Board-level Representation Research Articles

The European Participation Index (EPI) and inequality: a multi-dimensional cross-national comparative measure of worker participation

Is worker participation becoming more prominent or less? Furthermore, what is the impact of worker participation on economic performance? This article introduces a tool designed by researchers at the ETUI to help answer these questions: the European Participation Index (EPI), a country-level summary measure of the strength of workers’ voice in companies. The EPI is based on (i) union density and collective bargaining coverage, (ii) workplace representation and (iii) board-level representation. This multi-level index provides an alternative to existing cross-national measures by taking into consideration two levels at which worker participation can take place: the workplace and the board. The article shows first that worker participation has become less prevalent in the EU over the past decade; and second that the EPI is robust and has superior explanatory power in relation to income inequality compared with traditional measures of collective bargaining.

Chapter 5: Circumvention of Board Level Representation of Employees

Board level representation of employees (BLER) may be circumvented by different strategies. Possible escape routes are the incorporation as a European Company, the cross-border merger or the creation of a foreign legal entity. The paper argues that these strategies are not abusive as such. A European Member State may impose BLER rules on foreign legal entitites as long as they comply with the proportionality test applied by the Court of Justice with regard to freedom of establishment. As far as the European Company and cross-border mergers are concerned, EU secondary law caters for the protection of employee rights. The recently adopted Company Law Package introduces new rules for cross-border mergers, conversions and divisions. It is argued that the Member State of origin has the right to refuse the issuance of the pre-conversion, pre-merger or pre-division certificate in cases where the operation aims at circumventing national standards of employee participation.

The Case for Employee Board Level Representation in Ethiopian Corporate Governance System

The participation of workers in the management of companies brings benefits. Many European jurisdictions have recognized workers’ involvement in the management of firms in diverse forms and to varying degrees. The board level representation is believed to be the strongest of all the mechanisms. In some jurisdictions the laws require a full and legally mandated representation of employees in supervisory boards of the largest firms. Several other countries also have corporate laws that allow the representation of workers in a board room. As a result, a recent discourse in corporate governance deals with a multi stakeholders including the labour. However, the mainstream corporate governance discourse in Ethiopia is restricted to discussions mainly from the perspective of shareholders. By disregarding employees as stakeholders in corporate governance of their firms, Ethiopian laws stand in a sharp contrast to the approach of corporate governance that allows a board level representation of firms’ workers. This article shall, by examining experiences of some European jurisdictions and analyzing the relevant Ethiopian legislations, questions whether Ethiopia's prohibition of board level employee representation in corporate governance of share companies is justified. It also inquires whether the European style of employee board level participation is feasible in Ethiopia or an alternative (practical) style of employees’ board level participation should be crafted. Keywords : Corporate governance, board structure, employee representation, Ethiopia DOI : 10.7176/JLPG/84-02 Publication date : April 30 th 2019

German board-level employee representation in multinational companies: Patterns of transnational articulation

We investigate codetermination on German supervisory boards of multinational companies and pose two questions. First, under what conditions does board-level representation constitute a power resource for employee representatives? Second, how does board-level representation articulate with European Works Councils? We conclude that factors related to corporate structure – head office location, the level at which supervisory boards are established – play a decisive role in determining the power resources available to employee representatives. Articulation with European Works Councils depends on the adoption of a strategic approach whereby German employee representatives deploy the power resources derived from national codetermination rights at the transnational level, or use the mechanisms of transnational employee representation to compensate where such national power resources are lacking.

Negotiated board-level employee representation in European Companies: Leverage for the institutional power of labour?

The European Company Directive anchored board-level employee representation in European law for the first time. Rules negotiated between management and worker representatives became the primary source for formulating and designing such representation as an institution of European industrial relations. However, I show that negotiated rules on board-level representation provide limited institutional leverage for European workers. I examine the fragmented and incomplete legal framework applicable, the diverse forms and patterns of negotiated rules and their potential and limitations for supporting workers’ power on boards.

Board-level employee representation in the Visegrád countries

This article addresses the complexity of trade-union approaches to board-level employee representation in the Visegrád countries, and the barriers it faces in particular national settings. Trade unionists in these countries accept the relevance of such employee representation in theory, but their practical agenda covers other issues which they perceive as more important as they struggle to survive at many levels of activity, and face growing existential uncertainty and risk. Unions also lack capacity to overcome obstacles such as reluctance on the part of the political class and managerial hostility to board-level representation; they cannot exert influence on major policy decisions at national level. They are operating in a more and more difficult environment, reflecting not merely a declining membership base, but also the recent economic crisis that failed to change the economic policy paradigm in the Visegrád countries: policies there still rely on a neoliberal approach and hence are not conducive to labour participation. What can still be seen as the predominant model is the traditional one of the market economy in which rights of ownership reign supreme.

