Works Councils: Towards Stakeholding

J OU R N AL OF L AW AN D SOCIETY VOLU M E 24, N U M BER 1, M AR CH 1997 ISSN : 0263–323X, pp. 44–64 Works Councils: Towards Stakeholding? SALLY W H EELER * IN TR OD U CTION The purpose of this paper is to examine the potential of employees as stakeholders within the corporation. What is meant by stakeholding in this descriptive sense is a broad conception of the employee as a citizen of the corporation with the duality of concerns that is implicit in citizenship; namely, the acknowledgment of the authority of the corporation’s governance structure but also the right to participate within the corporation in a way commensurate with an interest derived from employment. The paper focuses on the European Works Councils D irective1 and the steps taken by undertakings towards employee consultation and participation as a result of the D irective. It is suggested that what marks works councils out as worthy of particular discussion in the context of stakeholding is that their innovation on a pan-European basis is the first attempt to confer active2 participation as a right for employees created by the state, or more accurately in this case, the European U nion, rather than simply creating the right for employees to be passive recipients of information.3 ‘Active’ is defined here as the possibility of direct interface with management to establish concerns. It is a two-tier process; the first tier refers to the possibility of direct interface, the second tier refers to whether that opportunity is capable of being taken or has been taken. The purpose of the D irective is to improve employee rights to information and consultation with consultation being expressly defined as a two-way communication process; the exchange of views and establishment of dialogue between employees and management.4 The whole area of employee * Faculty of L aw, L eeds University, L eeds L S 2 9JT , England I would like to thank Jo H unt and D arren Boulding for their invaluable research assistance and the F aculty of Law at Leeds who provided the necessary financial support for this. M any of the ideas for this piece were formulated while I held a visiting appointment at G riffith U niversity Law F aculty in the summer of 1996. I am very grateful to colleagues there for their invaluable constructive comments, particularly Shaun M cVeigh who, as always, was an inspiration. Jo Shaw commented on earlier drafts and checked the ‘Europe stuff’. H owever, as is usually the case, the fact that it reads as it does is my fault. 44 © Blackwell Publishers Ltd 1997, 108 Cowley R oad, Oxford OX4 1JF , UK and 238 Main Street, Cambridge, MA 02142, USA participation is one which has been well traversed by industrial relations and labour law scholars.5 Works councils have received considerable attention within the field of European law and European Studies.6 The orientation here is towards the impact of works councils on the legal institutions of the company. Worker participation in governance mechanisms such as supervisory boards has been mandatory in some individual European states for some time, including G ermany where worker involvement was negotiated as part of the 1922 post-war settlement. The European Works Councils Directive is the first time that a common model of participation has been created which recognizes that enterprise is multinational and affords like rights to employees regardless of the identity of the host country. Within the U nited K ingdom, with its much publicized opt out of the Agreement on Social Policy, the number of employees that will be directly affected by the D irective in terms of having enforceable rights for participation against their employers is relatively small.7 The Directive is structured so that works councils have become mandatory from 22 September 1996 in respect of multinational companies with at least 1,000 employees across the European U nion including at least 150 in two member states.8 Multinational companies which have this employment profile do not have to include U nited K ingdom based employees but experience to date indicates that those who have introduced works councils are doing so. If in the future the U nited K ingdom were to accede to the Social Policy Agreement, then the D irective in some form would become binding as part of U nited K ingdom national law. It seems that in the U nited K ingdom one in three companies affected by the D irective have introduced works councils, a faster uptake that of other EU member states.9 This paper hopes to offer some possible explanations for why, despite government opposition, there has been this desire by business to comply with the terms of the Directive. In order to do this it is necessary to situate the issue of employee participation within a broader discussion of some of the approaches to corporations and corporate behaviour which take a focus wider than simply the rights of and duties owed to shareholders. Stakeholding as a theory rather than as a descriptive noun in the sense that it is used above, is one such theory. This discussion will form the first part of the paper. In addition to being the first attempt at pan-European recognition of the multinational nature of business from the standpoint of employees,10 the European Works Councils Directive also offers an opportunity for employees to be participative in business while retaining their identity as employees. This is a significant change of position. The G erman position on participation which does not adopt this approach has already been outlined above. Previous interest in employee involvement in the U nited K ingdom was based upon the idea of participation through board membership. The Bullock R eport 11 recommended that there should be three constituencies represented in unitary company boards: employees and shareholders who together made up two-thirds of the board with the remainder of members being drawn 45 © Blackwell Publishers Ltd 1997 from an independent group agreed upon by a majority of the other two constituencies. The subsequent White Paper 12 resiled somewhat from this position. It proposed a two-tier board system, supervisory and managerial, akin to the G erman position, and declined to impose these structures, maintaining that there should be a flexible and gradual approach towards employee participation. Interestingly enough Bullock recommended a recasting of directors’ duties to accommodate worker directors; in addition to taking on existing directors’ duties, most notably the duty to act in the best interests of the company, defined by Bullock as the interests of shareholders present and future, worker directors, in common with all other directors, were to consider the interests of employees.13 This was to allow employees on the board to argue for the predominance of their own interests. It is this concession which sums up the difficulties of conferring organizational citizenship on employees through participation at board level. By structuring participation through existing governance mechanisms which were set up to achieve a different end – namely the orchestration of the enterprise towards return to shareholders – workers are being asked to participate in an inflexible structure which is not theirs and a structure which emphasizes the existing parameters of ownership and the space between employee interest and hierarchical decision making within the firm.14 There is no evidence to suggest that workers wish to participate in governance mechanisms which involve them in legal duties owed to the company enforceable by shareholders and state imposed responsibilities15 in respect of their conduct. As a matter of empirical fact, we know relatively little about what goes on in board meetings, about how decision-making processes are established, and about what values are put on consensus, conflict, and prior consultation. In the main, such empirical work as has been done has centered on the position of non-executive or outside directors16 and how they integrate themselves in boardroom culture sufficiently to perform a monitoring role.17 There would seem to be little point in lobbying for rights to be bestowed on employees exercisable as board members when we have little idea what impact or effect their presence would have. There is also a sense in which the idea of worker involvement at board level in either a unitary or two-tier structure is now so far away from the capitalist agenda 18 that pursuing it and ignoring the opportunities offered by innovations such as works councils would be an exercise doomed to failure. The corporate governance reforms in the U nited