Also, doesn't it just make sense that the employees of a corporation, the ones doing the work, might have at least as good of, if not a much better idea of, the direction the company should take on certain issues, as compared to the shareholders?
The employees may be "the ones doing the work" but capital investment is key to allowing them to do that work productively. The shareholders provide that capital, which (formally or informally—they're not obligated to provide it in the first place if they don't like the terms) means that they get to decide how it's used. The board is their agent in making these decisions. If they're smart they'll pay attention to what the employees recommend within their area of expertise—but then again "individual contributors" are often more or less ignorant of, or at least less focused on, certain aspects of running a profitable business which are nonetheless essential to remaining in business. To pick one obvious example: If your engineers create something very impressive from a technical point of view, but there isn't a large enough market willing to pay what it would cost to manufacture, then the product will fail. If that happens, the engineers are salaried employees and have already been paid for the work they put in designing the product. They may be looking for new jobs if the company goes under, but the shareholders who fronted the capital for that development hoping for a long-term payoff risk losing their entire investment.
If employees of a publicly traded company want representation on the board they can always buy shares, individually or e.g. via their union if they have one. However, not wanting to take that kind of risk is a big part of why people choose to work as employees of someone else's company rather than being self-employed in the first place. It's safer to take the regular paycheck and invest your savings in a diversified portfolio rather going all-in and investing heavily in your employer.
As shareholders are organized into funds, employees can organize into worker organizations and as with shareholder unions, they then get a voting board member, who could be elected by the workers to represent them on the board.
This results in a power balance between capital and labor (both of which are required for a successful business). Yes, this means higher wages and rights for labor relative to the current situation in the USA, and less dividends for shareholders, but that seems fair doesn't it?
So to become an employee you need to "buy in" to the company? Or is this your sign-on bonus? Can an employee divest themselves of their shares, or are they only a token shareholder with no ability to trade? Do new hires dilute their shares or does the company need to decide the maximum number of employees in advance?
This is an interesting structure but I don't think most employees would care for it very much, since it forces them to be invested in their employer rather than holding a safer diversified portfolio. I would certainly be opposed to requiring this structure as a matter of corporate law—I don't want to be a shareholder in my employer. I have that option already and I choose not to take it. If the company should happen to fail I don't want to lose my job and my life savings simultaneously.
> This results in a power balance between capital and labor (both of which are required for a successful business).
It would certainly change the power balance, by undermining the power of the shareholders to direct their own investments, which hardly seems "fair". I do not see this as an improvement, either as an investor or as an employee. The reason for the former is obvious, but even as an employee I want the shareholders to be free to handle their own domain, which is ensuring that my employer remains a profitable business capable of remaining in business and keeping those steady paychecks coming. People like to complain about undue focus on quarterly gains, but in practice my direct, financial interest in the company, and that of my coworkers, is very short-term; most obligations between us are settled within a few weeks, the longest (like accrued/borrowed paid time off) last a year or less. I can leave at any time and I don't have to worry about finding a willing replacement first. The shareholders, on the other hand, are invested in the long-term success of the company. Even if they don't personally hold the shares for long, they need someone else who believes that the company will be successful to buy their shares. So as an employee who prefers the certainty of a paycheck over the vagaries of investment returns, and would rather not to be looking for new employers on a frequent basis, I am happy to let the shareholders take responsibility for the company's long-term success and reap the corresponding rewards when they make the correct decisions. I do not want to interfere with their decisions, or to empower my coworkers without a shareholder's stake in the company's future to do so.
