Codetermination: Should Employees Serve on Boards?
Codetermination, the inclusion of a corporation’s workers on its board, began only recently in the United States. Corporations such as Chrysler, Northwest Airlines, (UAL), and Wheeling-Pittsburgh Steel added representatives from employee associations to their boards as part of union agreements or Employee Stock Ownership Plans (ESOPs). For example, United Airlines workers traded 15% in pay cuts for 55% of the company (though an ESOP) and 3 of the firm’s 12 board seats. In this instance, workers represent themselves on the board not so much as employees but primarily as owners. At Chrysler, however, the United Auto Workers union obtained a temporary seat on the board as part of a union contract agreement in exchange for changes in work rules and reductions in benefits.