The influence of employees on the strategy of the company

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Explore:  Business Development

This is an introduction to the dissertation of Marnix Holtzer. His dissertation 'De invloed van werknemers op de strategie van de vennootschap' appeared in February 2014 and was published by Kluwer.

On the whole, Dutch employees tend to exert the influence they have on a company to improve their terms and conditions of employment. But according to Marnix Holtzer in his thesis 'De invloed van werknemers op de strategie van de vennootschap', this is a short-sighted approach. They would do better to get more involved in thinking about the policies of the companies they work for. This would open their eyes to long-term strategic decisions that have a greater social and societal impact than the level of their wages and that of their co-workers. Boards of directors and supervisory boards also stand to gain from encouraging this kind of input from employees.

A report entitled ‘Balanced corporate governance’ (Evenwichtig ondernemingsbestuur) compiled by the Social and Economic Council SER concludes that the system of participation in strategic decision-making processes for Dutch employees is not working as it should. Employees themselves are largely to blame by failing to exercise their rights to the full. Marnix Holtzer tried to find out exactly how much say employees could have in deciding corporate strategy, and how this could be improved in line with accepted social opinion.

He concluded that the stakeholder model would be the best option for corporate governance. Employees are naturally one of the stakeholders.

The legislative process for employee participation in strategic decision-making is completely deadlocked. There is no social or political support base for expanding or diminishing employee rights. Holtzer thinks that the main reason for this is the internationalization of Dutch industry.

Employees still have a fair amount of influence in Dutch companies, particularly when compared with employees in international concerns operating in the Netherlands. This is a logical consequence of the company management remit, which obliges managers to safeguard the interests of the international group as a whole, and prevents them from elevating the rights of Dutch employees above the rest. Nonetheless, there can be opportunity to exert pressure, for example if the employees council is set up in the principal holding company.

These opportunities are considerably fewer in foreign international concerns. Case law shows that the courts understand the complex decision-making processes that take place in international concerns, and accept the fact that employees can only be allowed to participate at a later stage.

The trade unions have a powerful weapon for exerting influence on strategy: the right to institute an inquiry. The inquiry procedure enables unions to ask the Enterprise Division for an inquiry into malpractices. However, this means of redress is rarely used by the unions. In addition, their representation rate in the Netherlands is dropping. The unions could strengthen their position by showing a greater interest in strategy and, where justified, taking more action, as recently (and successfully) seen at PCM and Meavita.

 

Topics:  Business Development

Published In: General Business Updates, Labor & Employment Updates

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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