun employers who didn’t pay fairly.
Employers, boards and remuneration committees should therefore be doing their due diligence when it comes to ensuring fair pay — from transparent benchmarking and fair negotiating practices (for instance, asking about salary history isn’t fair) to factoring in employees’ living costs and other job-related expenses.
“At a time where we are seeing CEOs trending for their decision to cut their own salaries and pay their employees more, can company leaders really afford to do the wrong thing?”
3. Bridging the gap between boards and their stakeholders
As we’ve established, in 2022 boards will need to go further to hold executives accountable for the fair treatment of two key stakeholders — the environment and their own employees. But one barrier stands in their way — boards are too far removed from whom they are supposed to speak up for.
This was one of the conclusions drawn by the Board Intelligence Think Tank in 2021, following discussions with over 150 current and future leaders on the role of business in building a fairer future. The Think Tank identified several key points for boards to consider in 2022 to help bridge this gap.
“I’d ask business leaders: Who do you have the power to represent? Whose experiences do you understand? And who are you not hearing from at all? Why not?”
Firstly, boards need to expand their definition of diversity beyond gender and ethnicity (although these are still important) and towards less visible points of difference, like socioeconomic background, experience and accessibility.
From here, they need to reflect on where their boards are lacking representation and adopt new processes to ensure they always consider all stakeholders. This could include inviting an employee or youth representative to every board meeting — and agreeing to a process that forces you to follow through on what you hear. And some companies have even adopted the process of adding an empty chair to the table to act as a physical reminder of the stakeholders who aren’t represented in the room
"We need shocks to jolt us out of a mere intellectual understanding — whether of climate change or social unfairness. So, why not start to embed some discomfort into our everyday experience?"
There’s no silver bullet for what next year has in store. But, if boards start by addressing these three priorities, they’ll begin to tackle the issues that are front of mind for their stakeholders —and help them and their business remain a force for good, both in 2022 and beyond.