Capita asks staff to join board in culture shake-up

EDINBURGH (Reuters) - Capita is inviting employees to apply for up to two seats on the board of the British outsourcing firm in an attempt to improve its corporate culture and public image.

A sign indicating the begining of the congestion charging zone, which is managed by Capita, is seen in London, Britain, January 31, 2018. REUTERS/Toby Melville

The boardroom has long been the preserve of senior executives and external directors in Britain, although staff representation at the top of the company is common in other European countries.

Drafting staff onto its board would be the first time a publicly-listed British company had made such appointments since the 1980s, a spokeswoman for Capita said on Wednesday, adding that those selected from among its 53,000 UK employees would keep their day jobs.

The move was welcomed by the Trades Union Congress (TUC), which represents unions in Britain, whose General Secretary Frances O’Grady said:

“...we urge other firms to follow their (Capita’s) lead. Capita should fill these places through elections so that the new board members are chosen by the workforce.”

Capita, which provides IT-led business services to the public and private sector, is trying to address a poor corporate image in an industry largely known for providing politically-sensitive public services such as running prisons or managing administrative tasks in Britain’s National Health Service.

British contractor Carillion’s collapse this year prompted criticism from lawmakers over the risks of government using such companies to cut the cost of public services.

Capita is restructuring under chief executive Jon Lewis who was brought in six months ago after a series of profit warnings.

Lewis has committed to simplifying its services business, change the culture and improve the image of Capita, which earlier announced a 60 percent drop in first half pre-tax profit, highlighting the challenge Lewis faces.

In July the British government published a revised corporate governance code, which recommends that employees be better engaged in a number of ways, including board representation.

However, the code does not oblige companies to take such steps and corporate governance experts said that in the past British companies have balked at such measures.

It may be too early, however, to judge the impact of the move until the terms on which Capita staff will be represented has been set out by the company.

“This is a positive signal of a desire to have an open and honest dialogue with employees,” said Charles Wookey, CEO at Blueprint for Better Business, a charity which is advising Capita on how to improve corporate governance.

Reporting by Elisabeth O’Leary; Editing by Alexander Smith