Techies Turn To Organized Muscle

This time last year, Pixelpark was New Economy to the core. At the high-flying Web-design agency, in a converted east Berlin light-bulb factory, proud staffers called themselves Pixels. They pulled all-nighters alongside CEO Paulus Neef in a happy team effort to get rich quick. The company stock they owned rose tenfold in just six months. Then came the downturn, and revolt. With losses mounting and Neef threatening to lay off 200 of the 1,500 Pixels, they did the unthinkable: dusting off a predigital relic of German industry, they elected a work council--employee representatives with the power under German law to negotiate firings, hirings and company policy--and took Neef to court to challenge the layoffs. "The time when we could resolve our differences with Paulus in the kitchen is long gone," says Pixelpark project manager and work-council chair Katja Karger.

As layoffs loom at many of Germany's leading Internet companies, nervous dot-comers are seeking old-fashioned protection from work councils and unions. About two dozen tech firms have elected councils, including eight of the top 50 listings on the tech-heavy Neuer Markt. The German units of AOL and Amazon last year became the first Net companies to elect councils, which can negotiate everything from pay scales to the exact time for a coffee break. All this reflects serious doubts about a largely imported, American dot-com culture. In a recent poll by the Rare Company headhunting agency in Heidelberg, one third of job applicants said they'd rather have a higher salary than stock options, and two thirds wanted a work council to represent their interests. "Job applicants no longer expect a cool office and stock options, but security," the study concluded.

In part, this is about growing up. Many New Economy companies are way past the kids-in-a-garage start-up phase but still lack mature channels of internal communication. "Companies like Pixelpark and AOL are already Old New Economy," says Torsten Olderog, professor of entrepreneurship at Witten/Herdecke University. Workers are getting older, too. Peter Schmidt, a developer at hardware maker Hoft & Wessel, says many staffers hired out of college now have families and can no longer put in 15-hour days. "Now if I work all night I get in trouble with my wife," says Schmidt, who is glad his work council has negotiated caps on overtime.

Though slow to catch on to the Internet culture, big German unions are turning it into an organizing weapon. The IG Metall union now recruits at Frankfurt pink-slip parties and has a psychologist who deals with e-mail queries from burned-out techies. Verdi, a service-sector union, has set up a task force called Connexx to infiltrate new-media companies. After Neef announced layoffs at Pixelpark, Connexx project coordinator Wille Bartz fired off an e-mail to all 1,500 employees, urging them to set up a council. He gave workers a link to a confidential Connexx discussion board, where they could air grievances. Yet so far only about 30 or 40 Pixels have actually joined the union. "We don't need a union to know what to talk to management about," Karger says. "People here are smart and can think for themselves."

The unions and councils suffer from guilt by association with the past. "A work council is unnecessary bureaucratic hierarchy," Olderog says. "These companies will lose their flexibility and turn straight into Old Economy." Not so, others say. Rainer Fritsch, human resources chief at Software AG, says the firm's 7-year-old council helps create "an atmosphere where people feel comfortable and can let their creative potential unfold." The markets don't care: there's no difference in valuation of tech firms with or without councils, according to a study by the Max Planck Institute in Munich. That's a relief, because there will soon be a lot more dot-coms where the workers have a say.