Employee input can boost the bottom line

Requirement to consult staff on workplace issues should benefit both sides

New regulations came into force in the UK last month. Under EU and UK law, employees in organisations with more than 150 staff must now be consulted about major employment issues in the workplace. Smaller organisations will be included over the next two years.

The legislation requires employers to negotiate to set up arrangements for information and consultation within a month of receiving a request by 10% or more employees, with fines of up to £75,000 if they fail to allow staff to be involved in significant workplace changes.

Many surveys show that most employees want to have the opportunity to express an opinion about major issues concerning their employment and the company in which they work. Regrettably, however, in all too many workplaces, the rhetoric about "employees are our greatest asset" fails to match the reality.

Rumours abound because many business leaders are poor communicators. This is more likely to be true in IT companies and IT departments, where technical proficiency is not always accompanied by people skills.

As a result, employees feel left out of decision-making and are less inclined to put in the extra effort needed to make their organisation a success.

Fewer than one-third of employees in the UK have trust and confidence in the job being done by their leaders, a survey of 3,000 staff by consultancy Watson Wyatt revealed.

And research published by consultancy ISR found that employees in the UK think they are more likely to hear about changes to their workplace in discussions at the water-cooler or in a smokers' huddle than from their bosses. The rumour mill is particularly active in the high-tech sector, where 77% of employees say they first hear about significant developments through rumour.

Many companies have already made arrangements to provide for information and consultation with employee representatives. Some have established consultative committees. However, others have set up arrangements in a rush, implying to their workforces that the idea originated from altruistic intentions, rather than legislation.

There is, potentially, a direct financial impact on companies' bottom line and a link between the communication skills of business leaders and share price performance.

Companies where employees say their bosses are poor communicators are more likely to perform poorly on the stock market. In multinational companies tracked by ISR over two years, those whose employees said they are kept informed improved in share price by 21%, whereas those where fewer than average said they are kept informed saw share values fall 27%.

Employers need to engage their employees in developing strategy, not merely implementing it. The better companies recognise their employees not as antagonists but as the most powerful ambassadors for their organisation.

Peter Skyte is national officer of IT workers' union Amicus

What the new rules mean for you

UK legislation implements the EC Directive on Informing and Consulting Employees, based on a framework agreed by the Confederation of British Industry and the Trades Union Congress.

  • Employees in organisations with 150 or more staff will have a right to be informed and consulted on a regular basis about issues in the organisation they work for
  • Organisations with 100 or more employees will be covered by the legislation from April 2007, and those with 50 or more staff will be covered from 2008.
  • Any request must be made by at least 10% of employees.
  • Existing agreements may continue where they enjoy the support of the workforce.

The regulations are designed to encourage employers, employees and their representatives to agree information and consultation arrangements that suit their circumstances - it does not spell out the subjects, method, timing or frequency of arrangements that are allowed.

Standard provisions based on the directive apply as a fallback in situations where no agreement is reached on information and consultation arrangements.

Source: Department of Trade & Industry

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