K ingdom themselves and the language in which they have been discussed subsequently19 would seem to indicate that reforms in the board room are seen as centering on the regulation of the relationship between management and shareholders and not on the idea of the corporation as a broader institution.20 This is an idea which is developed further in the first part of the paper. Works councils would seem to provide an opportunity for organizational citizenship in an environment in which employees can form an agenda which 46 © Blackwell Publishers Ltd 1997 reflects the interests21 of those who are contributing labour and can be treated on their own terms as having a participation right as distinct from an ownership right. The flexibility offered by a structure which is not tied to certain ideological precepts in the way that board-level participation would be, could lead to participation arrangements tailored to reflect the internal organization layers of each undertaking. Consequently, the second part of this paper will examine published works-council agreements within the framework of interaction ritual. This involves considering how the parties structure their responses to issues such as information dissemination and how they deal with experience differentials in the context of negotiations and meetings. This involves drawing on the observations of G offman and D e Certeau. STAK EH OLD IN G AS A TH EOR Y Stakeholder theory was first set out in 196322 as an antithesis to the idea that shareholders were the only group to whom management had any responsibility. The classical exposition is provided by the work of R . Edward F reeman. F reeman’s position is that stakeholders are those groups who have a stake in or claim to the firm.23 H e specifically included within this group suppliers, customers, employees, shareholders, and the local community. According to F reeman, each one of these stakeholders has a right not to be treated as a means to an ends.24 It is this K antian imperative against which the potential of employees as stakeholders through works councils is tested. H is blueprint for employees in this context is surprisingly modest. It seems to amount to nothing more than employees being treated in good faith by management and being made to feel that their views matter and consulted on issues that effect them. In common with the Bullock recommendations and other European models, F reeman wishes to achieve much of his conception of the stakeholding firm through participation in board-room structures. However the actual mode of operation becomes irrelevant when considered in comparison with F reeman’s suggestions for redesigning the underlying purpose of the firm. It is no longer to be a vehicle for maximizing the welfare of shareholders but one for enhancing the welfare of all stakeholders. It is this reorientation of the goal structure of the firm that has sparked off much of the debate around stakeholding as a theory.25 D espite the misgivings of some commentators, such as F riedman 26 and G oodpaster,27 the idea of stakeholding has become popular, or at least a popular reference label! D espite making this call to relocate the position of the firm within society, stakeholding as a theory generally does not make any attempt to prioritize the position of stakeholders vis-à-vis each other or to suggest in times of conflict between them who should prevail or how a decision on who should prevail could be reached.28 The closest F reeman comes to this is in his discussion of how the K antian imperative he adopts can be integrated with the contractual theory 47 © Blackwell Publishers Ltd 1997 of the firm.29 There his demand is that there should be a recognition of equality between stakeholders in terms of their moral rights and that inequalities should only be tolerated if they improve the position of the least well-off stakeholder.30 This very general formulation is not necessarily a weakness of stakeholder theory; a rigid approach on this point would be condemned as being too inflexible to meet different situations. N evertheless, perhaps not surprisingly, those who oppose stakeholding as a theory often use this gap as a way of pointing to practical unworkability from the viewpoint of management. This is the essence of Sternberg’s critique.31 She uniquely sees this as a potential supervisory problem in respect of management; that without the demands of profit maximization and the presence of other measurable financial standards, management will be able to award to themselves large pay rises and other perks. Among those who have sought to move the consequences of embracing stakeholding from simply an imperative that there should be a reorientation of the firm away from profit maximization to a more positive instructive agenda are K ay and Silberston.32 They see as the lead consequence of the adoption of stakeholding an improvement in economic performance. They do not embrace the conferral of rights upon stakeholders but instead see paternalistic guardianship of their interests by boards of directors. These boards of directors are charged with balancing the competing interests of present and future stakeholders and developing multiple objectives which they pursue on a long-term basis. A variety of corporate governance reforms are put forward to free this agenda from problems like the shortterm interests of shareholders. The mulitiple objectives to be pursued are to be set against crieria such as value and efficency. Whilst this model avoids the problems of F reeman’s rights-based agenda and may be superficially attractive in a political sense to defenders of capitalism because it is couched in terms of economic performance, there are still unanswered questions in terms of the governance of the settlement of overall goals and how and for whom effeciency and value are to be assessed. It is unlikely that all stakeholders will share the same position on these issues. H owever, paradoxically, it is this lack of practical detail and cutting edge which has enhanced stakeholding’s attraction for a wide variety of actors.33 Stakeholding has become the vocabulary in which to describe interests in an organization, corporate or not. It is seen as the perfect answer to the corporate legitimacy crisis that has gripped capitalism since the mid to late 1980s in particular. In the U nited K ingdom this crisis was characterized by the failure of the so-called enterprise culture.34 The components in this failure are well documented and do not require any detailed analysis here. Briefly enumerated, they are the spectacular collapses of large corporations which had often indulged in well publicized acquisitive behaviour, for example, the Bond Corporation; the inability of the Serious F raud Office (SF O) and other agencies in the wake of scandals such as BCCI and Blue Arrow to deal with corporate abuse; the very large pay rises of corporate executives and the 48 © Blackwell Publishers Ltd 1997 commitment to downsizing in employment terms. All of these factors have resulted in a desire to clean up the image of business.35 Stakeholding has become the vocabulary and methodology for doing this because it is seen as being capable of satisfaction by the construction of a passive notion of social responsibility;36 the corporation should build into its decision-making processes a consideration of other groups in addition to its goal of shortterm profit taking. Management should decide what the interests of stakeholders are and what is sufficient to give weight to them. The reorientation of the firm’s goal structure that stakeholder theory demands can conveniently be put to one side as management struggles with the practicalities of balancing interests. It is worth noting that during the 1980s even previously hard line free marketers recognized that there was room for social responsibility concerns within the matrix of profit maximization if exercised by management on a mandate from shareholders.37 Shareholders are the group who have secured a more positive response in this respect in the sense that the Cadbury Committee on Corporate G overnance was set up by the F inancial R eporting Council, the London Stock Exchange, and the accounting profession to decide how management should evidence their intentions towards shareholders and to set in place a series of checks and balances on management behaviour. It has done just that from a standpoint of mere mechanical process. A closer evaluation however reveals that the emphasis is still on passivity from the actual stakeholder. Shareholders now have the security of non-executive directors in the board room but the points made above about our lack of knowledge of boardroom culture still hold good in this context. There are a limited number of people with the relevant experience to be non-executive directors and they come from the very community which they are policing.38 We do not know enough about institutional investors and their attitudes towards the use of voice39 to know if they will take the opportunities offered by the direct interface of the annual general meeting. The fact that adherence to the Cadbury code is not compulsory for companies but is left to a market evaluation of their regulatory choices by investors40 is an instance of the emphasis that is placed not on the active participation of shareholders but on the use of exit. If they are not happy with the regulatory choices of the company then they can sell their shares. In reality, it is unlikely that many shareholders’ meetings will depart from the rather grim picture painted by G ower: ‘unhappily meetings are rarely attended by more than a handful of members [shareholders] unless there is some dispute and then the only real excitement arises from attempts by the party that has lost the battle of the circulars to trap the others into some formal irregularity . . .’