The Dutch system of workers’ participation

The contribution, the Dutch system of workers’ participation, describes the main architecture of the institutionalised system of workers’ representation in the Netherlands. In the after WWII-period, the Dutch legislator and the social partners have developed a conventional and regulatory frame that defines and recognises the partners at company level, provides minimum requirements for a dialogue and promotes the negotiations in the shadow of the law. The contribution focusses on three main forms of representation, respectively the work of trade unions at plant level, the rights and competences of works councils and the employee board level representation. The author concludes that the representation in the two-tier supervisory board is much weaker than in countries like Germany, Austria, or Sweden. However, the works council system is well-advanced and equipped with rather strong competences, based on consultation and consent rights on items and policies that are often decided in other countries at the level of the supervisory board. Trade unions tend to rely on the direct participation in the board in situations of high urgency, whilst the daily matters are dealt with in works councils. If the choice has to be made between strengthening the position of works council in codetermination or broadening of the supervisory board towards more workers’ participation, the trade unions have so far clearly opted for the first option.

Democracy in trade unions, democracy through trade unions?

Since the Webbs published Industrial Democracy at the end of the nineteenth century, the principle that workers have a legitimate voice in decision-making in the world of work – in some versions through trade unions, in others at least formally through separate representative structures – has become widely accepted in most West European countries. There is now a vast literature on the strengths and weaknesses of such mechanisms, and we review briefly some of the key interpretations of the rise (and fall) of policies and structures for workplace and board-level representation. We also discuss the mainly failed attempts to establish broader processes of economic democracy, which the eclipse of nationally specific mechanisms of class compromise makes again a salient demand. Economic globalization also highlights the need for transnational mechanisms to achieve worker voice (or more radically, control) in the dynamics of capital–labour relations. We therefore examine the role of trade unions in coordinating pressure for a countervailing force at European and global levels, and in the construction of (emergent?) supranational industrial relations. However, many would argue that unions cannot win legitimacy as a democratizing force unless manifestly democratic internally. Therefore we revisit debates on and dilemmas of democracy within trade unions, and examine recent initiatives to enhance democratization.

Is Europeanised Board-Level Employee Representation Specific? The Case of European Companies (SEs)

This working paper investigates whether European board-level representation of employees in European Companies (SEs) is really ‘Europeanised’ or is coloured by the national system of their company’s country of origin. The authors used responses of employees sitting on SE boards to a questionnaire-based survey conducted between 2009 and 2013 and conclude that SE board-level representation is not an extension of national institutions and practice. It displays its own features, as well as sharing features with either German parity codetermination or one-third codetermination.

Formation, development and current state of industrial democracy in Germany

The article covers the history and development of German co-determination (works councils and board-level representation). The first section addresses the terminology of industrial democracy by comparing the different meanings in English and German industrial relations vocabulary. This is followed by a section on the history of the institutions of worker committees, works councils and board-level representation in German industries, beginning from the first voluntary introduction of worker committees by social-minded employers through the periods of the Kaiserreich and the Weimar Republic and on into post-war Germany. A third section addresses the present role and functions of works councils, including their learning process by interaction with management and their symbiotic relationship with the trade unions, followed by a section on the differences and similarities between works councils and human resource management. The last section analyses the changes and current trends in the field of shop-floor participation, works councils and board-level representation.

The Future of Employees’ Board-Level Representation in The European Union

Abstract It can not be said that board-level employee representation is in the centre of attention in the European Union at the moment. Even though there are uncountable studies on how to enhance the EU legislation of board-level representation to ensure the workers participation in the employer's decision-making in spite of the Member States’ regulations that vary greatly, there is no sign of such intention at European level at all. Member States without any legislation regarding board-level representation often argue that introducing such participatory rights would become an obstacle to the freedom of establishment and, in addition, would hinder the performance of companies. There is no proof that giving workers the right to participate would have catastrophic results, because Member States with strong participation schemes have strong position in the global and European market. Actually, the global financial and economic crisis proved, that those companies that strengthened participatory rights on board level mitigated the effects of the crisis, avoided redundancies and became profitable.

