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 at the same time. But for a whole host of “essential workers” that workplace can be a matter of life or death, quite literally.
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 form “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 color and immigrants, but a new force of worker empowerment, walk outs and union organizing. Some companies have responded by engaging workers and their unions, while others have tried to shut it down creating distrust between management and workers.
An article in the Harvard Business Review notes that “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 R&D 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 for re-inventing the relationship between workers and corporate America to one that is based on 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 capitalize on quick short terms gains at the expense of long-term health of a given enterprise.
The Business Roundtable (a group of leading CEOs of corporate America) stated it was time to move from a shareholder first model of capitalism to one that takes into account 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 from the short termism shareholder first model that pays lip service to declaring employees are their greatest asset that deserve thanks for working through a pandemic to an economy that actually does.