.41 49 © Blackwell Publishers Ltd 1997 OTH ER AN SWER S TO TH E COR POR ATE LEG ITIM ACY QU ESTION The degeneration of stakeholding as a theory into passive social responsibility does not explain the popularity of works councils. Stakeholding has not been the only response to the crisis of corporate legitimacy. F or example, H andy rejects the idea of stakeholding42 in order to (re)create the idea of a company as an independent entity reaching outwards to groups such as bankers, employees, suppliers, and the community. The corporation is to be seen as a community in and of itself which owes something to outside groups but which ultimately is in charge of its own destiny, free from the pressures of short-termism and those imposed by loan capital providers and thus able to develop and fulfill long-term strategies. In common with stakeholding, this approach is suggesting a reorientation of the corporation’s position within society. The idea of shareholders being able to deal as they wish with their shares as items of property would be untenable in H andy’s scheme. So, in many ways, this poses as much of a threat to conventional capitalist discourse as stakeholding while suffering from all the defects of stakeholding. N o attempt is made to direct management as to how they run the community the corporation has become, how they prioritize the interests of outside groups, and so on. The idea of looking from the corporation outwards rather than working inwards from stakeholders’ agendas is also the theme of Teubner’s approach to the corporation. Teubner advocates autonomization of the corporation from all of its interest groups which he terms ‘resource-holding interest groups’.43 This autonomy would result in none of the interest groups having sovereignty over the corporation.44 Legal policy would operate so as to strengthen the corporation’s position of autonomy. This, in turn, would place restraints on the behaviour of resource-holding interest groups and would enable the corporation to pursue its own agenda which would be defined in broad social terms.45 The idea of the corporation as an essentially political structure in the form of a private-interest government rather than simply a facilitator of economic activity is the position taken by both F rug46 and H irst.47 F or F rug, corporate legitimacy can only be achieved if there is objective external control which will ‘ensure that the interests of constituents are not threatened by the consolidated power exercised by the bureaucracy itself’.48 Bureaucracy is central to F rug’s thesis as he views corporations as bureaucracies, and justifications for corporate power as justifications for bureaucratic power. These justifications, according to F rug, are based on the fallacy that bureaucracies are part of efficient economic organization displaying such features as rationality and accountability. F or H irst, corporations have a role to play in achieving a system of associative democracy for society in general. The governance structure that he proposes for corporations mirrors that which he proposes for all governmental structures. The idea is to 50 © Blackwell Publishers Ltd 1997 construct a situation where corporations are self-governing associations representative of their constituent group interests. To achieve this the legislature would promote the evolution of co-operative non-profit-making institutions through tax breaks and incentives pointing towards the use of industrial credit unions and regional banks for financing. Large corporations would be encouraged to devolve into small industrial associations of 1,000 employees or less. The emphasis would be on the pursuit of a limited number of shared goals or on the accommodation of differing goals within the same institution.49 TH E PAR TN ER SH IP AG EN D A These two imperatives look to be incompatible and in both that and their substance they have much in common with F rug’s demands for ensuring objectivity either through shared values of organizational life or through the accommodation of personal desires. H owever both these positions have in common a notion of partnership between all the interest groups that is needed to secure the pursuit of common goals or shared values or the accommodation of different goals or personal desires. Active participation by employees in the corporation is more likely to arise out of a genuine notion of partnership than from dictated instances of passive social responsibility. Partnership and trust have become increasingly popular ways in which to describe relationships within the matrix of the corporation, particularly that between capital and labour, but there are examples of the relationship between other groups being described in this way.50 These references to partnership and trust come from a wide spectrum of interests ranging from the popular political in the shape of Will H utton 51 to those who comprise the management voice of capitalism. This was expressed through the R SA inquiry which resulted in the publication of the T omorrow’s Company report to which the management teams of twenty-five leading businesses contributed in consultation with many others. The result was a blueprint for corporate culture based on a partnership approach.52 F or example, in relation to employees, the partnership comprised, among other things, a committment by the company to provide a reward system, a framework for learning, and a mentoring system in return for the employees’ committment to develop self-reliance, flexibility, and breadth, and a sense of the realities of global competition. The relevance of partnership and trust is stressed by Carlton and K urland 53 who assert that a major source of trust between stakeholders is their recognition of their interdependence on each other: ‘that the fortunes of all depend on combining the performances of all’.54 It is around this idea of interdependence that a theoretical framework for partnership and trust emerges. It seems that what is required is a new settlement between capital and labour. The need for this new settlement is sparked off by a crisis, not so much of corporate legitimacy as described 51 © Blackwell Publishers Ltd 1997 above, but more of corporate existence brought about by the consequences of post-F ordism. Indeed, while H irst’s call to structures of associative democracy is a rather more radical ending, its beginnings are also the vacuum in industrial organization created by post-F ordism. There seems to be a consensus that the adversarial culture of 1960s industrial relations will not help either side to survive the upheavals of the end of the assembly-line approach to production, the introduction of new technology, and the concept of just-in-time delivery as the relationship between production and market swings into reverse.55 G one are the days of the Charlie-Chaplincreated character in M odern T imes, destroyed by the demands of the assembly line, and the image of job demarcation within the factory conjured up by Peter Currell Brown in S mallcreep’s Day. U shered in to replace them are flexible working schedules and working practices, an emphasis on skilling, and the maintenance and enhancement of skill levels through training to keep pace with technological change (hence the references in T omorrow’s Company to the need to be flexible and realize the significance of global competition), moves towards task