Employee participation in organizational decision making allows employees to have a say in decisions that affect their working lives in some way. Nevertheless, this apparently benign definition masks a number of complexities. The main problem is that different parties in the employment relationship may differ on the procedure by which employee voice is expressed and on the substantive content of the participation. For this reason, the history of employee participation (EP) is long and tortuous, with no simple, uncontested objective.
Many managers see EP as largely job centered, established as a means to offer expanded task discretion to individual employees as a way to enhance their fulfillment and hence job performance. Employees may accept these prescriptions, but under conditions of insecurity or hostility (e.g., following downsizing exercises), they may interpret these initiatives more negatively as being orientated toward satisfying primarily employer, rather than employee, needs. Managers may also adopt EP principally as a means to disclose information of managerial intentions or decisions, which they hope will engender employee trust and goodwill.
Unions, on the other hand, through their representative functions, may seek a broader and more active vision of gaining a voice in organizational decisions, which managers might believe could undermine their authority or subvert optimal corporate performance (e.g., by seeking higher pay awards). While some economists do point to a negative association between union participation and organizational performance, other authorities contend that the same process of representative EP can actually strengthen employee commitment to the company by providing them with an authoritative collective voice, which also encourages managers to sharpen their performance in dealing with staff. Allied to this, a third perspective suggests that rather than representing conflict over divided interests, employee participation, correctly applied, can benefit the ambitions of all stakeholders. This approach has been reinforced through studies and research by authorities such as Jeffrey Pfeffer and Mark Huselid, who have argued that employees represent the principal source of performance enhancement and that encouraging employees to exercise autonomy and discretion fortifies both their motivation and their performance. There is certainly evidence by these and other authors that the combined use of commitment-focused EP can positively impact employee contributions. These observations are especially relevant for the growing numbers of knowledge workers in advanced economies, whose commitment is vital to organizational success.
What emerges from these different perspectives is that EP can be represented by a host of varied practices, applicable at different levels within the organization. Basically, though, EP can be classified into direct, indirect, and financial forms. Direct forms tend to derive from management instigation and provide for personal involvement for individual employees or work teams with no representative intervention. Involvement by employees in decision making is restricted to task or workgroup issues or to reactive communication exercises. Examples include direct communication between employees and managers through both downward and upward routes. Performance appraisal can be seen as a means of direct EP, requiring upward communication from employees (e.g., factors influencing their performance or requests identified for future development) and downward communication from appraisers about appraisee success in meeting targets, allocating performance-related pay awards and setting future personal objectives. This focus on direct contact between manager and managed can have important implications for managerial and career development. As an assessed part of their performance and indicator of advancement potential, supervisors and managers may need to acquire a range of facilitative and communication skills as a demonstration of their managerial competence. At the same time, the appraisal process offers opportunities to different ranks of employees to enhance their employability through the acquisition of skills and qualifications.
Personnel skills may also be practiced in facilitating two other prominent approaches to direct EP, namely, employee empowerment and teamworking. Research has indicated that these processes are especially relevant to today’s increasingly sophisticated and flexible work regimes and educated workforces. Empowerment, which aims to project greater decision-making autonomy on individual employees and supervisors at the task level, can provide opportunities for career advancement for both managers and the managed that are in contrast to more rigid and hierarchical work regimes. Teamworking, a form of group empowerment, requires competence in communication and facilitative leadership from both team leaders and their supervisors.
Indirect EP through representatives can be demonstrated through collective bargaining (or negotiation) and works councils and, in Europe especially, by worker directors and, more recently, European Works Councils (EWCs). In contrast to direct EP, indirect EP has a regulative function and may actively engage with organizational or corporate issues (such as restructuring), which may require the organization to become more accountable to employees and their representatives. Especially in the more regulated European economies, these approaches can be supported by national or supranational legislation within a social justice framework that acknowledges that in an era of giant and multinational corporations, employees are often at a market disadvantage in negotiating and protecting their terms and conditions of employment. For the same reason, not all companies welcome these interventions into their decision-making powers and may oppose recognition of trade unions and resist, organizationally and politically, the imposition of forms of indirect EP, which are considered inimical to their economic interests.
Collective bargaining is probably the most commonly adopted form of indirect EP and, unlike other forms, requires recognition of an independent trade union by the employer. Collective bargaining involves the joint regulation of terms and conditions of employment between the employer and trade unions acting on behalf of employees. Works councils and EWCs can exist independently of trade unions (and, indeed, may be regarded by unions with suspicion), and rather than joint regulation assumed by negotiation, they are designed for managers to inform and consult over organizational decisions with representatives of the workforce. The role of EWCs is tightly circumscribed by European legislation to inform and consult about company international issues at formal council meetings held at least annually. Evidence from the operation of EWCs suggests, however, that employers have little to fear from the establishment of these institutions.
Financial participation or employee ownership is most advanced in the market economies of the United States and United Kingdom. In both countries, over a third of employees in the private sector have access to acquiring stock in their companies through employee share ownership plans (ESOPs). Although the intention of ESOPs can be to support retirement incomes, their more general purpose is to create a tangible sense of ownership, which advocates like Joseph Blasi, Douglas Kruse, and Corey Rosen have argued feed into both employee and organizational performance. Although the evidence is mixed, research tends to confirm that the presence of a positive “ownership effect” is directly associated with higher proportions of shareholdings held by employees. The other positive finding is that synergy between employee ownership and other high-commitment human resource policies has been demonstrated.
As organizations attempt to become more competitive, effective deployment of human resources is becoming an essential feature of organizational strategy. The role of employee participation in this process of human resource development is vital. Research will continue to explore the approaches and conditions that can be best associated with enhancing employee capabilities and managerial performance.
- Blasi, J., Kruse, D. and Bernstein, A. 2003. In the Company of Owners: The Truth about Stock Options. New York: Basic Books.
- Heller, F., Pusic, E., Stauss, G. and Wilpert, B. 1998. Organizational Participation: Myth and Reality. Oxford, NY: Oxford University Press.
- Huselid, M. 1995. “The Impact of Human Resource Management Practices on Turnover, Productivity, and Corporate Financial Performance.” Academy of Management Journal 38:635-672.
- Pfeffer, J. 1998. The Human Equation. Cambridge, MA: Harvard Business School Press.
- Walton, R. E. 1985. “From Control to Commitment in the Workplace.” Harvard Business Review 63(2):77-84.