Article i 'Tidsskrift for arbejdsliv' no. 3 2005, page 34-50.
English resume

Employee representatives on firm’s supervisory boards

Consequences for corporate governance and stakeholder theory

Caspar Rose

Empirically, the paper is based on a major survey on public management and co-operation, carried out in 2003-2004 in municipalities. The survey involved 560 key players in the co-operative system – 280 top managers and 280 combined union members’ representatives. 120 in depth interviews in municipalities as well as counties supplemented the survey, shedding light over the complexities of the power exchange between management and employee representatives.

More than thirty years have passed, since Danish employees was giving a right, enacted by an amendment of the Danish Corporate law, to be elected on the firms supervisory board. During these years, only little attention has been paid to the Danish system, where employees have the right to elect one third of the members of the supervisory board in large firms. In the debate on corporate governance, a central theme is whether management should face a narrow duty of loyalty protecting the interests of shareholders, or alternatively face a broader duty of loyalty, which entails that management should also take into account the interests of various other stakeholders, including the firm’s employees.

The Danish code for good corporate governance, entitled the Nørby report criticises indirectly the system of employee representatives, as employees may appear less independent, and as a consequence, less capable of monitoring management efficiently. This article contributes to the debate by showing the results of a new major empirical study, which has been conducted jointly with my colleague Hans Kurt Kvist.

The article presents and motivates 8 hypotheses, which say something about which interests employee board members might take into consideration. The article also contains a brief survey of the relevant literature. Not surprisingly, the results show that employee representatives say that they weight the interests of the employees, as well as trade unions significantly more that the supervisory board as such. However, the study also reveals that employee representatives claim that they care more about the local community, as well as the environment than the board as such. The author argues that statutory employee representation in corporate boards may serve as a sound counterweight to the recent years’ strong attention towards the notion of shareholder value by Danish listed firms.


Tidsskrift for arbejdsliv

(Journal for Working Life)


 

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