Recession Fears May Highlight Workers’ Rights Issues For Boards

Workers rights
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Boards may want to consider asking the following questions regarding employee rights issues.

As companies continue preparing for an expected recession, corporate boards may need to give greater attention to their company’s relationship with its workforce. In response to recession fears, many companies have begun cost-cutting campaigns that slashed employee headcount significantly and made policy changes that impact worker pay and safety. As layoffs continue, and if a recession should become severe, worker rights issues will likely become a bigger issue for companies to contend with. Corporate board members may need to prepare themselves for potential worker responses to layoffs and changes in workplace policies, such as pay freezes, adjustments to work assignments and return to office mandates.

Employees of internet retailer Amazon recently held a public event advocating for employee rights issues and lobbying Amazon shareholders to vote in favor of pro-worker, pro-equity shareholder proposals at the company’s annual shareholder meeting. Highest on the list of discussion points were racial and gender pay equity and workplace health and safety resolutions authored by Arjuna Capital and Tulipshare. While it got little attention, the Amazon associates event could be an indication that employee groups appear to be stepping up efforts to seek alliances with shareholders in an effort to forward employee rights.

Corporate boards may need to consider the potential short-term and long-term impact of worker actions involving their company, such as worker protests, strikes and publicity campaigns about unfair conditions at their organization. For example, accusations of racial and gender pay disparities can have an impact on recruitment and retention efforts that can have lasting impact on a company’s reputation and its ability to expand and grow. If worker safety becomes and issue, there may be legal consequences involving employee lawsuits or fines from regulators, which cut into company resources and investor profits.

Some questions regarding employee rights issues that boards may want to consider include:

• Have we conducted an audit of our workforce that provides a reasonable measurement of worker productivity at current levels of employment and projections of productivity at higher and lower levels of employment?

• Have we prepared answers for shareholders who may have questions about layoffs and the company’s overall workforce strategy? How do we ramp up hiring quickly if the recession is milder than anticipated and demand surges?

• What steps are being taken to make sure we are building our executive ranks from within and recruiting the right people for our workforce of the future? 

• Have we discussed worker productivity and safety with our workforce and incorporated their concerns into our overall business plan?

• Do we know how our largest shareholders feel about employee rights issues, and would they back our current position on those matters?

Directors should ask these questions and more if they want to avoid public actions by employees and shareholders on these workers’ rights issues in the future.

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