Employee participation: the story of awkwardness and success

Dear reader,

when the British military administration demanded us after World War II to install employee participation in the iron and steel sector, it was not foreseeable that it could emerge as a success story. Then, the official reasoning stated that after the experience during the Nazi era this industry sector needed a better control. By means of workers’ representatives sitting on advisory boards it should be avoided that companies could give in to seductions of a totalitarian regime. That is, so far, the official wording. Unofficially, our British friends had a second agenda. Through employee participation – aka “co-determination” - they hoped to weaken the German industrial basis in order to shield the ailing British post-war industry against unwanted competition.  

Alas, with hindsight one has to admit that this regulation has backfired. The German industry embarked on an unprecedented success story by means of the so-called “economic miracle” of the 1950s and 1960s. And this happened despite the fact that co-determination was expanded and is nowadays spread across all industrial and economic sectors. Next to the economic miracle also an employee participation miracle? Not at all, this is not a miracle but the result of hard work and in particular of trustful co-operation of companies, employees and social partners. It needs a considerable amount of ideological shortsightedness if to date employees participation is made responsible for the economic problems of some companies. Today, we are allowed to say that the German post-war economy has become successful not despite but exactly through employees participation.

Meanwhile, this recognition has arrived in UK, too. The new British Prime Minister, Theresa May, immediately after her arrival in 10 Downing Street announced that in future, seats for workers’ representatives in corporate boards – i.e. the steering and control bodies of British companies – shall be established by law. An interesting re-import of an idea originating from Great Britain and successfully tested in Germany, isn’t it? For the Anglo-Saxons running a company, this comes close to a revolution. Representatives of the British industry already are highly alerted.

However, they can be calmed down: yes, employee participation is labourious, is not easy-going and will definitely not be successful without efforts. But this is also true for a good corporate strategy or the introduction of a new business model. Here, too, engagement and hard work are needed if the endeavours shall lead to success. In return, this means also that co-determination needs to be protected. Employee participation means power which needs to be dealt with carefully. If employee participation is applied for misuse of power in order to pursue personal or group interests, this damages the employee participation culture and puts at risk our successful employee participation idea.

Now, I wish you a lot of enjoyment when reading the new issue of “Perspektiven”, this time focussing on “employee participation”.   

Yours,

Ulrich Goldschmidt