The next generation of companies will be democracies, why staff and customers should take more control over firms - Bird Lovegod

And now they’ve got themselves into a real pickle in their homeland. Employees have been finding the upper management hard to work with, and there’s now a serious dispute within the company.

According to Sifted, the fintech newsletter, “grievances are believed to be centred around uneven workers’ salaries, triggered by a loophole that meant N26 employees could look up their colleagues’ wages”. That may have been the trigger but there was a powder keg of discontent happening.

So employees got together to form a works council. This is a German employment structure, like a union, but specific to a single company, and companies are required by law to support the creation of them, and legally not allowed to prevent them. As part of its employee interest powers, the works council can legally request company information that is otherwise kept secret, including the financial situation of the company, future business plans, and payment comparisons between different genders or races within the company.

Works councils have eyes, ears, and powers. Strangely, the founders of N26 seem to be less than keen.

The company’s two founders circulated a letter to its 1,500-strong staff, saying “a German works council stands against almost all values we believe in at N26; drive, simplicity, integrity, excellence”. They also raised fears around a works council creating “more complex and hierarchical” structures, and leading to an “increased degree of confrontation”.

So N26 management instead drove down the complicated route of getting a court injunction to ban the meeting to select the electoral board. This was bypassed at the last hour, with, I understand, the assistance of IG Metall, Germany’s largest union. So the meeting did go ahead and now N26 Works Council is in the process of forming itself. With presumably, gigantic muscle and legal assistance quietly backing it.

So the integrity of the management is now under microscopic scrutiny and they’re experiencing a wildly increased degree of confrontation. This is what happens if you don’t live your ‘values’.

This internal disruption, on top of the epic market disruption caused by Covid, is going to really shake this challenger bank, and the harder the management resists the more it’s going to crumble. Trying to prevent employees having a more influential role in the company is hardly the flavour of the season.

I’m wondering, what if companies here in the UK welcomed works councils? Even encouraged them, helped create them? Would those companies fare better than more hierarchical ones?

I heard of a marketing agency that developed an app for internal use. It enabled the employees to vote on whether or not to take on new clients, based on how that client matched the agency’s values. They would literally turn away business if the votes were less than 50 per cent in favour.

It is this kind of highly experimental, principle-based structuring that I believe will give rise to the next generation of successful companies of all sizes in all sectors. Using technology to embed these principles and decision-making processes into companies creates authentic outcomes.

Rather than having empty “values they believe in”, the next generation of companies will have principles they adhere to. And they’ll use technology to enable employees, and even customers, to participate in the process.

The next generation companies are going to be democracies. Giving employees, and even customers, voting rights accordingly. Some are even going to give their customers shares, and in doing so, create entirely new corporate structures, that will, in turn, become the new, and very much improved, normal.