integration and greater self regulation of workers as production line pacing ceases.56 All of these factors mean that the Taylorist methods of controlling workers through fragmentation of tasks, deskilling, and payment systems are no longer viable.57 An influential contribution to the industrial relations literature on participation was made by Ramsey58 who suggested that management resorted to participation mechanisms as a way not of increasing productivity59 but of buying off the corporate legitimacy crises that occurred on a cyclical basis within Taylorist management structures, heralded by worker resistance and challenge. This has the effect of framing the corporate legitimacy crisis very narrowly as being one that results only from pressures generated within the corporation itself.60 R amsey’s cycles of control are reminiscent of the struggles that took place to establish and exercise the tenets of M arshall’s conception of corporate citizenship 61 – the right of employees to form trade unions, to bargain collectively, and to strike. These were first-generation rights. Participation is a second-generation right. M anagement and workers are performing together on a much wider stage. Participation through works councils is placed on the corporate agenda partly through outside influences concerned about the place of the corporation in society, particularly in respect of the distribution of wealth and power (even though, as demonstrated above, this concern is often channelled in the direction of notions of social responsibility), and partly as a result of more specific concerns about how best to accommodate new working demands upon industrial structures. By way of reinforcement of this point, several commentators point to the idea of trust underpinning participation arrangements in jurisdictions where partnership between capital and labour is present either because of legislative instruction 62 or because of cultural norms.63 52 © Blackwell Publishers Ltd 1997 A CON TEXT F OR CON SID ER IN G TH E EU R OPEAN WOR K SCOU N CILS D IR ECTIVE Whilst rejecting R amsey’s argument about cycles of control as not reflecting the current position in society, it is perhaps pertinent to consider the point he made at the same time about the adoption by management of participation structures being a way of securing ‘longer term ideological gains’.64 To ignore this suggestion would be to procede rather naively in acceptance of the view that a ‘new deal’ has indeed been struck in industrial relations. Whilst there is rhetoric to support this view, only an empirical examination of works councils’ structure and operation will attest to its truth. What follows is a description of the D irective’s contents in order to identify what are potential entry points for employees to frame themselves in as stakeholders engaging in active participation and what are potential exit points where management can structure events so as to secure control of the participation agenda for their own ends and so frame employees out as stakeholders. What is outside the scope of this analysis is any consideration of how works councils might fit into the various models of participation and democracy that are posed from the standpoint of political theory.65 The approach taken here to identifying entry and exit points is one of comparison between the events envisaged by the D irective and empirical evidence drawn from interactive studies of organizational behaviour. These studies examine issues such as the use of symbols and language.66 All the works-council agreements discussed subsequently are drawn from information already in the public domain rather than from original empirical research. The principal source is a compendium of fifty-one agreements published by the European F oundation for the Improvement of Living and Working Conditions.67 N o claims can be made for representative nature of these agreements and indeed none is necessary, as the work presented here is really by way of a research agenda identifying issues for futher empirical inquiry, rather than a definitive analysis.68 CON CLU D IN G A WOR K S-COU N CIL AG R EEM EN T Several possible background factors in the construction of works-councils agreements and their eventual shape can be identified. F irst, there is the question of accommodating a works council within any existing participation mechanisms such as videos and newsletters.69 Second, there is the not unrelated issue of cultural influence; a particular member state’s industrial relations history may point to the inclusion or exclusion of particular substantive or procedural matters.70 It is also likely that cultural questions will play a part in the form of enactment that is given to the D irective in each member state.71 53 © Blackwell Publishers Ltd 1997 Within the D irective there would appear to be three mechanisms for creating participation arrangements. The first is under Article 13 of the D irective. This allows for arrangements for consultation and information in respect of employees which were in place before 22 September 1996 to serve as sufficient to comply with the requirements of the D irective. The attraction of Article 13 agreements from the viewpoint of management is that they potentially allow mechanisms which fall a long way short of works-councils agreements to satisfy the D irective. F or example, a face-to-face meeting between the two groups is not necessarily required nor are there mandatory election provisions for Article 13 arrangements thus allowing management to ignore union representation. This agreement mechanism is a potential exit point for employees. This is certainly the way that the ‘informed’ popular media have presented the impact of Article 13.72 H owever, a consideration is that once these agreements expire the D irective will be mandatory in all member states except the U nited K ingdom and ‘market pressure’ from agreements made under either of the two procedures outlined below is likely to result in the negotiation of a works council rather than renewal of the Article 13 arrangement. It is also at least arguable that Article 13 agreements which offer a package which is substantially less than that envisaged for works councils in the D irective may be open to challenge after the date at which the D irective becomes mandatory. The second and third procedures have their initial steps in common. N egotiations are begun either at the initiation of management or by written request of 100 employees or their representatives in two member states. Two outcomes are then possible. There may be a negotiated voluntary agreement under Article 6 which permits the employee discussion group, constituted under Article 5, and management to make their own decisions about procedural and substantive issues such as the function of the works council, the resources it will have, and the frequency and duration of meetings. Alternatively there may be an enforced agreement under Article 7 of the D irective which then triggers adoption of the structures contained in the Annex to the D irective leading to mandatory provisions on both proceedural and substantive issues. An enforced agreement under Article 7 will occur either when management refuse to begin negotiations within six months of a request being made to do so or when both parties are unable to reach an agreement within three years of the initial request to begin negotiations. Just to add a further layer of complication, parties can agree simply to adopt the terms of the Annex under an Article 6 voluntary arrangement. G iven that at the time of writing the date by which agreed arrangements had to be in place had only just passed, all of the agreements currently in the public domain were voluntary agreements. It is worth setting out in full the substantive issues that are contained in the Annex because their presence will have an effect on the negotiating frame. They will form the boundaries to the space in which the agreement is reached.73 54 © Blackwell Publishers Ltd 1997 Provision 2 of the Annex: Structure, economic and financial situation development of business, production and sales trends of employment and investment substantial changes concerning organization, working methods and production processes transfers of production mergers, cut backs, closures and collective redundancies Provision 3 of the Annex: R ights of EWC to be informed of relocations, closures and collective redundancies and to request additional meeting for discussion thereof. There is an implicit assumption in the D irective that it will be management which refuses to respond to negotiation overtures made by