Codeterm

Codeterm, also known as codetermination, is a system of corporate governance that originated in Germany. It involves the representation of employees on the supervisory boards of companies. This means that workers have a say in the strategic decisions of the businesses they work for. The practice aims to balance the interests of shareholders and employees, promoting a more collaborative and equitable workplace.

There are different forms of codetermination, but the most prominent is the representation on supervisory boards. In larger companies, employee representatives can make up a significant portion, sometimes even half, of the supervisory board. This board oversees the management board, which is responsible for the day-to-day operations of the company. Codetermination typically applies to companies above a certain size, often with a minimum number of employees.

The introduction of codetermination in Germany has been linked to several outcomes, including more stable labor relations, higher employee morale, and a focus on long-term company stability over short-term profit maximization. Critics sometimes argue that it can slow down decision-making or dilute the power of shareholders. Despite these debates, codetermination remains a significant feature of the German economic landscape and has influenced labor practices in other countries.