Section 172 of the Companies act 2006 requires Directors to take into consideration the interests of stakeholders in their decision making. In particular, section 172(1) states that regard should be had to the long term consequences of decisions, the interests of the company’s employees, the need to foster the company’s business relationships with suppliers, customers and others, the impact of the company’s operations on the community and the environment, and the desirability of the company maintaining a reputation for high standards of business conduct.
The following describes how the directors have had regard to the matters set out in section 172 (1) of the Companies act 2006. This section of the strategic report and the pages to which it refers comprises the Company’s section 172(1) statement together with the statements as how the directors have engaged with employees and had regard to their interests and how the directors have had regard to the Company’s business relationships with customers, suppliers and other external stakeholders.
During the year the board reviewed and assessed who they considered to be the Company’s key stakeholder Group’s. These are identified below together with the reasons why each stakeholder Group is considered key.
Employees: We are a people centric business, delivering professional search in a first-class way. This can only be achieved by having a highly engaged workforce.
Clients and candidates: The success of Phaidon depends on offering first class services to our customers.
Suppliers: Our business needs responsible business suppliers with expertise in areas outside of our core discipline of sourcing talent for our clients.
Communities & Government: Having a positive impact on society, sits firmly in the DNA of our culture.
Owners (investors): providing returns to owners ensures our future sustainability.
Review of stakeholder engagement.
Board members dedicated time in the year to progress the culture framework and ensure the employee voice is heard particularly during the working from home periods. This included regular virtual conference meetings with each region by the CEO, CFO and regional MD in the absence of being able to visit each office and monthly online initiatives, incentives and activities.
A global employee assistance programme has been rolled out for the support of employees and their immediate family.This is a confidential service.This has proven really beneficial when support for employees has been critical with state and government services having lengthy waiting times.
The board has prioritised the digitalisation of our learning strategy. The first phase has been completed by digitalising the on boarding content for new starters to enable remote onboarding where required.In addition, in the main hub offices, the board have sponsored a revised onboarding programme removing a number of elements of classroom theory and increasing live desk training. This has led to improved work practices for new joiners and their managers resulting in improved retention and billing metrics.
The board continues to invest in senior employees through external courses with the London school of Economics, Kings College and professional training bodies such as the Chartered Institute of Management accountants (“CIMA”).
Clients and Candidates
The chief executive and managing directors for each region regularly discuss feedback from clients and candidates through surveys and the website to better understand their needs. This engagement has helped prioritise investment in marketing, training and development technology.
To ensure the board has up to date knowledge of market trends the board identified markets and regions it wishes to better understand the opportunity.In 2020 sessions on West coast of USA and China occurred and resulted in making key decisions in terms of location plans and market focus, with the Los Angeles office opening in 2020.
Relationships with key suppliers are discussed at the board. The CFO on behalf of the board directly reviews the bi- monthly payment runs ensuring suppliers are paid without undue delay and provides an update to the board on working capital management.
A new global purchase ordering system is currently being rolled out which should improve relationships between the business and suppliers through improved ordering processes and communication.
Communities and Government
The board strongly supports CSR and fundraising activity which is carried out across all our regions.
The Group has supported “the brokerage” and “Holgen” in the EU and Asia respectively, organisations working with groups of students, usually from disadvantaged backgrounds or ethnic minorities. In the USA we have partnered with the Komen foundation, a cancer research charity assisting with various fundraising events.
The group’s tax strategy and any formal extended credit provided by the tax authorities are discussed at the board level.
The board agreed not to furlough the majority of staff who were terminated in late March 2020 and take the furlough financial support from governments as we were unsure whether we would re-employ this employees in the foreseeable future given the demands on management training time in a work from home environment.
Representatives of the funds that own a majority stake in the business attended all board meetings and participated in all key decisions.
In Q2 2020, The board decided to postpone the refinancing of the preference shares to conserve cash reserves.
In August 2020, the board re-issued shares to both existing and new employee shareholders. Wider share ownership is an important priority for the board and culture of the business, so employees can share in Phaidon’s success. Over 40 employees became new shareholders during the year.
All significant employee shareholders attended a virtual AGM by region where the financial performance and outlook for the business was discussed.