the workforce or management that makes a disingenuous response by dragging out negotiations for a three-year period. H ence the Annex terms set out here which are reinforced by procedural provisions such as management bearing all the costs of the council. H owever in setting up the Annex as a ‘black hole’ for management, what is being created is an extra dimension to the negotiations; that workers are offered such an ideal type of works council by the Annex that they are reluctant to reach agreement on anything less than the Annex terms. The presence of the Annex is likely to provide a positive disincentive for workers to agree to an Article 6 arrangement rather than simply an incentive for management to negotiate. The flexibility offered by Article 6 is only likely to be an incentive to workers in circumstances where there is a particular issue which is outside provisions 2 and 3 of the Annex. Consquently Article 6 is not perhaps going to be taken by employees as an entry point in the way that the D irective intended it to be. TH E CON TEN TS OF WOR K S-COU N CIL AG R EEM EN TS Without empirical observation of the negotiations around the construction of a works council or of the meetings themselves, it is impossible to know how the subject area coverage of the council is arrived at or which side resiles furthest from its optimal position. Within the fifty-one agreements published by the European F oundation for Living and Working Conditions, only five make no reference to economic and financial conditions and within those five, one makes a general reference to being set up with the background of the D irective in mind. This can be contrasted with the figure of only six agreements which make reference to working hours and conditions, an issue which is not specifically referred to in the Annex. In addition, fourteen agreements make reference to the calling of extra meetings either specifically to deal with issues of relocation as provided for in the Annex or when information that is of ‘special importance’ arises. The influence of the indicative list of terms in the Annex appears clear. 55 © Blackwell Publishers Ltd 1997 Once the subject area remit of the council has been decided, the next issue that arises is a further substantive one of how management selects information it considers appropriate to bring to the council and how it presents that information. Although, as has been explained above, the D irective envisages a two-way communication process, of the fifty-one published agreements only seven refer to employees giving their opinions and transferring information to management and, of these seven, only one refers to the views of the council being factored into the decision-making processes of management.74 D espite the antecedents of EC policy making in the field of worker participation being definitely in favour of co-determination,75 these responses to the European Works Councils D irective are more akin to the fostering of stake-holding through co-operation.76 Information and the ability to collect and disseminate information are of themselves symbols of power; they are evidence of access to a global view of an organization and its environment that is available to management and not to other stakeholders. Selectionof information for dissemination is likely to be based on a strategy of legitimizing decisions that have been taken or will be taken, the idea being that the more ‘information-intensive’ a decision is the more likely it is to be considered acceptable.77 N one of the fifty-one published agreements feature any detailed discussion of the temporality of consultation or dialogue in relation to management decision-making processes with the council, or in other words, whether the council should be consulted at the planning stage of decisions or the implementation stage or both. At this point it is relevant to consider whether works councils are set up in consideration of employees and their needs as individuals, or whether they are created to recognize the Europeanization of business activity. This is relevant because what concerns employees as individuals are the planning and implementation stages of operational decisions – and here, ‘operational’ is defined as plant-specific decisions such as work schedules, payment systems, and task deployment, whereas what concerns employees as a European collective are the more macro-strategic and tactical decisions which focus on concerns such as product investment and development issues, technology adoption, and goal development within the organization as a whole.78 The D irective is silent on the identity of employees to be selected as council representatives. The Annex terms refer simply to the need for representatives to be employees selected in accordance with national legislation.79 In practice this will mean that many of the elected representatives are elected through trade union structures as trade union members or officials. Article 13 agreements will probably depart from this model in order to comply with the instruction that the consultation and information agreement should cover the entire workforce. The implications of this have already been pointed out. H owever, even within the idea of works council membership through union membership, there is the agenda of individual responsibility put forward by the partnership approach outlined above to be accommodated. The idea is that each employee as an individual 56 © Blackwell Publishers Ltd 1997 undertakes to be flexible, adapt to new technology and become aware of the impact of global competition. This type of approach to organizational life when taken with the wider political ideology of individual rights rather than collective rights towards trade unions, employment law, and society in general80 of the last seventeen years does throw up at least the possibility of the adoption of an individual identity.81 A consistent feature of the published agreements is their assertion that issues discussed by the council must be discussed in the context of their impact on at least two member states. Exclusively national or individual issues are universally excluded. One way of looking at this facet of the agreements is to say that as it does not cut across existing national structures in respect of issues such as collective bargaining, it is giving employees a chance in a positive way to carve out a new identity for themselves as organizational citizens on a European stage and therefore is to be welcomed. H owever, information construction and dissemination emerges as an exit point for employees if we consider what is alleged to have happened at Coats Viyella 82 in the light of this uncertainty about the purpose behind the council. Coats Viyella put in place a works council in 1995. It is a tiered system with each of the company’s six divisions having a council which sends a representative to a company-wide meeting held once a year. Employees have two identities – a divisional one and a company-wide one. A meeting of the company-wide council was held in January 1996. Employees in the section of the clothing division that is based in the U nited K ingdom were informed in M arch 1996 that one of the U nited K ingdom plants was closing with the loss of 400 jobs and further job losses elsewhere predicted. The council position was that this had not been disclosed in January and should have been. The company management’s position was that the individuals affected had a right to be informed first and that at the company-wide meeting chief executives of the different divisions had given an outline of future plans including ‘necessary reorganization and corporate strategy’.83 In other words, the information could have been gleaned from the council meeting but only if the employee representatives had recognized the triggers to an operational decision in the midst of discussion of strategic decisions. The employees concerned received news at an operational level which had been available to the collective only in an unrecognized general format. There is little possibility of the employee representatives being able to use the procedural device of agenda setting here to overcome these substantive difficulties; of those agreements within the fifty-one studied which make specific mention of agenda-setting responsibilities, the overwhelming majority declare it to be a joint one shared by both sides. Employees are thus unlikely to be in a position to raise issues and then demand information in respect of them. The fact that the type of disfunctionality which occurred at Coats Viyella occurred within the format of a works council which at its