SOME
CONSEQUENCES OF CODETERMINATION
Based
on Wofgang Streeck. 1984. "Co-determination: The Fourth Decade." B.
Wilpert & A. Sorge (eds.), International Perspectives on Organizational
Democracy: 391-422.
Yonatan Reshef
School of Business
University of Alberta
Edmonton, Alberta
T6G 2R6 CANADA
1.
Almost all the
"internal" workforce representatives on Supervisory Boards are also
works councilors. These interlocking offices render the legally clear separation
of functions fictitious. The information obtained by someone as a member of the
Supervisory Board will also influence her/him in her/his capacity as a works councilor
and vice versa. The reality is a progressive de facto integration of workplace
and enterprise codetermination.
2.
The presence of some
works councilors on the Supervisory Board strengthens the position of the works
council vis-à-vis the management. The fact that they have a say in the
appointment of members of the Management Board prevents career-oriented
managers from antagonizing the works councilors. Moreover, the Management Board
tries to avoid taking conflicts to the Supervisory Board, making
every effort to settle controversial issues beforehand.
3.
A divergence between the interests of the employees of the company
and those of the union is likely to emerge. The employees are interested in narrow, immediate
economic benefits. The unions, on the other hand, derive part of their strength
from the sense of solidarity of all workers. Their credibility is based on their
ability to articulate and to defend overall workers' interests including the
interests of the unemployed.
4.
Because they are better informed and have a deeper understanding
of the firm's economic situation than the rest of the workers, the works
councilors often find themselves in the position of having to defend management
decisions before their fellow workers.
5. Codetermination
facilitates the creation of a "productivity coalition," or
"company egoism," in that management, the internal employee
representatives, and the shareholders share a common interest in company-specific
interests. They'll do anything they can to promote the interests of the company
at the expense of other interest groups. For example, under codetermination
layoffs are almost impossible. As manpower policy grows inflexible, management
would work together with the employee representatives to turn the workforce more
productive, yet at the same time would refrain from hiring from the external
labor market, unless they are certain that the market will grow fast enough to
accommodate the extra production. In other words, the high efficiency of
individual companies goes hand in hand with adverse effects on the overall
productivity of the economy.
6. Management in
codetermined enterprises is exposed to constant pressures to provide information
and to give reasons for its decisions. This has forced it to consider decisions
more thoroughly, to take more factors into account, to make underlying
assumptions more explicit, and to learn to communicate more effectively within the
organization, in general, and with the workforce in particular.
7. Research has demonstrated
that in companies in which the influence of the labor representatives on the
Supervisory Board is high, the influence of professional management is also
high; influence of shareholders, on the other hand, is negatively correlated
with management influence. Consequently, management can use larger portion of
profits for investment rather than for dividends.
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