Strengthen employee participation in the board of directors would allow them to weigh more on the definition of the major strategic guidelines of the company – like the practices in force in almost half of the member states of theUe.
The problem
Private companies have an essential role to play in ecological and social transition, both by their investments (green innovations) and by practices HR more inclusive and sustainable. However in France, the definition and control of the business strategy are essentially the responsibility of shareholders: the board of directors or surveillance, precisely in charge of this definition and this control, is to a very large extent made up of shareholders’ representatives. Employees, whose contribution to the creation of value is undeniable, are generally excluded from the major strategic choices.
The consequences are important: focus on the maximization of short -term profit, arbitration in favor of dividends to the detriment of investment with deferred profitability, reduction of issues related to employment. If the presence of salaried administrators is compulsory for certain companies, their representation remains very below what it is in many European countries. As it stands, we can even think that it is essentially symbolic, without real consequence on the reorientation of corporate strategies.
The proposal
Increase the number of employee representatives in the boards (administrative or supervision) of private companies and extend the scope of this measure to a wider population of companies.
How does it work ?
The representation of employees to the Council is compulsory in 13 countries of the European Union (including France), plus Norway. The standard is then a representation rate of 30%, which reaches 50% for the largest German companies. In France, the law imposes the presence of 2 employee representatives for an average of around 13 administrators per council. This representation rate, about 15% (2/13), is therefore significantly lower than what is observed elsewhere in Europe. In addition, the current system applies to all companies (with advice) of more than 1000 employees in France or 5000 around the world. This threshold is restrictive (for example, 500 employees in Germany or 100 in the Netherlands ; See Conchon and Waddington, 2016).
We therefore propose to resume the recommendation (for European companies and European cooperatives) of the European Union Confederation (THESE) of December 2020, namely:
– 2 or 3 employees representatives for companies with 50 to 250 employees ;
– 30% of employee administrators for companies with 250 to 1,000 employees ;
– 50% for companies with more than 1000 employees.
On what research work is the proposal founded ?
Many empirical works have sought to assess the consequences of the representation of employees on the board. Jäger et al. (2022) or Crifo and Rebérioux (2019) offer reviews of this literature, mainly on German data. In total, these studies show that the presence of salaried administrators rather has favorable consequences, on financial or extra-financial performance, as well as on remuneration or the quality of employment.
In the French case, Harnay et al. (2024) and Cavaco et al. (2024) show that the system has negligible consequences, in particular due to the low representation of employees to the Council. However, when employees really manage to weigh, there are favorable consequences on extra-financial performance.
How to implement ?
The presence of salaried administrators is regulated by the Commercial Code applying to the different types of companies with board of directors or supervision. The proposed reform here therefore requires a legislative modification, like the three laws which, in 2013, 2015 and 2019, established and modified the system.
On the unions side, the CFDT has always been very favorable to the device, while the CGT was converted more recently. At European level, the THESEas we have seen, has spoken out in favor of the representation of employees to the Council. The employers are more hesitant – but some voices see it as an opportunity to increase the practice and culture of compromise within French companies.