Democracy at Work – Revisited

Abstract

This article deals with a of worker participation which was introduced in a German car dealership and repair shop in the 1960s and which goes far beyond the legal framework of German codetermination (Mitbestimmung). The comprises full codetermination in economic affairs, substantial gain-sharing, participation through teams on the shop floor, and the neutralization of (i.e., transfer of owner's property rights to a foundation). The significance of these four elements is described in theoretical terms. The development was evaluated by interviewing a representative sample of the company's employees. The economic and social success of the company leads to the question of how industrial can be further advanced in the future. Key words: industrial democracy, of work, governance of small and medium-size enterprise (SME), codetermination 1. The context In Germany, the late sixties and early seventies was a remarkable time of new departures. It was the era of the first coalition of the Socialdemocrats and the Liberals in the Federal Government, and Willy Brandt coined the slogan of dare more democracy (Mehr Demokratie wagen!). Under the label of humanization of work a large government program was introduced. It resulted in a considerable number of applied research projects in the areas of job design, organization, and the upgrading of skills in the wake of technological change. In 1972, the Work Constitution Act (Betriebsverfassungsgeset2, BetrVG), which had been in effect since 1952, was overhauled. This brought about a considerable strengthening of council's rights, while still retaining the original philosophy of the law, which ultimately left capital owners' rights untouched. It was argued that democracy, successfully installed on the political level in West Germany after 1945, must be extended to the sphere of and business enterprises in order to be fully achieved. One of the disputes over the revision of the BetrVG concerned the introduction of an attested right of at the shop level or, as it was named at that time, co-determination at the workplace (Mitbestimmung am Arbeitsplatz). The unions were fiercely against such an initiative for fear of weakening representative codetermination and creating a body which would possibly compete with the works councils and be too accommodating towards employers' pressures. An outspoken, although minority fraction within the Metal Workers Union (IGM) demanded codetermination at the workplace, but was not able to convince the heads of the union and was subsequendy expelled from the union (in particular Matthofer and Vilmar; cf. Vilmar 1971). This is the social and political climate in which the project we will present here came into existence, although the first steps in creating the Hoppmann model predate these political developments. The firm Hoppmann, a car dealer and repair shop in Siegen, an industrial town in the south of North-Rhine-Westphalia, was founded in 1937. After suffering heavy destruction during the war, the company was rebuilt after the war and became a leading dealership of Opel cars. The sudden death of the founder in 1957, left his son, Klaus Hoppmann, at age 30, in a precarious situation. He was heavily dependant on longterm employees for advice on running the business. He also felt a moral obligation towards the employees for their part in rebuilding the shop. He was convinced that decisions in a business should not be based on the more or less accidental fate of inheritance, but should be legitimized differently. The first step towards a new form of governance was the introduction of profit sharing in 1961. After a revision in 1969, this plan stipulated that the yearly profit should be shared 50 - 50 between employees and employer, after a deduction of a 7 % interest on equity, paid to the company. Half of each employee's share was to be credited as a loan to the company (paid out only when an employee left the company, usually at retirement), and the other half was to be paid out pardy on a monthly basis, pardy at the end of the year. …