An idea that is gaining more traction is the idea workers should have representation on corporate boards. Think-tanks, colleges, college professors and political leaders all say it is something to consider. In Germany, the law requires workers to be on corporate boards and it has worked very well according to one MIT professor. So why doesn’t that happen in the U. S.?
Arguments have been made that having workers on boards could stifle innovation or it could be difficult to fire subordinates. But arguments like the one about innovation, in particular, are bogus. Having workers on the board might help. They have a completely different perspective especially when they’re doing the job. Let’s take the role of customer service reps who actually talk to customers. They may be able to provide more insight as to what products customers want. The worker on the shop floor may be able to recognize productivity issues that could be from equipment not working properly.
As far as the problem of having workers on a board because workers may need to be fired can be disputed, too. When we have worked with labor-management committees, it’s usually the labor people who are harder on themselves than management. In many organizations, there is a specific discipline policy that outlines the steps before termination. It allows employees to correct whatever is wrong whether that be with work or behavior. Workers on corporate boards may be able to suggest that type of process or suggest something that is fair for all. Corporate boards also terminate CEOs and other management personnel. Rarely, do employees retaliate. There may be times but they also know there must be just cause.
Sometimes boards have to approve layoffs. We worked with a labor-management committee that developed a policy to avoid layoffs. Both sides did a lot of work looking at layoff alternatives. It wasn’t just the management side that did the research or came up with a new approach.
And then there’s the arguments about shareholder interests or pension solvency. The argument is workers do not care about shareholders’ interests. Wrong. What if the employees are shareholders? More than likely they do have an interest, and even if they aren’t shareholders, they understand why it’s important to have shareholders and why it’s important to take care of them. Workers are not stupid. One comment was that workers will fight for pension solvency when it may not be possible. Of course workers are going to fight for it. It’s about their retirement. Workers may be able to come up with ways to save a pension plan. UAW had to help GM with healthcare when the company was about to go bankrupt.
And some point to companies that have had workers on their boards and those companies haven’t performed. They say it’s because workers didn’t let the CEO make the decisions he needed to make. What if the decision was to have negative consequences? What if other alternatives that could make the company more profitable were not identified or addressed. That has happened before and, yes, workers, need to say something. What if a decision is unethical, or worse, illegal? The board and the CEO could be held liable. The recent Boeing Dreamliner issues are an example. Two fatal accidents happened after workers had complained to management about problems during the manufacturing process at the new South Carolina plant. If workers are on corporate boards, such as Boeing, they would be able to address safety concerns especially since they do the job on a daily basis.
Here’s the thing, the arguments that are being made against workers on corporate boards are very weak. There are a lot of other good reasons why workers need to be on corporate boards.
Even though some people cited certain companies that had workers on their boards and failed, there are examples of companies that have succeeded. And even if those companies did fail, the arguments being made didn’t prove it was because workers were on the corporate board. A professor at MIT did some research on corporate boards with workers and found the companies were more productive. It’s just like allowing workers to have a voice in the workplace. When workers can have a role in the day-to-day decisions, they feel like they’re more respected and valued which makes them want to help their organization flourish. That has been proven over and over. Two weeks ago, we reported on the blog that SHRM, the Society for Human Resource Management, is now advocating for worker voice because they said work culture must change because it is costing companies billions of dollars. Who’s making that decision not to allow worker voice and losing money? More than likely it’s not workers.
The professor also points out that workers are not the only board members. There are others who have a voice, too. So things like stopping an increase in CEO pay or not taking care of shareholders or not being able to fund the pension are addressed by other board members who also have a voice.
When we work with labor-management committees there is usually a common ground rule among committees and it is, Leave Titles At The Door. It isn’t isolated to one side. It is relevant for both sides. It means everybody is to be of equal standing during the meetings. Everybody’s voice has equal weight. Neither side nor any particular individual should dominate the process. Groups work better that way. The groups that have truly embraced that ground rule have been the most successful and have worked through some very difficult issues. It should be the same with a corporate board.
There are a couple of pieces of legislation in Congress now that outline the make-up of corporate boards. In both bills, workers would consist of one third of the board members. There would be another two-thirds made up of management, shareholders and other outside individuals. That really doesn’t give workers dominance over a decision like some fear but it still would provide them with a voice. And that’s what’s important.
There are a lot of other issues that would need to be addressed for workers to be on boards such as how it work in a unionized environment versus a non-unionized environment, would workers be compensated as board members, how would representation work, and how much information would be shared. These and many other issues still need to be defined and can be. There’s also nothing to say a company would be more successful with workers on boards than not. It depends on the people themselves and their commitment to the issues they face and to the organization.
It could be ego, or experiences, or something else that is causing some to not like the idea of workers on a corporate board but when it comes right down to it, it’s about people in general. The concern is not without merit but there are good and bad players on both sides. It’s also important to recognize there have been some very good people who have been extremely successful at making some significant decisions for their organization when they left their titles at the door.