Companies might be smarter with workers in the boardroom

WHEN legendary physicist Richard Feynman was called in to help solve the mystery of the 1986 Challenger space shuttle explosion, he didn't use advanced math. Instead, according to his own account of the incident, he talked to the engineers. The workers who actually built the space shuttle, he found, had a good idea of which parts were likely to fail. Talking to them helped point Prof Feynman towards a flaw in the rubber O-ring joints, which everyone eventually realised was what brought the shuttle down.

This story illustrates a more general principle. Workers have a lot of knowledge about the day-to-day operations of the businesses they sustain. Clerks and salespeople know what customers want, and how buyers decide to make purchases. Assembly line workers know how to speed up manufacturing and prevent defects. Engineers know how to redesign products, and so on. These are things that executives and top managers, sitting in their offices and perhaps far from where much of their companies' operations are located, may overlook. That means that if a business or product line is struggling, executives may sell it off or downsize instead of addressing the problems at the operations level.

Germany has come up with an innovative solution to this problem: put workers directly in corporate boardrooms. Since 1976, German companies with more than 2,000 employees must reserve half of their board seats for worker-elected representatives, while those with 500 to 1,000 employees must set aside one-third. Referred to as co-determination, this policy - which has been proposed in the US by Senator Elizabeth Warren - is often touted as a way to give workers more power to demand better wages and benefits. But its primary benefit might be improving corporate productivity.