Employee participation in corporate governance: Implications for company resilience

How do works councils and employee board-level representation affect company performance? Research on employee participation provides mixed and sometimes contradictory findings. This article argues that the performance effects of employee participation depend on the business cycle. Specifically, the conservative impact of employee participation on strategy may be associated with lower company value in good times, but may also provide a buffer against a loss of value in bad times. This argument is supported by data from 726 European firms in the period surrounding the financial crash of 2006–2008.

‘Taken on board’: An evaluation of the influence of employee board-level representatives on company decision-making across Europe

Employee board-level representation is a significant feature of industrial relations systems in the majority of EU member states. Even so, analyses of its impact on company board-level decision-making remain sparse, and very few focus on how employee board-level representatives conduct their relationships with shareholder representatives and maintain their independence from management beliefs, norms and values. This article examines the findings from interviews with 20 unionized representatives in 13 European countries. Representatives reflect on their influence on the board, their relationship with other board members and their achievements and disappointments. The article concludes that employee representation contributes towards a more broadly based corporate strategy by ensuring that it takes into account at an early stage the views and interests of organized labour.

Employee Board-Level Representation in the EU: A Contested Subject

This article serves as the introduction to this special ECL issue on Employee Board Representation. Van het Kaar presents a helicopter view of all current regulations in the EU Member States. In his view the current credit crisis urges both investors and employees to improve checks and balances within the company structure.

The Establishment of the European Company: The First Cases from an Industrial Relations Perspective

This article presents the first systematic empirical analysis of all European Companies established at the time of writing, and focuses on industrial relations issues and the negotiated rules of employee involvement in particular. It elaborates on the election procedures, the special negotiation body and the mechanisms of employee information and consultation and board-level representation. Some tentative conclusions consider the likely impact on the development of European industrial relations.

Workers' board-level representation in France and in Europe – experiences and developments

Workers' board-level representation in France and in Europe – experiences and developments

Danish board-level representation under revision

Danish board-level representation under revision

German corporate governance in transition: Implications of bank exit from monitoring and control

Close links between banks and large companies have been seen as a key component of Germany's corporate governance system. The recent sale of large shareholdings by banks raises the question of to what extent this system will converge to the US model of dispersed ownership. This paper argues that concentrated ownership will remain a key feature of this system. In addition, board-level representation of employees and the lack of a culture of independent directors are further factors supporting incremental change in Germany's corporate governance system rather than wholesale convergance to the US model.

Financial Sector Reforms and Corporate Governance of Banks in Developing Economies: The Indian Experience

The corporate governance of banks in developing economies is important, if for no other reason than the prevalence and severity of banking instability in many of these economies. In India, although the issues of corporate governance have not received much attention in the first generation of financial sector reforms, this issue will become a natural choice in the second set of reforms. The article finds that the partial divestment of Public Sector Banks (PSBs) has not brought about any significant changes in the quality of corporate governance mechanisms. This study also confirms the urgent need to review the size and composition of the PSB boards in India, particularly on adequate board-level representation for private shareholders when there is mixed ownership between the government and the private sector. The considerations of the Government of India (GOI) in making board-level appointments and the degree of transparency in the appointment process requires adequate attention. The issues of limited operational autonomy and inadequate representation for private shareholders in the boards could affect the recapitalization strategy of PSBs.

In search of the changing role of the corporate human resource function in the international firm

There has been considerable research on the issues of board-level representation by personnel/HR directors and senior HR managers' involvement in strategic decision making. Since the early 1990s there has been a growing interest in international HRM, reflecting the growing recognition that the effective management of human resources internationally is a major determinant of success or failure in international business. There is also evidence that HR constraints often limit the effective implementation of international business strategies. More recently, it has been argued that the more rapid pace of internationalization and globalization leads to a more strategic role for HRM as well as changes in the content of HRM. Yet, while there have been some attempts to integrate international corporate strategy and human resource strategy, surprisingly, the role of the corporate human resources function has been neglected, particularly in the context of the international firm. This article seeks to redress the balance. The question addressed is: what is the role of the corporate HR function in the international firm? To answer these questions empirical research was conducted in thirty UK international firms. We found an emerging agenda for corporate HR in international firms which focuses on senior management development, succession planning and developing a cadre of international managers. We conceptualize this as a strategic concern with developing the core management competences of the organization, and argue that it can be usefully analysed from the perspective of the learning organization.