Capitalism could be hugely improved via worker representation on board of directors

[yllus]

One of the problems capitalist economies seem to face is that a corporation's focus can be purely upon short-term growth for shareholders at the expensive of the corporation's long term viability, or job stability for employees.

Now, sometimes short-term is exactly the purpose of a corporation - nothing wrong with that - and I think we all agree that corporations do not exist simply to provide employment to the citizenship, but I think the financial crisis of '07-'08 did wonders to highlight the worst excesses of short-term thinking. I think it's in society's interest to curb this sort of destructive excess.

So - could we steal a good idea that's been proven elsewhere? Ever since hearing about the German legislation regarding Mitbestimmung (co-determination), I've thought that a major improvement to the stability of large organizations could come from their concept of employee representation on the board of directors.

The effect of this model on the largest type of organization (500 - 2000 employees) would be that employees would vote to elect one-third of the board of directors. The hope would be that general strife and relations between management and employees would be reduced due to the greater representation at the highest levels, and that the worst excesses of short-term thinking would also be checked.

Here's a related Wikipedia article as well:

Wikipedia - Co-determination

The German model of co-determination is unique. Formulated at the end of World War II, it was applied first in the coal and steel industries of West Germany following the war and gradually expanded to other sectors. Co-determination in Germany is regulated by the Co-operative Management Law (1951), amended in 1976, and the Workers Committee Law (1952), amended in 1972. Within the framework of the 1976 reform, the government broadened the laws' applicability to all firms throughout the German economy employing more than 2,000 workers.

The German co-determination law (Mitbestimmungsgesetz) forms part of the bedrock of German industrial and company policy. It requires that just under half of companies' supervisory boards' members be representatives of workers. German company law is curious to an English speaker's eye, because it has not one but two boards of directors. Shareholders and trade unions elect members of a supervisory board (Aufsichtsrat). The chairman of the supervisory board, with a casting vote, is always a shareholder representative under German law.

The supervisory board is meant to set the company's general agenda. The supervisory board then elects a management board (Vorstand), which is actually charged with the day to day running of the company.

The management board is required to have one worker representative (Arbeitsdirektor). In effect, shareholder voices still govern the company for a number of reasons, but not least because the supervisory board's vote for the management will always be a majority of shareholders.

Co-determination in Germany operates on three organisational levels:

1. Board of directors: Prior to 1976, German coal and steel producers employing more than 1,000 workers commonly maintained a board of directors composed of 11 members: five directors came from management, five were workers' representatives, with the eleventh member being neutral. (Note: Boards could be larger as long as the proportion of representation was maintained.)

In 1976, the law's scope was expanded to cover firms employing more than 2,000 workers; there were also revisions to the board structure, which now had an equal number of management and worker representatives, with no neutral members. The new board's head would represent the firm's owners and had the right to cast the deciding vote in instances of stalemate.

2. Management: A worker representative sits with management in the capacity of Director for Human Resources. Elected by a majority of the Board of Directors, the workers' representative sits on the Board and enjoys the full rights accorded to that position.

3. Workers committees: The workers committee has two main functions: it elects representatives to the Board of Directors and serves as an advisory body to the trade union regarding plant-level working conditions, insurance, economic assistance and related issues. The committee is elected by all the workers employed in a plant.

Thanks to the years during which a co-operative culture has been in place, management requests from workers for proposals to improve operations or increase productivity, for example, are no longer considered mere legal formalities; they represent recognition of the fact that workers play an important part in plant success.

In tandem, a practical approach has evolved among both parties, with each aiming to reach decisions based on consensus. In addition, worker representatives no longer automatically reject every proposal for structural reform, increased efficiency of even layoffs; instead, they examine each suggestion from an inclusive, long-term perspective. At the core of this approach is transparency of information, such as economic data. Co-determination is thus practised at every level, from the local plant to firm headquarters.

Co-determination enjoys intractable support among Germans in principle. In practice, there are many calls for amendments to the laws in various ways. One of the main achievements seems to be that workers are more involved and have more of a voice in their workplaces, which sees a return in high productivity. Furthermore, industrial relations are more harmonious with low levels of strike actions, while better pay and conditions are secured for employees.

