Employee Shareholding and Participation in Corporate Governance

Lord Davies of Stamford Excerpts

Thursday 11th October 2018 Lords Chamber

[Lord Davies of Stamford (Lab)]

My Lords, I thought I would make a brief contribution to this debate, because it occurred to me that I might be one of the few people in the House with some direct experience of worker representatives on corporate boards of directors. In my early 30s, my firm, Morgan Grenfell, which was a merchant bank—what we would now call an investment bank, I suppose—sent me to Paris. Although this was not the original intention of my bosses, I set up a subsidiary there, which did not do too badly. I ended up spending three years in Paris and remained president of that subsidiary after I came home to England. France, then as now, has and had had for many years a system of compulsory election of worker representatives to boards of companies over a certain threshold of numbers of employees. In the course of my three years in Paris, when I was meeting French industrialists and bankers pretty much every day, I must have heard endless complaints, and suggestions of new ideas. I never once heard any complaints about this system. It did not seem to be a problem.

Morgan Grenfell France never had enough employees to qualify for the compulsory requirement for worker representatives on the board, but I had other interests in France and was, for many years—more than I can remember, but until the day I joined the Government—a director on the main board of Vinci, which is the largest construction company in the world, and had more than 300,000 employees worldwide, about 40% of those in France. Therefore, we certainly qualified, and had two worker representatives on the board. Again, I have to say that the system worked very well. I cannot honestly say that the worker representatives contributed a great deal to our boardroom discussions, either the main board discussions or on committees. I was on the audit committee and chaired the remuneration committee. I would not have been on the audit committee if I did not have a financial background. But on my remuneration committee I always had one of the two workers’ representatives. That was an issue in which they took a lot of interest, rightly and understandably so. It was extremely useful, like when I was trying to oppose what I thought were slightly unreasonable pressures, such as you always get in successful companies from people who think that their contribution has been insufficiently rewarded.

I found that the system worked well in both directions. It was extremely useful for me, and I think for some colleagues who did the same thing, to talk to the workers’ representatives and get a feel about the situation on the shop floor, on the front line, in our various construction sites around the world; to ask generally how morale was; or to ask specific questions such as, “What do you think of the new internal training programme?” and “How are our safety measures working?”. Safety is very important in the construction industry. Any well-run board will provide lots of opportunities for informal discussion among members of the board, and during these discussions the workers’ representatives were very often able to set us right about some illusions we might have had about how things were going. It was a very useful thing—I think it helped a lot in both directions.

I can see absolutely no argument against it, and am absolutely horrified when I hear, as I once did in this country, somebody saying that if you had workers on boards they would produce endless, long, prepared speeches written by somebody else, totally ignorant, and hold up the business of the day—not at all my experience. I therefore very much welcome the initiative from my noble friend Lord Haskel to bring this idea back into public debate. I hope we follow the very successful French example.