Groundings of voice in employee rights.

AuthorMuir, Dana

ABSTRACT

The 2001 Symposium on Corporate Governance, Stakeholder Accountability, and Sustainable Peace explored possible connections between corporations and sustainable peace. The Symposium's discussions were inspired by the view that liberal values and democratic principles help prevent violent conflict in society. In this Article, the Author discusses the notable ideas expressed in the symposium, including those articulated by Professors Timothy L. Fort, Cindy A. Schipani, and Terry M. Dworkin. The Author posits that formal programs enabling employees as owners and participants in their corporations may promote employee voice and improve corporate governance. Financial participation rights, decision-making participation rights, and "entry" and "exit" rights are the three basic dimensions of such programs. The Author asserts that corporations will necessarily consider the viewpoints of employees and their communities as a consequence of employee ownership and participation programs, which will ultimately contribute to sustainable peace in society.

TABLE OF CONTENTS I. INTRODUCTION II. HISTORY AND DIMENSIONS OF EMPLOYEE OWNERSHIP AND PARTICIPATION PROGRAMS A. Anti-war and Harmony as Motivating Ideals B. Participation Dimensions of Employee Ownership 1. Ownership and Governance Right 2. Ownership and Financial Participation Rights 3. Ownership and Entry and Exit Rights III. ENABLING LEGISLATION AND INTERNATIONAL PERSPECTIVES A. United States 1. ESOPs 2. Stock Purchase Plans 3. Stock Option Plans 4. Deferred Compensation Pension Plans 5. Miscellaneous Programs B. Sampling non-U.S. Legislation 1. France 2. Egypt 3. Russia C. Weirton Steel--One Company's Experience IV. CONCEPTUAL CONNECTIONS--EMPLOYEE OWNERSHIP AND PARTICIPATION, CORPORATE GOVERNANCE, BUSINESS ETHICS, AND SUSTAINABLE PEACE A. Monitoring Managerial Choices 1. Firm Level Challenges 2. Employees as Effective Monitors 3. "Workers by Day" B. Modeling Democratic Principles 1. Effect of Employee Ownership and Participation 2. Possible Irrelevance of Employee Voice V. REDUCING CONFLICT THROUGH EMPLOYEE VOICE A. Employee Voice B. Sources of Conflict C. The Cost of Superficial Programs VI. CONCLUSION "Today on the world's horizon are seen the forces of political and economic reaction ... fomenting revolution against private capitalism and free enterprise which flourished until thrown out of equilibrium." (1)

  1. INTRODUCTION

    The 2001 Symposium on Corporate Governance, Stakeholder Accountability, and Sustainable Peace (2001 Peace Symposium) (2) explored possible connections between corporations and sustainable peace. In scholarship that resulted from that conference, Professors Timothy L. Fort and Cindy A. Schipani argued that corporations can, within their workplaces, model peaceful societies and, thereby, increase disputants' abilities to reach accord without resorting to violence. (3) Similarly, Terry M. Dworkin observed that whistle-blowing can encourage governance practices that enhance the role of the individual at the workplace, as well as foster communication and conflict resolution across diverse groups. (4) Similarly, Fort and Schipani postulated that how a corporation treats its stakeholders might influence local culture in ways that either contribute to or undermine sustainable peace. (5) Many of the ideas that were discussed in the 2001 Peace Symposium drew upon evidence that liberal values and democratic principles appear to play positive roles in avoiding violent conflict. (6) This Article hypothesizes that formal programs enabling employees as owner-participants in their corporations may promote employee voice, a topic that is of interest to Professors Fort, Schipani, Dworkin, and other peace scholars.

