Employee involvement and communication HR Management

All organisations need communication systems to function, whether these are overtly recognised or subconsciously taken for granted. In the 1990s it was increasingly recognized by many employers and managers that the creation of effective communication is an extremely important aspect of the efficient running of organisations. Communication is a complex series of processes operating at all levels within organisations, ranging from the ‘grapevine’, heavily laden with rumour, to formalised systems such as joint consultative committees (JCCs) or works councils.

These can operate at the localised level of the shopfloor or office between supervisor and staff and the staff themselves, or at a distance by means of representatives such as union officials or messages from on high from the boardroom or the chief executive, to various branches or subsidiaries of large and complex organisations. They can be one way or two way, top down or bottom up and both top down and bottom up, as well as across the organisation.

It is being increasingly recognised that messages to and, equally important, from the workforce have considerable significance. They are important for conveying the organisation’s mission, business aims and objectives, and its general ethos or culture. They are attempts to harness the adaptability of labour power by giving workers leeway and encouraging them to adapt to changing situations in a manner beneficial to the firm.

To do this top managers give workers status, authority and responsibility. Top managers try to win their loyalty, and coopt their organisations to the firm’s ideals (that is, the competitive struggle) ideologically. (Friedman, 1977: 78)needed to enable the thoughts and feelings of the workforce to be expressed and, of equal significance, heeded and acted upon. Such policies are being heavily influenced and underscored by HRM practices.

Communication systems also carry implicit messages about the mediation of power within organisations. Employee involvement communication systems are processes that enable the workforce to have a greater say in decision-making to varying degrees, with the concomitant loss of managerial prerogatives – an issue that can create conflict, as well as attempting to allay it.However, even the simplest message can be misunderstood or misconstrued because of the complex influences that act on the communication process.

Equally important, and potentially disastrous, is the fact that communication channels can send conflicting messages. An oft-cited case is the company that encouraged employees to take up share options which entitled them to attend the annual shareholders’ meeting, where they were told how successfully the company had performed over the previous year. Many of these same employees were also in the union, to which management communicated later that because of the company’s poor performance over the previous year, the pay increases requested could not be met!

  • Communication overload

Many employee relations surveys point to lack of communications or poor communications as an important weakness in organisational operations. This view is not only held by shopfloor workers but also increasingly by middle and even senior managers. However, a recent trend has shown that new technology and e-mail in particular can lead to the reverse – communication overload.

Many people speak of the dreaded ‘in-box’ email problem when one has been away from the office to return only to find their in-box filled with 60 or more new messages. It has reached such proportions that some employees are becoming stressed in trying to keep up with the flow of messages. Up to two hours a day (often more) can be spent in just reading and answering e-mails.

A recent survey found that ‘82 per cent of managers in the UK believe that the volume of information they have to handle has greatly increased over the past three years. And 54 per cent claim to suffer information overload’ (Russell, 2001: 38). Some US firms now have an email- free day each week where employees are not encouraged to look at their e-mail in-boxes, and courses are now becoming popular in how to deal with e-mail overload.

The real problem is getting information that is important and relevant to the right person but this can have ‘political’ implications. Managers as the creators and interpreters of policy have the power to withhold key information. HRM advocates believe that a ‘high trust’ and open organisational culture can help resolve many of these problems, but it would be naïve to presuppose that the problem would vanish entirely.

  • Employee involvement: history and development

The idea of involving the workforce may seem self-evident, as employees must be involved in order to do their job. It has long been recognised, however, that doing a job does not necessarily mean being interested in it or doing it well. The school of human relations promoted by thinkers in the field such as Mayo, Vroom, Likert and Maslow, among others, has drawn conclusions from their various studies that positive motivational factors engendered by such methods as employee involvement may develop a more creative, interested and therefore more productive workforce.

Even though employee involvement is just one aspect of organisational communication it is, nevertheless, wide ranging and diverse in its forms. Types of EI also evolve and change with managerial vogues, which are governed by political, economic and social pressures. For example, the First World War witnessed a considerable growth in worker militancy together with an increased popularity of left-wing ideologies, many of which espoused various forms of workers’ control, one example being Guild Socialism (Cole, 1917).

