Careless whispers: confidentiality and board-level worker representatives

Publication Date12 Feb 2020
DOIhttps://doi.org/10.1108/ER-03-2019-0146
Pages681-697
AuthorValentina Franca,Michael Doherty
SubjectHR & organizational behaviour,Industrial/labour relations,Employment law
Careless whispers: confidentiality
and board-level
worker representatives
Valentina Franca
Faculty of Public Administration, University of Ljubljana, Ljubljana, Slovenia, and
Michael Doherty
Maynooth University, Maynooth, Ireland
Abstract
Purpose The article focuses on the role that confidential informationplays in relation to the work of board-
level worker representatives, and their interaction with other worker participation mechanisms. Thus, the
purpose of the paper is to explore the implications of confidentiality of board-level information for effective
worker participation. The main argument is that if board-level worker representatives are excessively
constrained by confidentiality provisions, their capacity to work effectively is brought into question.
Design/methodology/approach A qualitative research was undertaken on a sample of 12 public limited
companies in Slovenia. In each company, three interviews were conducted: with the CEO or board member,
with a board-level worker representative and with a works councilor, who was not a board-level worker
representative (36 interviews in total). Each of these interviewees has a particular role, and interest, in handling
confidential information. Thus, a method of triangulation by groups was employed. The interviews were
conducted at the company premises during October and November 2017. The results were analysed by the
content analysis method.
Findings This research confirms that in the majority of companies, nearly all of the material and information
discussed by the board is deemed to be confidential. Consequently, communication between board-level
worker representatives and the works council is rendered difficult, if not impossible. The results indicate an
urgent need to redefine the concept of confidentiality and to reinforce the level of communication between
management boards and works councils.
Research limitations/implicationsThe research is limited to one country, which, by no means, is fatal, as
international comparisons, although of greater breadth, often lose some depth of analysis (especially, for
example, where there are differences in legal contexts). Although the issues discussed in the paper are of
relevance to all those with an interest in worker participation mechanisms, they cannot be generalised mostly
due to national specificities.
Originality/valueThe questionof confidentialityas between the board,board-level worker representatives,
works councils, trade unions and other form of worker representation, despite its importance, has been raised
quite rarely in research. In this research, three groups of stakeholders (CEO/board member, board-level
workers representative and works council members) have been covered, with the aim to extend the
understanding of how confidentiality obligations impact relationships between these.
Keywords Confidentiality, Boards, Board-level worker representatives, Works council, Worker participation
Paper type Research paper
Introduction
Models of worker participation are perennially discussed in the industrial relations arena, be
it from the perspective of the law (Fulton, 2006), economics (Addison and Schnabel, 2009),
human resource management (Addison, 2009) or sociology (Kalleberg et al., 2009). This
research contributes to the work on this topic by focusing primarily on the role of board-level
worker representatives, and, more specifically, the role that confidential informationplays in
relation to the work of board-level worker representatives, and their interaction with other
worker participation mechanisms. The interaction of board-level worker representatives with
Impact of
board-level
information
681
The authors are grateful to the Slovene DirectorsAssociation, which offered substantial assistance in
organising interviews, and to the anonymous reviewers for their constructive and helpful comments.
Funding: There was no specific funding for this research.
The current issue and full text archive of this journal is available on Emerald Insight at:
https://www.emerald.com/insight/0142-5455.htm
Received 4 March 2019
Revised 1 September 2019
17 December 2019
Accepted 18 December 2019
Employee Relations: The
International Journal
Vol. 42 No. 3, 2020
pp. 681-697
© Emerald Publishing Limited
0142-5455
DOI 10.1108/ER-03-2019-0146
other forms of worker representation (notably works councils and trade unions) is crucial for
the representativespower resources (Lafuente Hern
andez, 2019;Haipeter et al., 2019) and the
effective implementation of the basic principles of worker participation, especially in relation
to information and consultation rights (Waddington and Conchon, 2016).
Despite its importance, the question of confidentiality between the shareholder board
members, board-level worker representatives, works councils, trade unions and other form of
worker representation has been addressed quite rarely in the literature to date[1].Gold (2011),
however, found that the issue of confidentiality, and particularly how to handle sensitive or
restricted information about company strategy and operations, were the most serious and
problematic issue facing board-level worker representatives. Waddington and Conchons
(2016) comprehensive work revealed a trend in various European countries to label almost
everything discussed at board-level as confidential. According to their study, one of the most
important reasons for the increased labelling of documents and discussions as confidentialis
managements fear that worker (and, to a lesser extent, shareholder) representatives might
communicate information discussed at the board to external parties, including the media (see
also Cremers and Vitols, 2016). This fear is especially acute where the information refers to
sensitive financial or other issues, which can affect the implementation of a growth strategy
(Timming and Brown, 2015). Disclosure of confidential information can occur, as Davies and
Hopt (2013) observe, even where mandatory rules on boardroom secrecy are well-established
(as in Germany).
It might be understandable that management would wish to label as much information as
possible as confidential, in an attempt to try and reduce the risks of disclosure. However, the
consequences of such action, and of greater (mis)use of the confidentiallabel, can include a
limitation of the right, and duty, of board-level worker representatives to coordinate with, and
report back to, other worker representatives (Waddington and Conchon, 2017;De Spiegelaere
and Jagodzinski, 2016), and therefore present a significant obstacle to the proper functioning
of worker representation on boards (Lafuente Hern
andez, 2019).
This article explores the implications of confidentiality of board-level information for
effective worker participation.Our focus is on the restrictions confidentialityobligations place
on board-levelworkerrepresentativesin fulfilling theirrepresentativeroles. Our mainargument
is that if board-level worker representatives are excessively constrained by confidentiality
provisions, their capacity to work effectively is brought into question, and their relationships
with other worker representatives, notably the works council members, is rendered more
difficult. Furthermore, we emphasise that the content of the information in question is key.
What is prohibitedand consequently non-communicable must depend on the topic and
sensitivityof the information; notall information can or shouldbe treated in the same manner.
The article looks in-depth at the issue of confidentiality from the perspective of board-level
worker representatives at national level, using the case study of Slovenia, and focusing on
three key questions. First, what board-level information is labelled as confidentialand why?
Secondly, how do board-level worker representatives deal with non-communicable
information? Thirdly, how does (non/)disclosure impact the relationships between different
worker representation mechanisms? Our aim is to draw attention to the relatively neglected
issue of how labels of confidentialityaffect the work of board-level worker representatives
via in-depth qualitative research.
The article proceeds as follows. First, we discuss the concept of confidentiality in the
context of existing work on different forms of worker participation in the enterprise. We then
outline the main characteristics of the Slovenian context, and the specific model of worker
participation in Slovenia, focusing on the roles of the different worker representation
mechanisms (namely, board-level worker representation, works councils and trade unions).
We present our data and measures, and then discuss the main implications of how
confidentiality affects the interaction between key stakeholders.
ER
42,3
682

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