Some other interesting reading material on this topic:

- BLS - Foreign Labour Developments (PDF)
- ADBInstitute: Employee Representation on the Board of Directors

 

[Matt1970]

So in other words a company that may have put hundreds of people to work and made million in profit has no clue what it is doing and can only be saved if the guy sweeping the floors at night was put in charge.

 

[Bowfinger]

One of the problems capitalist economies seem to face is that a corporation's focus can be purely upon short-term growth for shareholders at the expensive of the corporation's long term viability, or job stability for employees.

Now, sometimes short-term is exactly the purpose of a corporation - nothing wrong with that - and I think we all agree that corporations do not exist simply to provide employment to the citizenship, but I think the financial crisis of '07-'08 did wonders to highlight the worst excesses of short-term thinking. I think it's in society's interest to curb this sort of destructive excess.

So - could we steal a good idea that's been proven elsewhere? Ever since hearing about the German legislation regarding Mitbestimmung (co-determination), I've thought that a major improvement to the stability of large organizations could come from their concept of employee representation on the board of directors:

Yes, I also thought that was an intriguing idea. I've often commented that although I greatly support capitalism, it becomes harmful when we no longer have a reasonable balance between profit and community. Having workers represented on the board seems like a promising approach to maintaining that balance, as well as opening lines of communications within the company that would help it operate more smoothly and effectively.

 

[yllus]

So in other words a company that may have put hundreds of people to work and made million in profit has no clue what it is doing and can only be saved if the guy sweeping the floors at night was put in charge.

The idea is clearly not to put janitors on the boards of companies - it's to ensure that employees have a say in the direction of that company.

 

[glenn1]

I'd be open to it but think you'd need to adjust labor law and carefully firewall any union involved from the board lest either corrupt the other.

 

[nixium]

So in other words a company that may have put hundreds of people to work and made million in profit has no clue what it is doing and can only be saved if the guy sweeping the floors at night was put in charge.

Ladies and Gentlemen, I present here what goes for the voting right wing these days. A person who is capable of taking an entire well written post with facts and oppose it with a two sentence nonsensical blurb based on dogma.

If you ever wondered how idiots like Palin and Bachmann make it big in this country.. well here you have it. Morons vote for morons.

 

[Pray To Jesus]

Ladies and Gentlemen, I present here what goes for the voting right wing these days. A person who is capable of taking an entire well written post with facts and oppose it with a two sentence nonsensical blurb based on dogma.

If you ever wondered how idiots like Palin and Bachmann make it big in this country.. well here you have it. Morons vote for morons.

I can do it with three words:

Fuck you libtard.

 

[Phokus]

I'd be open to it but think you'd need to adjust labor law and carefully firewall any union involved from the board lest either corrupt the other.

In Germany, those board members REPRESENT the unions.

 

[ivwshane]

I can do it with three words:

Fuck you libtard.

You must be matts 2nd account. I have no proof but you both post the stupidest shit so it must be true.


Personally I don't think share holders should have any say in a company. You buy shares because you support the company, it's management, and the direction they are going and you don't support the company then sell your shares.

 

[Matt1970]

Ladies and Gentlemen, I present here what goes for the voting right wing these days. A person who can debunk a wall of blubbering Liberal entitlement BS text in two sentences.

Morons have no clue how a business is run.

FTFY

 

[OCGuy]

Excellent, Comrade!

 

[Phokus]

Excellent, Comrade!

Yeah, those Communist Germans... you idiot

 

[Zaap]

I work for an extremely successful global entertainment company.

If most of its employees had a say in running the business (and that includes everyone from people cleaning the toilets, to secretaries, to the creative staff -including myself- to middle management, to most of upper management other than those select few that specifically know how to direct and manage the company's direction and excel at doing just that...

...the whole thing would fold like a house of cards. In no time.

