The cultural approach of consensus decision-making is found in all areas of an organization. If you ask a clerk at a Japanese store a question about whether a product will serve a particular need, you will likely see two clerks huddle together to discuss the issue, reach a consensus, and then announce the conclusion to answer your question. Ringisei is a common practice of workers within Japanese cultures at all levels of the management structure.
The codetermination system is based
in law. The legal system of codetermination is primarily a German and Swedish system. It is not quite like having union representation, but it does require a company, by law, to allow employees to be part of the decision-making system. Having employees sit on the corporate board seems like a good idea, but this would be a rare thing for American corporations.
The board of directors at an American corporation is almost exclusively made up of the company’s executives and corporate insiders. Often, the executives and corporate insiders are hand-picked for their qualifications and loyalty to the chief executive officer (CEO). Should the stockholders be allowed to vote on executive compensation, or should that be a board decision? The shareholders can vote on who serves on the board, but political factors are usually involved. The point is that an American culture may not be likely to adopt immediate and significant changes toward decision making. The same idea can be argued for the case of Japanese cultures and the decision-making practice they are accustomed to performing. The decision to implement such a change, like any decision, should be carefully evaluated. Always inquire about the return on investment (ROI). Is it worth the change, and will it contribute to the performance (i.e., financial, quality, or personnel) of the organization?
The codetermination system would likely be welcomed and embraced by shareholder activists, but should it become
the law in America to include a seat or two on a publicly traded corporation’s board for non-management employees? And is that even a good thing? Is there a compromise type of system that would require directors to be independent of executives that does not have to be legislated into action?
The idea of codetermination may have roots in diversity. Many countries require females to be on the board of publically held corporations. In 2005, Norway (i.e.,
the law) has since required 40% of corporate boards to consist of women. By 2015, France plans to implement a law that requires 50% of corporate boards to consist of women. In 2007, Spain passed a similar law. Great Britain and Germany are debating the following question: Should governments require quotas for women to serve on corporate boards or should the market drive the appointment?
These laws could lead to term limits for a board member, as well as a board defined by job classification (i.e., workers and management). Once a can of worms has been opened, where do you draw the line? Who needs a union if workers are represented this way? Codetermination does not have to be only about labor/worker representation or rights. On the other hand, codetermination does appear to be the main focus. All policies and strategies that would be discussed in the normal course of board business could be open to the decision-BBA 4426, International Management 3
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