divisional level refers to ‘dialogue tak[ing] place in a spirit of trust and mutual respect and a determination to develop an active partnership with an open, informative 57 © Blackwell Publishers Ltd 1997 and collaberative style in all discussions’84 raises questions about the viability of works councils as a vehicle for establishing active participation by employees. The apparent manipulation of information giving and consultation in this way is perhaps an example of R amsey’s view of management using participation structures as a way of achieving longer-term ideological gains.85 TH E M ECH AN ICS OF WOR K S-COU N CIL M EETIN G S The Coats Viyella situation described above may be evidence of a meeting situation in which employee representatives are constructed into being passive receipents of information rather than feeling comfortable enough to ask questions. The agreement in this instance refers to the answering of questions as one of the aims and objectives of the council but also to the giving of ‘formal presentations’ by management members and an address by the group chief executive. There would appear to be a tension here between an environment of informality and formality.86 This type of tension is likely to be most acute for the group which lacks familiarity and cohesiveness. In this context this will be the employees. They are unlikely to have any social bonds or at least not in the initial stages of works council meetings nor will they necessarily have shared agendas and expectations for the council. This lack of familiarity or cohesivness is illustrated by the fact that thirtytwo of the fifty-one published agreements refer to the opportunity for employee representatives to hold a pre-meeting before the council meeting. R ather than acting as an entry point to creating power equality between the groups it emphasizes their inequalities. M any employee representatives will be experienced trade union officials. H owever their experience is likely to come from nationally based negotiations on issues such as pay and work schedules where there is a preferred outcome for both sides. There is no obvious bargaining frame in the context of works-council meetings. Their role is quite a different one; to obtain, process, and filter back information on a range of general issues. A pre-meeting before a council meeting displays an unfamiliarity with issues such as the relationship between technology and production, for example. The pre-meeting can only construct a knowledge base out of the information that has been released to it in whatever form it has been released.87 The idea of employee cohesion is alluded to in the D irective itself in that the Annex terms refer to council membership being drawn from employees and does not appear to admit management as of right to the council. H owever if the council is to be a forum in which two-way communication takes place then there has to be an interface with management. The participation of management in this way moves the discussion from substantive issues into procedural concerns. One, the responsibility for agenda-setting, has already been considered. Others are the choice of venue for the meeting, the chairing of the meeting, and the conduct of the meeting through the 58 © Blackwell Publishers Ltd 1997 chair. The Directive is silent on these and other issues of detail. Only empirical observation can confirm the importance of these sorts of details in relation to works councils but studies of structured interactions in organizations stress the importance and significance of micro features such as the allocation of turn-taking in meeting conversation. Boden talks88 about the management of ‘meeting space’ and how few actual decisions are taken in large formal meetings which are reserved instead for the politics of information exchange. What are likely to emerge as exit points for employees at this point are once again the large meeting experience of management used to a situation in which the focus is not the degree of movement between two opposing points89 of view, but simply the general discussion of information in a time-bounded forum with no particular outcome in mind. CON CLU SION Stakeholding in the context of corporations is a fairly free-form idea which has been both adopted and adapted to provide a range of responses to the corporate legitimacy problem. Stakeholding specifically through the medium of works councils is unlikely to provide anything more concrete than the existing vague notions of social responsibility. The Works Council D irective concentrates on providing a macro framework for participation which at first glance sets up a forum which is likely to foster active participation. H owever, its inability to engage with any of the issues that occur below that initial macro threshold is likely to see employees framed out as active participators. Control of issues below the function of the works-council stage such as information dissemination and the conduct of the meeting itself are likely to determine whose interests are advanced by the institution of the council.90 The labels repeat-player and one-shotter are now almost compulsory in any piece of socio-legal analysis which raises the issues of power or experienced inequalities. H ere management are repeat-players in the sense of being a pre-existing cohesive group, with shared goals, able to control collection and dissemination of information, and experienced in this type of meeting structure. These advantages become layers of control which stack up behind any disadvantage incurred through the presence of the Annex terms. M anagement can control affairs by retreating behind these successive layers of control. N OTES AN D R EF ER EN CES 1 2 D irective 94/45/EC of 22 September 1994. A more conventional way of describing participation through works councils is as indirect participation, with direct participation being used to describe structures like supervisory boards; see R . Lansbury, ‘Workplace Europe: new forms of bargaining and participation’ (1995) 10 N ew T echnology, W ork and Employment 47. H owever, this would seem to be 59 © Blackwell Publishers Ltd 1997 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 appropriate only in the circumstances of evaluating different types of participation against each other. See Companies Act 1985 (CA) s. 234 (5) and Sch. 7 Part V. See Art. 1 and Art. 2(1)(f). F or a comprehensive review of the various different types of participation and a detailed bibliography, see J. H yman and B. M ason, M anaging Employee Involvement and Participation (1995). See H . K nusden, Employee Participation in Europe (1995) for a review of trends and a detailed bibliography. The TU C put the number of U nited K ingdom companies caught within the scope of the D irective at 106, see A T rade Unionist’s Guide to W orks Councils at 59. H owever, research carried out at the U niversity of Warwick put the number in excess of 300, see P. M arginson, ‘The Coverage of U nited K ingdom owned companies by the European Works Council D irective’, Warwick Papers in Industrial R elations no. 56 (1996). Art. 2(1)(c). See the T imes 23 September 1996, 46 which refers to some forthcoming research by M . H all to substantiate this proposition. R ecognition at European level of the multinational nature of business organization has centered mainly on providing business forms to facilitate the establishment of largescale firms, see, for example, R egulation 2137/85, OJ 1985 L199/1 (the European Economic Interest G rouping), discussed in M . Israel, ‘The EEIG : A M ajor Step F orward for Community Law’ (1989) 9 Company L awyer 14. R eport of the Committee of Inquiry on Industrial Democracy (1977; Cmnd. 6706) Chair, Lord Bullock. Industrial Democracy (1978; Cmnd. 7231). id., at p. 84. Ironically this one measure survived to become the Companies Act 1985 s. 309. L. Tivey, ‘Economic D emocracy: A N ote’ (1991) 39 Political S tudies 335, at 337, and G . Teubner, ‘Industrial D emocracy through Law? Social F unctions of Law in Industrial Innovations’ in Contract and Organisation, eds. T. D aintith and G . Teubner (1986) are two of the many commentators who make this point. See, for example, the sanctions imposed by the Company D irectors D isqualification Act 1986. An exception to this is T. Schuller and J. H yman, ‘F orms of Ownership and Control: D ecision M aking Within a F inancial Institution’ (1984) 18 S ociology 51 but the focus there is not on actual decision-making processes but on definitions of ownership and control. See A. Pettigrew and T. M cN ulty, ‘Power and Influence in and around the Boardroom’ (1995) 48 H uman R elations 845; S. H ill, ‘The Social Organization of Boards of D irectors’ (1995) Brit. J. of S ociology 245; and F . Winfrey, ‘Behind Closed D oors: An Exploratory Examination of Boards of D irectors and D irectors M eeting Among the F ortune 500’ (1993) 4 Corporate Governance 199. Charkham makes the point that corporate governance is necessarily a product of its political and social history and attitudes in J. Charkham, Keeping Good Company (1994) at 249; see, also, n. 19 below. F or example, D . Prentice and P. H olland (eds.), Contemporary Issues in Corporate Governance (1993). An overview of the development of corporate governance values from the liberalism of the 1960s with an emphasis on social inclusion to the shareholder versus management perspective of the 1990s is provided by N . Jackson and P. Carter, ‘Organizational Chiaroscuro: Throwing Light on the Concept of Corporate G overnance’ (1995) 48 H uman R elations 875. The idea that within institutions different groups may have different agendas and choose what motivates them while still working towards the institution goal is commented on by 60 © Blackwell Publishers Ltd 1997 22 23 24 25 26 27 28 29 30 31 32 33 34 G offman in his description of mental institutions, E. G offman, A sylums (1961) 163. U se of G offman’s conception of an institution ‘in an ever expanding way’ is not without its critics, the argument being that such usage ignores the requirements of the description ‘total’, see C. D avies, ‘G offman’s Concept of the Total Institution: Criticisms and R evisions’ (1989) 12 H uman S tudies 77 at 79. H owever, workplaces, particularly under F ordist production systems, share some of the characteristics of total institutions and G offman does repeatedly in A sylums illustrate his conception of the institution with references to the workplace. F reeman supplies a history of the term and the concept in R .E. F reeman, S trategic M anagement: a S takeholder A pproach (1984) 31– 42. H e claims an intellectual heritage for the concept derived from Adam Smith and Berle and M eans. Elsewhere in the book, F reeman describes stakeholders ‘as those who can affect or are affected by the achievement of an organization’s purpose’ (p. iv). H e is attacked for this definition by those who feel that it is too wide and should be confined to those who are necessary for the corporation’s survival, put as shareholders, state, and customers; see, for example, E. Sternberg, ‘Stakeholder Theory Exposed’ (1996) 2 Corporate Governance Q. 4, at 6. H owever, F reeman also uses the survival definition of stakeholder and includes within it a much wider group including employees; see W. Evan and R . E. F reeman, ‘Stakeholder Theory of the M odern Corporation: K antian Capitalism’ in Ethical T heory and Business, eds. T. Beauchamp and N . Bowie (1988, 2nd ed.) 75, at 100–2. id., at p. 100. T. D onaldson and L. Preston, ‘The Stakeholder Theory of the Corporation: Concepts, Evidence and Implications’ (1995) 20 A cademy of M anagement R ev. 65 provides a useful overview of much of the literature that has been generated in this area. See M . F riedman, Capitalism and Freedom (1962) whose opposition is based upon the function of the firm as a profit maximizer. K . G oodpaster, ‘Business Ethics and Stakeholder Analysis’ (1991) 1 Business Ethics Q. 69, rejects the idea of equal stakeholders on the grounds that the relationship between shareholders and management is different from that between other stakeholders because of its fiduciary character. Although it should be noted that stakeholder theory does divide into several different approaches, for example, stakeholder/agency theory and stakeholder/resource-based theory and that what is offered here is by way of a general description. A more detailed account is offered by M . H use and D . Eide, ‘Stakeholder M anagement and the Avoidance of Corporate Control’ (1996) 35 Business and S ociety 211. The contractual theory of the firm that F reeman is specifically engaging with is that of Oliver Williamson, see his ‘The M odern Corporation: Origins, Evolution and Attributes’ (1981) 19 J. of Economic L iterature 1537. R .E. F reeman, ‘The Politics of Stakeholder Theory: Some F uture D irections’ (1994) 4 Business Ethics Q. 409 at 415. F reeman offers details of what he terms the ‘D octrine of F air Contracts’. E. Sternberg, Just Business (1994) 52. J. K ay and A. Silberston, ‘Corporate G overnance’ (1995) N ational Institute Economic R ev. 84, also, J. K ay, T he Business of Economics (1996) 119–20. F or a more detailed discussion of their approach then it is possible to give here, see P. Ireland, ‘Corporate G overnance, Stakeholding, and the Company: Towards a Less D egenerate Capitalism?’ (1996) 23 J. of L aw and S ociety 287. Outside of academia, the label ‘stakeholder’ has been adopted by groups as seemingly diverse as the Labour Party (see R . Peston, ‘Votes at stake over vision for economy’ Financial T imes, 11 January 1996) and the CBI (through the Watkinson report). The Watkinson report on T he R esponsibilities of the British Public Company came out in 1973 but has really been given prominence in the last ten years or so. See C. Stanley, Urban Ex cess and the L aw (1996) ch. 4. Stanley highlights events in the City of London between 1984–89, the period before and after Big Bang, and provides a thought-provoking analysis of the changes in financial practice and culture. 61 © Blackwell Publishers Ltd 1997 35 36 37 38 39 40 41 42 43 44 45 46 47 48 49 50 51 52 R .E. F reeman and D . G ilbert, ‘Business, Ethics and Society: A Critical Agenda’ (1992) 31 Business and S ociety 9, at 12. See T. Amber and A. Wilson, ‘Problems of Stakeholder Theory’ (1995) 4 Business Ethics 30, at 32. ‘F reedom and Philanthropy: An Interview with M ilton F riedman’, Editorial (1989) 17 Business and S ociety R ev. 11. See J. G ilson and M . R oe, ‘U nderstanding the Japanese K eiretsu: Overlaps between Corporate G overnance and Industrial Organization’ (1993) 102 Y ale L aw J. 871, at 874; and G . Stapledon, Institutional S hareholders and Corporate Governance (1996) at 142–5. There is evidence in the U nited States of America to suggest that shareholder activism is on the increase; see G . D avis and T. Thompson, ‘A Social M ovement Perspective on Corporate Control’ (1994) 39 A dministrative S cience Q. 141. In the U nited K ingdom there is little to suggest that this is happening; see G . Stapledon, ‘Exercise of Voting R ights by Institutional Shareholders in the U nited K ingdom’ (1995) 3 Corporate Governance 144, and J. Williamson, ‘The R oad to Stakeholding’ (1996) Political Q. 209, at 210. The London Stock Exchange has made it a condition of continued listing that companies supply a statement of their compliance with the code or reasons for non-compliance in reports and accounts. L. G ower, Principles of M odern Company Law (1993) 515. It is worth comparing this description with the populist reform agenda propounded by D . Butcher, ‘R eform of the G eneral M eeting’ in Corporate G overnance and Corporate Control, eds. S. Sheikh and W. R ees (1995) 221. C. H andy, ‘What is a Company F or?’ (1993) 1 Corporate Governance 14. G . Teubner, L aw as an A utopoietic S ystem (1993) 123–58, at 134. id., at 140. Teubner’s reference to the ‘social’ is not elaborated upon. There is no indication whether this is a call for the exercise of social responsibility, for some tightly controlled version of stakeholding or something else. This chapter on corporate governance is primarily a response to the transaction cost approach to the firm of Williamson. Perhaps in these circumstances we can expect little more than a throwaway reference to the existence of a social agenda. G . F rug, ‘The ideology of bureaucracy in American law’ (1984) 97 H arvard L aw R ev. 1277. P. H irst, A ssociative Democracy (1994). H irst’s basic principle is set out on p. 19. H e deals specifically with companies at pp. 144–55. F rug, op. cit., n. 46, at p. 1286. F or a critique of H irst’s position on this point, see D . M organ, ‘Associative D emocracy: decentralisation of societal and industrial governance? A critical discussion’ (1996) 32 A ustralia and N ew Z ealand J. of S ociology 1, at 11–14. It is relatively common practice for the relationship between supplier and customer to be described in this way; see B. D ale et al., ‘Supply Chain M anagement and D evelopment’ in M anaging Quality, ed. B D ale (1994, 2nd ed.) 292, at 294–6. See S. D eakin et al., ‘“Trust” or Law? Towards an Integrated Theory of Contractual R elations Between F irms’ (1994) 21 J. of L aw and S oc 329 who examine the nature of trust that gives rise to these sorts of relationships. Their conclusions are that trust in this context and the contractual co-operation which follows it consists of more than cultural and social norms and is created through the construction of contractual devices to encourage the performance of commercial relationships over and above the regulation of personal and property interests. See, also, W. Powell, ‘Trust-Based F orms of G overnance’ in T rust in Organisations, eds. R . K ramer and T. Tyler (1996) 51. Observer R eview 2 June 1996, 1. R SA (R oyal Society for the Encouragement of Arts, M anufactures and Commerce), T omorrow’s Company report, executive summary. 