The Bolshevik revolution in Russia in 1917 also had a significant impact on work relationships, as Marxist ideology is based on an analysis of how capitalism exploits the proletariat in the workplace. These influences had, and still have, a considerable impact on arguments surrounding work-related issues. One attempt to mollify these forces in Britain was to acknowledge legally, in the form of Whitley Councils, that employees and their representatives (trade unions) had some say in negotiations over pay and working conditions.

Despite good intentions from some parties on both sides of industry, these arrangements largely fell into disuse once recession hit the British economy after 1921 and the threat of workforce militancy receded. It was not until the Second World War that a popular revival occurred in EI schemes. The need for huge productivity increases to meet the war effort led workers to demand something in return – a greater say in the operation of the workplace.

Works committees or joint consultative committees were set up in many factories. Some continued in existence after the war, but management and unions lost interest in them in the 1950s, and many fell into decline when there was a preference for direct collective bargaining via unions, employer organisations and employers. Nevertheless, there was a considerable revival in the atmosphere of industrial democracy in the 1960s and 1970s, and shop stewards were to be found filling delegational positions (Marchington et al., 1992).

Debatesconcerning the extent to which these committees existed, and the real power they afforded the workforce, still engage social and economic historians. In the 1970s the Bullock Committee Report (1977) echoed an increased interest in industrial democracy. There was a growing consciousness that, while politics and society were increasingly being ‘democratised’, the world of work did not reflect this trend.

In addition, British membership of the European Community influenced the Bullock Committee to examine forms of industrial democracy among its European partners, such as co-determination in Germany and Sweden, and some societies where more radical forms of employee involvement were being undertaken, such as the worker self-management practised in Yugoslavia and at Mondragon in Spain.

These practices attracted considerable interest, as did worker-director schemes and the formation of workers’ cooperatives, which often happened in UK companies under threat of liquidation (Broekmeyer, 1970; Brannen et al., 1976; Eccles, 1981; Thomas and Logan, 1982). The political climate that had engendered industrial democracy swiftly changed under Thatcher’s Conservative government, which tarred such policies with the brush of leftwing ideology, and in the economic and political climate of the 1980s managerial EI schemes associated with HRM became popular.

  • Cycles and waves of participation

It is apparent from even this brief history that numerous influences have a bearing on the type, strength and sustainability of various participation schemes and trends. Unsurprisingly, therefore, commentators have attempted to discover patterns of EI and to place them into a theoretical framework. For example, the relationship between the introduction of profit-sharing with a high level of employment and industrial unrest down to the First World War has been indicated by Church (1971). Ramsay (1977, 1983) has argued that there are cycles of participation:

Marchington et al. (1992) have pointed to ‘waves’ of employee involvement within organisations, which respond to external trends and cause the institution of new schemes and the revamping of old existing ones. For example, a quarter of organizations in their survey sample had introduced their current schemes (survey period 1989–91) between 1980 and 1984, ‘and several of these were share ownership schemes which appear to have been stimulated by legislative changes from 1978 onwards’.

Other schemes such as team briefing were introduced in the early 1980s’ recession to communicate ‘gloom and doom’ messages such as pay freezes and voluntary severance. Over half of the schemes of their survey group had been introduced within the previous five years, and tended to be TQM programmes of various types. The ‘wave’ concept, they point out,Thus the importance of EI can be understood only if it is viewed as being central to the organisation, and not necessarily prominent.

For example, a joint consultative committee may achieve a central position in an organisation over time, although the most prominent new measure may be team briefings. If the JCC becomes less important or dies out, another scheme may replace it and attain the status of centrality. Whether schemes are retained, reformed or dropped depends on multifarious influences within organisations, for example the values and beliefs of managers, which interact with other influences in complex ways.

Poole has attempted to construct a theoretical framework to explain these influences. He sees workers’ participation and control as being understood as a specific manifestation of power. This is linked with ‘underlying or latent power resources and a series of values that either buttress particular power distributions or facilitate their successful challenge’ (Poole, 1986: 28). The relationship of power sources is illustrated in Figure.

Managements have been attracted to the idea of participation when their control over labour has been perceived to be under pressure in some way. This perception has coincided with experience of a growing challenge from labour to the legitimacy of capital and its agents. In Britain these challenges have coincided with the impact and aftermath of two world wars, and with the rise of shop floor union organisation at the same time as squeezed profit margins in the 1960s and 1970s.

