The modern company: too important to be left to the shareholders alone?

Is there only one way to run a company? If any group of people get together for a common economic activity, must they organise themselves as if they were a private limited company?

TASC has started a project 'Everyone's Business: Employee voice and the modern company' to explore these questions.

Within Ireland it is usually taken for granted that the purpose of a company is solely to create the maximum possible value for its shareholders. Such a model assumes that employees are simply resources for the company to use or discard as it sees fit; it assumes that employees have no independent voice; it posits that other possible stakeholders (customers, suppliers, the local community…) have a purely financial and contractual relation to the company.

Dominance of shareholder value

Yet this ‘shareholder value’ understanding of the company is relatively new and is certainly not the only possible form of economic organisation within a market economy. Indeed, the dominance of shareholder value is often seen as contributing to the recent expansion of economic inequality and job insecurity.

The dominance of shareholder value models now goes way beyond the private sector. First of all, state-owned companies appear to be increasingly managed as if they were privately-owned – by shareholders. Even more bizarrely, the governance systems of charities, NGOs and even housing associations and co-operatives are increasingly copied from the private sector – and a very particular private sector at that.

Alternative traditions

Elsewhere in the European Union there is a long tradition of employee representation within companies. For example in countries such as Germany employees are directly represented on the company’s supervisory board; in many more countries employees have representation at enterprise level through various forms of works councils. By contrast in the UK employee voice is effectively limited to employee share-holding. Some other European countries also facilitate co-operative forms of organisation which ensure the democratic participation of all involved.

In Ireland there is a strong tradition of co-operative enterprises within the. agri-food sector. Nonetheless Ireland has become increasingly dominated by the ‘Anglo-Saxon’ shareholder value model of the enterprise, despite some experiments with workplace ‘partnership’ in the 2000s. There is however one exception. The Worker Participation in State Enterprises (1977) enabled the election of worker directors to the boards of state-owned companies.

Thinking about employee voice

In 2012 the National Worker Directors’ Group commissioned a report from TASC on the effectiveness of worker directors on state company boards1. Our new project firstly updates that report through a study of the current experience of worker directors in Ireland; secondly it places the Irish experience in the European context of other forms of employee representation. The project aims to facilitate public discussion of forms of economic governance that can facilitate employee voice.

TASC Discussions on Employee Voice

Central to the project is a series of TASC Discussion events:

• Saturday 25 February 2017 ‘What would you do for work’ Public discussion of workers’ rights after screening of the film ‘7 Minutes’ as part of the Dublin International Film Festival. Cineworld, Parnell Centre, Dublin 1, 14.00 - 16.30.

• Thursday 23 March 2017 ‘Shareholders or Stakeholders? Enlightened corporate governance for our times.’ Expert discussion, ESB HQ, Fitzwilliam Street, Dublin 2, 18.00 - 20.30

• 11 May 2017 ‘No one way: Forms of employee voice in Europe.’ Expert discussion, GPO O'Connell Street, Dublin 1, 18.30 - 20.00

• September 2017 Report launch: ‘Everyone’s Business: Employee voice and the modern company’

TASC’s project is not about putting forward any one simple solution – it’s about making public the different experiences of company organisation and it’s about imagining different ways of organising firms in the modern world.

Posted in: Corporate governance

Tagged with: corporategovernance • employee voice • shareholder value • worker directors

Professor James Wickham

James Wickham was Jean Monnet Professor of European Labour Market Studies and Professor in Sociology at Trinity College Dublin. He has published widely on employment, transport and migration in Ireland and Europe; he is the author of Gridlock: Dublin’s Transport Crisis and the Future of the City and co-author of New Mobilities in Europe: Polish Migration to Ireland post-2004.  His book Unequal Europe: Social divisions and social cohesion in an old continent analysed the collapse of the European Social Model; his new text book European Societies (Routledge 2020) examines the structures of inequality in contemporary Europe.  He is a former director of TASC.