Make Better Allies of Your Workforce

Amid economic uncertainty, supply chain restructuring, and a new wave of automation, businesses that once engaged in extensive hiring now face significant layoffs. Many companies are rolling back flexible work arrangements prompted by the pandemic.1 Meanwhile, employees increasingly want to see their own values and priorities represented in how their companies operate.2 And since the pandemic, many are redrawing the boundaries between work and their personal lives to protect their own well-being.

These trends have intensified tensions between American workers and corporate leaders, leading to a gradual erosion of trust and an increasing strain in their relationships.3 We can see this both directly, in the rise of workforce controversies, such as strikes and other disputes over wages, working conditions, diversity, equal opportunity, health, and safety; and indirectly, through employee disengagement.4

Besides inducing costly operational disruptions and lowering the quality of work, labor controversies and disengagement pose significant challenges for businesses in attracting and retaining talent. Furthermore, such controversies hinder companies’ ability to navigate business challenges like cybersecurity, digitalization, and sustainability, which demand vigilance from and collaboration with employees.

Our analysis of the top 50 public corporations in Germany reveals that, despite a long-standing tradition of involving employees on company boards, management’s ability to manage workforce disputes and foster employee engagement varies. We found that the structure and composition of boards have little to do with their effectiveness; rather, what matters most for reducing conflict is the extent to which C-suite and board leaders actively engage employees in critical strategic decisions. (See “The Research.”) We interviewed key stakeholders in companies that had experienced fewer workforce controversies.