    This Article analyzes how specific types of plans--employee ownership and participation plans--affect the employee's voice within the corporation, the corporation's interactions with stakeholders, and the community's attitudes toward the corporation. This Article does not enter into, much less settle, the extensive debate on the pros and cons of employee ownership and participation programs. In addition, it does not delve deeply into the economics, organizational behavior, and other literature that attempts to evaluate the quantifiable effects of employee ownership and participation programs. There has been a significant amount of that type of research on a worldwide basis, much of it with contradictory or incomplete results. One of the few points on which researchers appear largely in agreement is that combining share ownership with decision-making participation is more likely to be effective than utilizing either share ownership or decision-making participation alone. (7) While the measurable effects of these programs on firm performances employee attitudes, and community is certainly relevant to the question of sustainable peace, it is not the purpose in this Article to summarize or evaluate this extensive body of literature. Instead, it takes the initial steps in searching for potential links between employee voice enabled by ownership and participation programs, corporate governance and the role of the modern day enterprise, and sustainable peace.

    Advocates of employee ownership and participation programs have long argued that employee ownership programs can be important in enhancing industrial peace. (8) In fact, this Article's opening quotation is neither a response to the events of September 11, 2001, nor does it derive from Saddam Hussein's alleged interest in developing weapons of mass destruction. Rather, the quotation comes from the 1939 Vandenburg Report, which studied profit sharing as a response to World War I and the social injustice produced by the Great Depression. (9)

    Employee ownership and participation programs, however, do not lack for critics. A key architect of one program stated, "You can't confuse ownership and being an employee. At home, a shareholder. At work an employee." (10) This highlights the contradictory role workers can be asked to play when they become involved in these programs. Economic studies have questioned the efficacy of the programs, (11) social scientists have critiqued specific programs, (12) and employee-owned enterprises are not without problems. (13)

    Various models of employee ownership and participation programs have developed in the United States and throughout the world. Part II explores the history of employee ownership programs, and how they were accepted by corporations and strengthened through legislation. Proponents have long held the view that ownership and participation programs could help achieve peace within the industrial workplace. Three dimensions of employee ownership programs are discussed in order to conceptually probe whether such programs can positively affect intra-corporation associational dynamics and community relationships. Those dimensions are: (1) governance rights, (2) cash flows, and (3) individualism. Part III examines a small subset of the country-level regulation of employee ownership and participation programs. In addition to specific legislative provisions, one firm-level example of employee ownership and participation is discussed as well.

    Part IV is dedicated to an initial exploration of the connection among current ownership and participation programs, employee voice, corporate governance, business ethics, and sustainable peace. First, this Section discusses whether employee voice derived from ownership and participation might have a role in addressing the need for monitoring in modern corporations, where ownership and management are bifurcated, (14) Second, it considers whether employee involvement through ownership and participation may have any implications for the ability of corporations to model democratic principles. Finally, this Section addresses whether enabling employees as owner-participants could provide any opportunities for reducing the "sources of conflict," (15) which Fort and Schipani identified in their peace scholarship.

  2. HISTORY AND DIMENSIONS OF EMPLOYEE OWNERSHIP AND PARTICIPATION PROGRAMS

    This Section begins by examining some of the views that were developed during earlier times with regard to employee ownership and participation programs. The periods following the World Wars and during the Depression in the 1930s are particularly interesting. Policymakers of those times recognized the challenges inherent in achieving peace and maintaining democracy in the face of severe social and economic pressures.

    The Section progresses by exploring fundamental factors underlying employee ownership and participation programs. By unpacking those programs, it becomes possible to consider the connections among formalized programs that are superficially quite different. Examining the constituent elements also makes transparent the role of entry and exit rights in affecting the scope of employee voice developed through ownership and participation programs.

    1. Anti-war and Harmony as Motivating Ideals

      This is not the first time that connections between employee ownership and participation and sustainable peace have been examined. In fact, there is a long history of linking employer-sponsored financial participation schemes with democratic principles and workplace harmony. In 1794 a glass works in Pennsylvania established the first recorded profit sharing plan in the United States because, as in the words of the owner, "'the democratic principle upon which this nation was founded should not be restricted to the political processes but should be applied to the industrial operations as well.'" (16) Albert Gallatin, the founder of that plan, was neither financially nor politically naive. In fact, he later served as Secretary of the Treasury under both Presidents James Madison and Thomas Jefferson. (17)

      In the early 1900s, U.S. businesses increased their use of profit sharing and stock ownership plans. That ended with the stock market crash of...

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