Could employees on boards make corporate America more COVID-19 resilient?
COVID-19 has become the window frame through which we now view so much of our lives. Certainly, high on that list is our work and workplace. For many who are fortunate to be employed and work from home, there have been annoyances and stresses in managing our home life and work life in the same place and time. But for a whole host of ‘essential workers’ that workplace can be a matter of life or death, quite literally.
No other crisis in recent memory, has seen workers re-classified from ‘unskilled’ to ’essential’ in a matter of weeks.
The immediate economic fallout of COVID-19 has revealed just how much we depend on our employers for livelihoods, our safety and even our health. No other crisis in recent memory, has seen workers re-classified from ‘unskilled’ to ’essential’ in a matter of weeks. This has spurred not only a nationwide conversation about the value of workers in occupations that are typically low-wage and mostly performed by women, people of colour and immigrants, but a new force of worker empowerment, walk-outs and union organising. Some companies have responded by engaging workers and their unions, while others have tried to shut it down, creating distrust between management and workers.
COVID-19 presents an opportunity to re-invent the relationship between workers and corporate America to one that is based in partnership and collaboration.
An article in the Harvard Business Review notes “studies show that trust between employers and employees as well as good labor relations are key factors for maintaining low unemployment. By taking an active part to the life of the company, workers and management can engage in win-win negotiations at times of economic difficulties.” Research shows that countries with strong workers’ participation rights perform better on a whole range of factors, including research and development expenditure and employment rates, while also achieving lower rates of poverty and inequality. But for too long, employers in the US have seen workers and their trade unions as adversaries rather than partners. COVID-19 presents an opportunity to re-invent the relationship between workers and corporate America to one that is based in partnership and collaboration.
So, it is not surprising that new proposals to include workers on the boards of companies are cropping up - from Elizabeth Warren to Theresa May and in shareholder resolutions presented at corporate shareholder meetings. These efforts are highlighting the desire to have worker considerations more valued within company decision-making.
There is a good case to be made for adding worker representatives to the boards of corporations. Workers understand how the business operates and are often able to contribute solutions and strategic discussions that arise in board decisions. Unlike shareholders, workers have more to lose if the company does not perform well. For most workers, their livelihoods depend on the success of the company. Most shareholders hold diverse portfolios which limit risk in any given company. In addition, some shareholders may be willing to capitalise on quick short-term gains at the expense of the long-term health of a given enterprise.
Unlike shareholders, workers have more to lose if the company does not perform well. For most workers, their livelihoods depend on the success of the company.
The Business Roundtable (a group of leading CEOs in corporate America) stated it was time to move from a shareholder first model of capitalism to one that considers other stakeholders impacted by business last year. One concrete way to ensure those stakeholders have a voice is to put them in decision-making roles on their board. There is no better place to start than with their own employees. As one academic studying workers on boards noted, it is “an attractive policy tool for those favoring substantial reallocation from capital to employees.” Should corporate America make such a move, it would do more to transition our economy away from the short term ‘shareholder first’ model that pays lip service to employees working through a pandemic, to an economy that places real value in workers long term.