Legislation looks to put employees in the boardroom. But should U.S. follow in the footsteps of Germany, UK, or other nations pushing for codetermination?
A 1991 article in the New York Times with the headline "Chrysler to Drop Union President's Spot on Its Board" may have sounded the death knell of a brief experiment in this country to get employees in the boardroom.
The practice never really made it much past the auto industry, and it's been decades since employees have served on the board of a major U.S. company. But legislation from by U.S. senator and presidential hopeful Elizabeth Warren hopes to resurrect the boardroom practice.
Other nations are already further along the path of codetermination--the term for having employee representatives as board directors.
In Germany, for example, it's been a mandate since the 1970s. Depending upon a German public company's size, it must have employee representative-directors make up half of the board. And in the UK, former prime minister Theresa May began to push for codetermination as a mandate. There was pushback on the proposal and a Local Authority Pension Fund Forum survey found some company officials thought their workforces were either too small or too large for the proper representation of employees. The Forum saw the unwillingness to add employees to the boardroom as a "lack of innovation in workforce engagement," especially since those polled did not think codetermination would be a detriment to their business.
After getting pushback on the proposal, the mandate was downgraded to a suggestion, though Personnel Today recently reported that workers on boards are increasingly the norm at European Union companies.
There are varying opinions on the prospect of the practice coming to our shores.
Bringing codetermination to the United States would give employees more of a voice, maintains Stephen Silvia, an American University professor in both the school of international service and the department of economics.
Charles Elson, the director of the Weinberg Center for Corporate Governance, a director at HealthSouth and a member of Directors & Boards editorial advisory board, calls it a "bad idea" because of a potential conflict of interest.
Codetermination in the U.S.
Employees on the board used to be a negotiation tactic in the U.S., most notably with seats held by union representatives like Owen Bieber, the former president of the United Auto Workers who lost his Chrysler director chair in...