‘We have different input’: Capita’s first employee directors make their mark | Corporate governance

The pandemic has led to unprecedented levels of firefighting in Britain’s boardrooms, with directors forced to make big calls about the future of their organisations. So it is fair to assume Lyndsay Browne and Joseph Murphy did not anticipate the baptism of fire that their trailblazing stint as Capita’s first intake of employee directors would involve.

In 2019, Browne, a long-serving finance manager at the outsourcer, and Murphy, a civil engineer who advises on highway projects, won a fierce internal contest to become non-executive directors of the company. Nearly 400 colleagues applied to take on the roles, which pay £64,500 a year on top of their day job’s salary.

Murphy, 34, says his day job is many rungs below senior management and “definitely at the delivery end of the organisation”. “We have different input to any other board director in the UK because we’re a different type of person. They tend to gravitate towards us on issues that directly relate to employees,” he said.

At one point employee directors looked set to be all the rage after Theresa May, while campaigning to become prime minister in 2016, promised to make big companies appoint them. In the end her proposals were watered down, leaving First Group, Mike Ashley’s Frasers Group, Mears and Capita among the small and disparate group of flagbearers.

May’s pitch was that “big business needs to change”, but the theme of this year’s annual general meeting season is evergreen, with shareholders last week pushing back on executive pay at AstraZeneca, Savills and Cineworld.

Janet Williamson, a senior policy adviser on corporate governance at the TUC, believes employee directors could help change the culture and priorities of boards. Workers have an interest in the long-term success of company and, with different backgrounds and skills, can challenge groupthink.

Companies have nothing to fear from the set-up, adds Williamson, because “having a voice does not mean having a veto”. “I think where companies have actually experienced it [having an employee director], they immediately feel the benefits. If all companies actually had to try it, a lot of the fear and misapprehension would disappear.”

Lyndsay Browne
Lyndsay Browne: ‘A lot of things that are being discussed can be very complex in nature, but from the way they’re presented, it’s clear.’ Photograph: Christopher Thomond/The Guardian

Neither Murphy nor Browne, who is 51, had sat on a board before, but their voices have been important in a year when the working lives of Capita’s 55,000 employees have changed dramatically. To equip them for the boardroom, the company – one of the government’s biggest contractors – put them through an intensive training course covering technical areas such as investor relations.

Capita is more often in the public eye for what goes wrong in its delivery of high-profile government contracts, which include administering the Department for Work and Pensions’ universal credit scheme and providing security tags for offenders.

The company is now several years into a revamp by its chief executive, Jon Lewis, who wants to recast Capita as a hi-tech management consultancy, enabling it to escape the long shadow cast over the outsourcing industry by the Carillion collapse.

The employee directors bring an understanding of the organisation that is very different to the rest of the board, says Lewis. “This has been particularly important over the past year when the pandemic has prompted such a shift in how we do business and how we interact with our colleagues.”

Lewis wanted them to express their opinions and offer an “unvarnished view of the operational and strategic challenges facing the company”. He says Browne and Murphy, who are due to step down at next year’s shareholder meeting, “have absolutely delivered on this objective”.

With 18 years service at Capita, Browne, who is based in Manchester, says being an accountant has helped her in the role because some business jargon is finance-related, but she suggests a lack of specialist knowledge should not put off wannabe non-executives.

“A lot of things that are being discussed can be very complex in nature, but from the way they’re presented and the way the discussion progresses, it’s clear,” she says. “Things that are complicated are simplified, in a sense, to ensure the board operates as effectively as possible.”

Joseph Murphy
Joseph Murphy: ‘We have different input to any other board director in the UK because we’re a different type of person.’ Photograph: Sarah Lee/The Guardian

To keep up, Murphy, whose master’s in soil mechanics is more useful on tunnel projects, did an accountancy course in his spare time. “I’m not as financially literate as Lyndsay, so that was an area I spent quite a bit of time on,” he says. “I’m a fairly engaged sort of person anyway: even within my own real estate and infrastructure business, I’d always feed back to senior managers.”

Browne, who as a senior finance business partner is involved in Capita’s asset disposal programme, says the extra workload varies. “There are some weeks and months where there’s quite a lot going on and other times when there are not quite as many meetings.” If board work has to be prioritised, their day job duties are picked up by somebody else.

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As non-executives, Browne and Murphy have listened more carefully to what employees are trying to tell the company than other non-executives might. The annual employee survey has been expanded and they study the answers with the company’s chief people officer and employee engagement director.

Browne says she wanted to be a non-executive because she had a lot of opinions about how things could be done differently at Capita. “I think we’ve raised things that would not otherwise have been discussed in a boardroom,” she says. “I think having engaged employees drives better business performance. I don’t have any doubt about that.”

Last summer, the company cut 200 jobs, which Murphy says was “not easy”. He describes the duality of the position as having two hats to wear, one of which, presumably, is a hard hat. “I can’t speak for everybody,” he says. “We are board members, the same as every other board member … our particular role is to provide our personal perspective, and we’re not shy about that.”

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