Worker Participation: Employee Ownership and Representation
The Harvard Law School Forum on Corporate Governance and Financial Regulation 2020-01-23
In the past thirty years, more and more attention has been paid to the effects of employee participation on company performance. What might be the effect of it on long-term company performance? How could increased employee influence affect corporate strategy and decision-making?
There are two main forms through which employees can participate directly to the life of a publicly traded company: through ownership of the company’s shares, and through representation on the board of directors.
Employee ownership usually results from “direct participation plans”, which provide a streamlined (and often discounted, tax-efficient) means for workers to invest in the company, with clearly established caps and conditions. Employee representation on the board of directors means that employees themselves, or a body representing employees, can appoint a representative to sit on the board of directors.