Germany rethinks board structure after corruption scandals
Under German law, companies are required to give as many as half of their supervisory board seats to labor representatives. That increasingly appears to be leading to conflicts of interest and bribery in corporate Germany, because executives need a board’s support to keep their jobs and carry out strategies.
Nowhere in Europe are the ties between labor and management so close.
Germany requires any company with more than 2,000 employees to grant half its board seats to labor.
Its advocates say that the consensus-driven corporate culture helped the country emerge from the devastating effects of hyperinflation and two world wars over the last century to become a powerhouse in the global economy.
But German media are beginning to point to questionable practices between labor representatives and management at other German companies, such as Deutsche Bahn and Deutsche Post.
At Deutsche Post World Net, the German postal company and operator of the DHL express delivery service, the chief executive, Klaus Zumwinkel, has also been accused of getting too cozy with labor. Good relations will be important next year when a commitment of no layoffs expires.
In one example, Deutsche Post has 530 employees who have put their normal jobs aside to act as full-time labor representatives, often with company cars and private secretaries. This is well above the legal minimum of about 400 for the company, which has more than 500,000 workers and is one of the world’s largest employers.
