The Resolution

I’d like to see more employees in the boardroom

There’s a strong case for Australian boards to have some form of worker participation

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In Germany, as is common in many European countries, boards have worker participation. Through the process of codetermination, 50% of the board in large companies (with over 2,000 employees) are voted for by employees. As board members, these employee representatives have the same rights - they can appoint and dismiss senior management, review their performance and advise on company strategy.

Worker participation brings a depth of technical and operational experience to the board, along with a point of view that they wouldn’t otherwise have access to.

Workers add diversity that enriches the board and the business

When it comes to boards, there’s no doubt that diversity is important. The people on your board should reflect your customers and experience in your industry. Insiders have an exceptional ability to identify nuances and pitfalls that won't occur to everybody else.

Good boards typically have a skills matrix that identifies what they need on the board and who around the table has got those skills. Workers tick the box when it comes to having deep expertise in the operations of the company. They know what’s going on at a tactical level and that is incredibly valuable.

Including employees is also a powerful communication tool that bridges the board and the workforce. This helps the business understand the strategy and the imperatives facing the company in ways that are not easy to achieve otherwise.

Another benefit of having workers on the board is that it acts as a natural curb on management behaviour. For example, it’s difficult to approve an excessive executive remuneration package with an employee on the board.

There are several ways for workers to participate on the board

There’s a lot of research that shows that worker participation on boards has added value to businesses in mainland Europe. In a similar way, I believe Australian companies could benefit from including workers on boards - as long as we can separate the notion that worker participation equates to union participation. The research I’ve seen shows that whilst worker participation adds substantial value, union participation does not.

While it may be challenging to introduce a process similar to Germany, where workers vote for board representation, there are alternatives that could work in Australia. A dual level board structure is one option, as is placing an Executive Director on the board.

Other ways that worker input can be gained include engaging workers through regular board site visits. This is invaluable because it gives the board the opportunity to casually meet people who are actually operating the business. They can ask them how they see things and what they think is important first hand.

Boards can also get involved in the company’s leadership development programs. Spending time with young leaders of the future, particularly people who are not in the senior management team, can be very helpful.

Whilst the European experience probably isn’t practical, there is certainly a case for Australian companies to consider having worker participation on their boards in some way. Workers bring a depth of real-world experience and expertise about both the industry and the company which has the potential to add substantial value in all Australian boardrooms.