In Germany, labor unions have the right to appoint one half of the members of co

In Germany, labor unions have the right to appoint one half of the members of corporate boards of
directors or supervisory boards in large German corporations. In the United States, some collective
bargaining contracts provide for a union representative (usually one out of fifteen or so board
members) on corporate boards. The question is: Is having union/employee representatives on
corporate boards of directors a good idea?
POINT Union and employee representation on corporate boards helps companies better deal with
their employees. Employees’ voices are heard, and employees with such a voice are likely to be
more sensitive to corporate needs for flexibility such as perhaps, the need to move some
corporate operations to a lower-cost location. Employee representation of this kind puts
corporations in better touch with the concerns of perhaps its most significant stakeholder group-
its employees.
COUNTERPOINT Corporations should primarily be managed for the benefit of their
owners/shareholders, not for the single stakeholder group of employees. Union and employee
representatives on corporate boards have an inherent conflict of interest in that they are seeking
benefits for workers more than benefits for shareholders, To the extent that such representatives
are on corporate boards, they should be there by way of the company’s consent as in a consensual
labor contract, rather than by having the government force them to be included on the board as in Germany.

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