62 © Blackwell Publishers Ltd 1997 53 54 55 56 57 58 59 60 61 62 63 64 65 66 67 68 69 70 71 72 J. Carlton and N . K urland, ‘A Theory of Stakeholder Enabling’ in Post M odern M anagement and Organisation T heory, eds. D Boje et al. (1996) 155, at 170. id., Carlton and K urland quoting from C. H eckscher, ‘D efining the post-bureaucratic type’ in T he Post-Bureaucratic Organization: N ew Perspectives on Organizational Change, eds. C. H eckscher and A. D onnellon (1994) 14, at 25. G . Paolucci, ‘The Changing D ynamics of Working Time’ (1996) 5 T ime and S ociety 145 at 152 K . Sørensen, ‘Of M en and M achines – Technology and Working Life D iscourses’ (1996) 39 A cta S ociologica 99. F . Taylor, T he Principles of S cientific M anagement (1947). H . R amsey, ‘Cycles of Control: Worker Participation in Sociological and H istorical Perspective (1977) 11 S ociology 481. F or this view see, for example, H . Braverman, L abour and M onopoly Capital (1974). See P. Ackers et al., ‘The U se of Cycles? Explaining employee involvement in the 1990’s’ (1992) 23 Industrial R elations J. 268. See J. Barbalet, Citizenship (1988) 22–7. M . Albert and R . G onenc, ‘The F uture of R henish Capitalism’ (1996) Political Q. 184. See F ukuyama’s description of Japan as a ‘high trust’ society where reciprocal moral obligations are reflected in partnership structures between capital and labour, in F . F ukuyama, T rust: T he S ocial V irtues and the Creation of Prosperity (1995) 185–93. R amsey, op. cit., n 58. There is a huge literature on this, a considerable amount of which deals with the work of Braverman, op. cit., n. 59; see, also, C. Pateman, Participation and Democratic T heory (1970) at 45 ff. F or an indication of the different type perspectives that could be applied to these phenomena, see the discussion in A. Westenholz, ‘D emocracy as “Organisational D ivorce” and H ow the Postmodern D emocracy is Shifted by U nity and M ajority’ (1991) 12 Economic and Industrial Democracy 173. Other accounts of published agreements abound, see, for example, H . K reiger and P. Bonneton, ‘Analysis of existing voluntary agreements on information and consultation in European multinationals’ (1995) 2 T ransfer 188. The document produced by the European F oundation for the Improvement of Living and Working Conditions, T he R eview of Current A greements on Information and Consultation in European M ultinationals ( 1996) also contains tabular anyalsis of the contents of the agreements. This information has not been used and often a different conclusion has been reached based on the texts as I read them. There is a large literature on methods of participation and the economic effects of participation. In addition to the material already cited, useful summaries and bibliographies are provided by D. Levine and L. Tyson, ‘Participation, Productivity and the F irm’s Environment’ in Paying for Productivity, ed. A. Blinder (1990), and J. Russell, ‘The Status of Research in Employee Participation: A Case for More Appropriate, Rigorous and Critical Methodology’ (1995) (Working Papers in Accounting and F inance, Manchester U niversity). The TU C publication on works councils, op. cit., n. 7 refers to the differences in management representative status between the F rench and G erman company works councils that have already been established under the D irective and conjectures that this may have something to do with the differences in their domestic industrial relations backgrounds. In G ermany, under domestic legislation, works councils do not include management representation. See the empirical evidence presented in D. McBarnet and C. Whelan, ‘International Corporate Finance and the Challenge of Creative Compliance’ in The Internationalisation of Capital M arkets and the Regulatory Response, eds. J. Fingleton and D. Schoenmaker (1992) 129. See Financial T imes, 10 November 1995, ‘Management: One step ahead of the works council – Employers have found a provision in the EU directive which they intend to exploit’, and F . Younson, ‘European Works Councils – Time to Act?’ PL C Jan/F eb 1995 41. 63 © Blackwell Publishers Ltd 1997 73 74 75 76 77 78 79 80 81 82 83 84 85 86 87 88 89 90 See R . M nookin and L. K ornhauser, ‘Bargaining in the Shadow of the Law’ (1979) 85 Y ale L aw J. 950 where they posit a negotiation framework based on each party knowing the rules within which they are operating and taking rules that offer a favourable outcome to them as opposed to the other party as a bargaining endowment. A similar situation is likely to occur here. Bercusson, although not citing this source, presumably has this framework in mind when he discusses the process whereby the social partners may become involved in the formulation of labour standards under the Social Policy Agreement, see B. Bercusson, European L abour L aw (1996) 540. To reinforce the point made earlier about the importance of cultural influence this agreement comes from H onda Europe, part of the well-known Japanese company. The first draft of the F ifth D irective was issued in 1972 (OJ 1972 C131/49) and contained proposals modelled on existing G erman legislation for compulsory co-determination within a two-tier board structure. Clegg provides a holistic definition of co-operation as comprising the rights to information, to protest, to suggest, and to be consulted. H is definition of co-determination includes the rights to vote, to decide, and to co-decide, see S. Clegg, ‘Organisational democracy, power and participation’ in Organisational Democracy and Political Processes, eds. C. Crouch and F . H eller (1983) 1, at 17. M . F eldman and J. M arch, ‘Information in Organizations as Signal and Symbol’ (1981) 26 A dministrative S cience Q. 171, at 178. F or a more extended discussion of this typology of decision making, see K nusden, op. cit., n. 6, at p. 11. The D irective’s approach to employees as a group does not account of the fact that the flexibility of post-F ordist work regimes has brought into the workplace a much more diverse range of employee groups and identities than are presently adequately catered for within the representative structure. See K . F erguson, T he Feminist Case A gainst Bureaucracy (1984), and H. Hansmann, ‘Worker Participation and Corporate Governance’ (1993) 43 University of T oronto L aw J. 589. See, for example, M . Burawoy, T he Politics of Production: Factory R egimes under Capitalism and S ocialism (1985) at 18, for the view that ‘each factory regime is the product of general forces operating at a societal or global level’. See P. du G ay, Consumption and Identity at W ork (1996) at 151–74. H ere, du G ay discusses at some length the way in which the enterprise discourse with which we are all now so familiar is used by management to pull employees into the organization as participating individuals. These events have been widely reported in the media; the following account is based principally on the report contained in People M anagement in M arch 1996. id. Coats Viyella is one of the fifty-one agreements published in the European F oundation for Living and Working Conditions and the precise text is thus available. See B. G ray, ‘Organisations as Constructions and D econstructions of M eaning’ (1985) 11 J. of M anagement 83, at 91. See R . D ingwall and P. Strong, ‘The Interactional Study of Organisations’ (1985) 14 Urban L ife 205. See M . M ulder, ‘Power Equalization through Participation?’ (1971) 16 A dministrative S cience Q. 31. D . Boden, T he Business of T alk (1994) at 81–90. F or the extent to which this is the usual focus of labour-management negotiations, see L. Cairns, N egotiation S kills in the W orkplace (1996). See F incham’s discussion of the importance of the mechanisms of control in R . F incham, ‘Perspectives on Power: Processural, Institutional and “Internal” F orms of Organisational Power’ (1992) 29 J. of M anagement S tudies 741, at 754. 64 © Blackwell Publishers Ltd 1997