CARDIFF GARCIA, HOST:
Democratic presidential candidates Elizabeth Warren and Bernie Sanders have both thrown their weight behind an economic idea that is common in other parts of the world and which they now want to try in the U.S. - it's called codetermination.
STACEY VANEK SMITH, HOST:
Codetermination is this idea that companies would be required to have a certain percentage of workers on their boards of directors. So the board of directors is supposed to represent shareholders. They're typically elected by shareholders and fight for shareholder interests - aka maximum profits. And the board usually has a lot of power to hire and fire the CEO, make decisions about mergers, layoffs, which products to develop.
GARCIA: We explored the pros and cons of codetermination in the U.S. yesterday, and today we wanted to hear from someone who actually has experienced it. One of them is Harald Kern. He lives in Nuremberg, and he's 59. Harald used to be a factory worker at Siemens, the giant German manufacturer, and for the past decade, he's been a worker representative on the company's board.
HARALD KERN: If someone would have told me in '96 that I would be - being (ph) board member, I'd think you were a little bit crazy.
VANEK SMITH: Harald went to trade school. He did not attend a liberal arts college. And he says the idea that he would be sitting at a table with executives making super-high-level decisions about mergers and expansion and product development was completely mind-blowing to him - and to his family.
KERN: My parents are quite proud about that, yeah...
VANEK SMITH: Oh, yeah?
KERN: (Laughter) They are, yes. But my father being - my late father being a Siemens worker there as well so...
VANEK SMITH: Oh, what did he do?
KERN: He was a - in the repair shop.
VANEK SMITH: Oh, yeah.
KERN: He was a repair shop man (ph).
VANEK SMITH: So he was very proud you were on the board?
KERN: He was very proud, yeah. But most of the time, I don't think he really understood what I'm doing there.
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VANEK SMITH: This is THE INDICATOR FROM PLANET MONEY. I'm Stacey Vanek Smith
GARCIA: And I'm Cardiff Garcia. Today on the show - codetermination. We speak with Harald about his experience as a worker/board member. Now, Harald is not allowed to talk about specific votes that he has taken, but he can talk about his experience in general and about the overall atmosphere and what he's learned in the last decade.
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VANEK SMITH: Do you remember your first board meeting?
KERN: Yes. It was 31 January in 2008. And it was in the night, after a very long general meeting of the stockholders in Munich. And on the other side, we were sitting a lot of people that was, so to say, the who's who of the chairmen - yeah, top management of Germany. It was Josef Ackermann from Deutsche Bank. It was Gad Cromelin (ph) from Doosan Group (ph), Diekmann from Allianz and so on.
VANEK SMITH: They were all in this board meeting?
KERN: They are all in the board meeting, yes...
VANEK SMITH: Wow.
KERN: ...Because we are just sitting there and have to elect our chair.
VANEK SMITH: How did you feel when you were walking in? Do you remember walking into the room?
KERN: (Laughter) Well, actually, it was for me - I'm coming from the south of Nuremberg, where it is working class - surrounding, so to say. And I was a little bit puzzled being there. And the first one, two years actually I was - especially during the meetings I was more listening and not speaking up too much, which changed the last five, six years, definitely.
VANEK SMITH: So what is - what are the board meetings like? How many workers are there versus other board members? Is it like a third or a half?
KERN: So we have - it is 50-50. That means it's 10 people from the owner's side, and 10 people on the employees' side. And they are elected from delegates from all over the Siemens group every five years.
VANEK SMITH: Do the workers all sit together? Does everyone kind of mix up?
KERN: It is completely in the row of our names, so alphabetically ordered.
VANEK SMITH: Oh, OK. So everybody's mixed in.
KERN: It doesn't matter - we are completely mixed, yes.
VANEK SMITH: What is it like? I mean, what's the - like, the power dynamic like?
KERN: First of all, we have to say the supervisory board member is not doing the daily business, as it is, for example, in the U.S. Yeah. So we are completely out of the business. What we do is, we are the employer, so to say, of the executive board. The executive board is telling us what is the business, how are the numbers. Then we talk about the questions. What is the business going? How is the strategy? How do we change it?
And this is very important because usually the owner's side are not coming from the same world and usually are not used to the same discussions. You can really confront the executive board with the reality we see from the factory side, from the officer's side. And I think the people who have quite an experience on the shop floor, they are always important to listen to.
VANEK SMITH: Yeah, you feel quite a sense of responsibility to the workers, it sounds like.
KERN: Yeah. That is - you have to be - balance the interest because the board is there to give the company a future, yeah, to see are the jobs of the management done in a good way? Are we convinced that this strategy is the right one? And this is something you have to really get very straight into the business and have a clear view - what are the chances and what are risks.
VANEK SMITH: I mean, one of the things that you hear in the U.S., like, against putting codetermination in place is that it would just cause a lot of tension in the boardroom and nothing would ever get done. Is that your experience? I mean, is there a lot of tension that comes up?
KERN: So it's not without tension, but it's in a tune that is very respectful on a personal level. So no yelling or something like that. This is not this time. As I sometimes like to say, we have to protect the management from their own doings on some things.
VANEK SMITH: (Laughter) You have to protect them from themselves.
KERN: (Laughter) From themselves, yeah, in a way.
VANEK SMITH: What do you think that, like, German managers understand that maybe American managers have not come to understand, that most U.S. managers have not come to...
VANEK SMITH: Is it, like, the value of the voice of the workers or...
KERN: No, no, this is not the point. I would think - my guess would be a lot of German managers, if they would have the chance, they rather would go for the American system. But nevertheless, just have a look on our both countries. A country small as Germany, with that numbers, there has to be a reason for that.
VANEK SMITH: So you think that, like, the part of the reason that Germany's economy is so strong and has been so strong for so long is because of this system of codetermination?
KERN: Yeah, it is part of it. I think it's not the only factor, definitely not. But this is a very strong factor because we have it. So the form of the social conflict as we handle it, trying to find compromises, trying to find ways to make it better than it was before. This is totally part of our genes. Is it something the management always wants? Definitely not. Yeah. But usually they are used to it, and there are few of the wiser ones who have done it for some time and looking back they say, oh, it was - in the end, it was better.
VANEK SMITH: Why do you think codetermination has been so helpful to the German economy? Like, what has it given to German companies and the German economy that wouldn't be there if they didn't have - if you guys didn't have this system?
KERN: You see, it is a accelerator of productivity, talking about how can we get more profit out of a certain process and things like that. And needless to say, it's also - definitely also a protector of employee interests.
And so I think the reason why Germany, for example, after Maggie Thatcher and Ronald Reagan, was not so deindustrialized (ph) as, for example, U.S., America and U.K. because there is that workforce, much stronger, and say, no, we have to find better ways than that, and going somewhere to Mexico or Czech Republic or somewhere else where, in the '90s, they had been the cheap workforces.
VANEK SMITH: So would you recommend codetermination for the U.S.?
KERN: I think, as a principle, I would really think go for it. But before that, you have to do a lot of, lot of things. Especially unions, when you begin with that...
VANEK SMITH: Yeah.
KERN: ...They are so shattered in their interests. They are not able to cooperate. And I think, at the moment, what I see in your managers' side, they would just fight for that just to be free from any influence besides their own discussion. So I think we are on two different planets in an ideological background, the social background - in all those things. This is something that I don't see at the moment in the U.S.
VANEK SMITH: Thank you so much, Harald. Thanks for taking the time.
KERN: It's my pleasure.
VANEK SMITH: This episode was produced by Darius Rafieyan, edited by Paddy Hirsch and fact-checked by Emily Lang. THE INDICATOR is a production of NPR.
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