Traditionally, supervisory board members consider themselves supervisors of corporate systems rather than overseers of corporate operations. Ninety percent or more of the responsibility for the company’s success or failure is felt to lie with the Executive Board. When times get tough, however, mere oversight is not enough, and more and more supervisory board members are coming to consider a meticulous examination of corporate strategy part of their obligatory remit.
Co-determination ties the hands of supervisory boards
The case of the German retailer Karstadt, where the signs of crisis were ignored for years on end, can serve as a useful example for the German business sector. At many companies there is far too much emphasis on harmony within the supervisory board; everyone hastens to do their duty in line with good co-determination practice, and consensus between employer and employee representatives is pursued at all costs. What, one could ask, were the employee representatives at Karstadt doing before the crisis became acute? Why didn’t they ask the Executive Board the right questions and insist on getting convincing and doubtless uncomfortable answers?
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