Most people are good at one narrow aspect of what it is they do within a company. Many *think* they know all about running the direction of the company- but there's a reason they're NOT running their own wildly successful companies- they're fucking clueless. Most of what they think they know is utter horseshit.

When companies do let clueless people in upper management take the reins- they made stupid decisions and wreck the company. It's not uncommon. Doing the same thing with people in lower levels would yield the same results. It's not a class thing, or anything else people want to make it - it's a skill thing.

Most people simply do not possess the skills required to manage, run and grow a huge corporation, not by a long shot. It's true weather you push a broom and ride the bus, or wear $5000 suits and drive a Tesla.

That's not to say there aren't plenty of companies blundering along with boards of directors full of utter boobs- there are. But adding more boobs won't make any difference. (More boobs is usually ideal, but not in this context.)

 

[Fanatical Meat]

How would one determine who sits in the employee seat? I'm pretty labor friendly but I don't see how this could have any benefit.

 

[gevorg]

workers can be easily manipulated, just like voters

 

[Veliko]

I work for an extremely successful global entertainment company.

And yet you weren't able to read the OP nor any of the links he provided that gave more information on what he was talking about and examples of where it has been used successfully.

 

[OCGuy]

Yeah, those Communist Germans... you idiot

That is what you wanted to get me on? After all this time? Come on, Phokus.

 

[jhbball]

I can do it with three words:

Fuck you libtard.

That has a nice ring to it. Which bible verse is that?

 

[Incorruptible]

NO. The government has no right to force them to have employees on the board. It's despicable people would do this and violate private business.

 

[WHAMPOM]

Lot of boobs who did not read the OP's source giving knee-jerk comments. Just another day in P&N.

 

[Incorruptible]

Lot of boobs who did not read the OP's source giving knee-jerk comments. Just another day in P&N.

You really don't understand how capitalism works, Do you?

 

[nixium]

FTFY

You're a right wing puppet, conversation with you is useless.

Hopefully you'll rot away in the extremist podunk right wing trash town or state you are in.

 

[nixium]

I can do it with three words:

Fuck you libtard.

You're a piece of shit, and I hold you, your posts and your beliefs in the deepest of contempt. I shall enjoy watching how society discards all that you hold sacred, and take satisfaction in the fact that you shall despair of this as you watch it happen.

 

[berzerker60]

I work for an extremely successful global entertainment company.

If most of its employees had a say in running the business (and that includes everyone from people cleaning the toilets, to secretaries, to the creative staff -including myself- to middle management, to most of upper management other than those select few that specifically know how to direct and manage the company's direction and excel at doing just that...

...the whole thing would fold like a house of cards. In no time.

Most people are good at one narrow aspect of what it is they do within a company. Many *think* they know all about running the direction of the company- but there's a reason they're NOT running their own wildly successful companies- they're fucking clueless. Most of what they think they know is utter horseshit.

When companies do let clueless people in upper management take the reins- they made stupid decisions and wreck the company. It's not uncommon. Doing the same thing with people in lower levels would yield the same results. It's not a class thing, or anything else people want to make it - it's a skill thing.

Most people simply do not possess the skills required to manage, run and grow a huge corporation, not by a long shot. It's true weather you push a broom and ride the bus, or wear $5000 suits and drive a Tesla.

That's not to say there aren't plenty of companies blundering along with boards of directors full of utter boobs- there are. But adding more boobs won't make any difference. (More boobs is usually ideal, but not in this context.)

This is fine theory. Yet happily we have real world examples and experience to test theory again. In the real world, this doesn't cause (most/many) companies to collapse.

This always seems to be the case whenever someone suggests using examples from history or foreign countries on how we might improve things. We just get reactions of "oh that would just cause chaos and collapse because [Theory, usually libertarian theory]," as if theory somehow trumps reality. If it did, we'd be looking at a beautiful communist utopia in the Soviet Union.

 

[Pray To Jesus]

You're a piece of shit, and I hold you, your posts and your beliefs in the deepest of contempt. I shall enjoy watching how society discards all that you hold sacred, and take satisfaction in the fact that you shall despair of this as you watch it happen.

Fuck you libtard.