Shifting the balance
Germany weathered the global financial crisis more effectively than any other country in the European Union.
Deakin law expert Professor Jean du Plessis argues that, in no small way, this can be attributed to its “co-determination” system of corporate governance that gives workers much greater say in corporate decision making.
“The rest of the world - including Australia - could learn much from greater understanding of this system,” said Professor du Plessis.
Professor du Plessis has recently been awarded a highly-acclaimed international social sciences research award that is allowing him to “spread the word” and, hopefully, encourage other countries to consider giving workers - and women - a greater say in business.
Professor du Plessis, from the School of Law, has been awarded the Anneliese Maier Research Award from Germany’s Alexander von Humboldt Foundation, an accolade which entitles him to five years’ research funding to extend his work on German corporate law and governance.
As well as giving greater rights to workers, he argues that Germany and a handful of European countries are taking the lead in women’s rights, by legislating quotas for female representation at board level – and this direction is likely to be followed by developed countries across the world in the coming decade.
Professor du Plessis was nominated for the Anneliese Maier award by the University of Muenster (Germany) where he has held strong academic links with its Institute of International Business Law for almost two decades. He was the only lawyer from a large field of nominations for the award, which is open to disciplines across the arts and social sciences.
Originally from South Africa, Professor du Plessis was one of the first academics to establish postgraduate courses in corporate governance in South Africa, which is where he initially developed his interest in the German model of co-determination, which, at its centrepiece, recognises employees across all levels.
“Co-determination is the ultimate form of recognition because it gives employees input – and a voice – at the supervisory board level of German public companies and private companies employing more than 500 employees.
“It recognises the partnership between capital (shareholders' share capital) and labour (employees) as two very important production factors and that employees should ultimately co-determine, with shareholders, the destiny of corporations,” he said.
He explained that the German model, which was introduced after the Second World War, requires companies to fill from one third to half of supervisory board places with employees, giving them real input on the strategic directions of the company.
“Before it was introduced, companies were cynical, expecting constant conflict, but this is not what happened. Now, in Germany, companies look after their employees very well, not just through co-determination, but through an integrated system starting from the shop floor.”
Professor Du Plessis made the move to Deakin’s Faculty of Business and Law in 1999 and was appointed Head of the Faculty’s School of Law the following year – a position he held for three years. He has continued to build on his international profile, co-authoring several books and over 100 refereed journal articles on corporate governance models in the UK, Australia and Germany.
This background provides the perfect platform for his new work under the Anneliese Maier award, which began in November last year with an international forum at the University of Muenster. Over the next four years he plans further forums, conferences and papers on the topic. He will also spend time each year in Germany building international collaboration.
At forums he is organising in Melbourne and Sydney, to be held in mid-October, Australians will get to explore the question “Ismandatory gender quota legislation for Boards also inevitable for Australia?”
In 2003, Norway was the first country in the world to introduce such legislation, giving companies two years to achieve forty per cent female board members, or face deregistration. Spain, Italy and now Germany have followed suit, and the European Parliament recently resolved to direct members to prepare legislation that makes at least 40 per cent female board members mandatory in companies with more than 250 employees (and sales over 50 million euros) for all EU countries by 2020.
“We need to discuss this issue in Australia,” said Professor du Plessis. “It is an example of ‘the elephant in the room’. It is a massive topic. Of companies in the Australian Stock Exchange 200, only 18 per cent of board members are women.”
“Legislation makes a big difference. When it is not in place, progress is much slower, with only between 10 and 25 per cent female board members in most countries.
“Today, many businesses are realising that they should not only be striving for maximum profits, but they have other responsibilities, such as protecting the environment and looking after the best interests of society.
“Good board members do not have to be hardcore business people. The global financial crisis and new economic drivers have forced us to reassess. I believe that innovations such as this could help us to flourish in the new globalised, economic landscape.”