In each case mounting pressure, including demands for ‘industrial democracy’ from sections of the labour movement, helped to precipitate management response. (Ramsay, 1983: 204) is analytically more useful than cycles, in that it does not presuppose any automatic repetition of events in an historical pattern, or any all embracing theory of waxing and waning which applies in the same way across all workplaces. On the contrary waves come in different shapes and sizes and last for different lengths of time in different organisations.

Poole (1986) postulates that:

Finally, ‘values about participation and control are shaped by the existing levels of workers’ participation and control, latent power, government action and ideologies’. While this framework pinpoints the main factors influencing the types and styles of employee participation and control, it cannot clearly demonstrate how these factors interact to produce such systems. Nevertheless, it is a useful model to aid understanding of these complex processes.

  • Definitions of employee involvement

There is an enormous range of employee involvement schemes, varying from those that are informational mechanisms to full-blown democratic systems where employees have as much say in the decision-making processes as does management. This makes an allencompassing definition problematic. In addition, different labels have been attached to these processes, such as employee or worker participation, industrial democracy, organizational communications, co-determination and employee influence, each of which has its own definitions.

Wall and Lischerson (1977) state that there are three elements central to the concept of participation: influence, interaction and information sharing. Marchington et al. (1992) divide definitions into three categories: those that refer ‘to employees taking part or having a say or share in decision making, with no attempt to quantify their impact on the process’; those that ‘refer to participation as concerned with the extent to which Workers’ participation and control are reflections of the latent power of particular industrial classes, parties or groups and the ‘value’ climate which may or may not be favourable to participation experiments.

These values thus mediate between certain structural factors associated with latent power and their realisation in the form of workers’ participation and control. It will also be seen that the principal structural factors associated with the latent power of the main industrial classes, parties or groups are economic factors, such as the levels of employment, the profit margins of particular companies, the levels of competition, the degree of industrial concentration and periods of economic ‘disintegration’; technological factors, such as the approximation of the technology of a company to a given point on the ‘technical scale’, the degree of complexity and education involved in any given task and the effects of the micro-electronic revolution; and finally, various forms of government action such as legislation on labour issues, its intervention in the workings of the economic system and so on. employees may influence managerial actions’; and those that ‘link together participation and the control over decision making’.

Poole’s basic explanatory framework of participation

Poole’s basic explanatory framework of participation

Marchington et al. (1992) believe that these definitions also need to take into account:

  • the degree of involvement(the extent to which employees influence the final decision);
  • the level of involvement (whether at job, departmental or organisational level);
  • the forms of involvement (direct, indirect and financial);
  • the range of the subject matter being considered in the involvement scheme.

For example, quality circles may have a high degree of direct employee involvement and influence on decisions at workplace level, but be limited in range to matters of teamwork and job design. Works councils, on the other hand, will involve employee representatives at organisational level, and may consider a wide range of areas such as business and industrial relations strategies, in joint decision-making with the management.

One problem with this tabular representation is that some EI schemes may pervade many or all levels of the organisation, for example financial participation. Others may cascade through many levels, such as team briefings (Ramsay, 1991). Team briefings could also fall into both the ‘informational’ and ‘communicational’ categories. Another problem is that the degree of participation with one scheme could differ from one organisation to another. For example, JCCs could vary in power from merely rubber-stamping management decisions to forming joint consultational mechanisms covering a rich variety of organisational topics.

Marchington et al. (1992: 13) divide EI schemes into four categories:

  • Downward communications (top down), for example from managers to other employees. This includes forms of EI such as house journals, company newspapers, employee reports and regular briefing sessions, often with videos as well.
  • Upwards, problem-solving forms, which are designed to tap into employees’ knowledge and opinion, either at an individual level or through the mechanism of small groups. This includes practices such as suggestion schemes, attitude surveys, quality circles and total quality management and customer care programmes
  • Some types, levels and degrees of employee involvement

    Some types, levels and degrees of employee involvement
  • Financial participation via schemes that attempt to link rewards of individuals to the performance of the unit or the enterprise as a whole. This includes schemes such as profit sharing, employee share ownership, and value-added or establishment-wide bonus arrangements.
  • Representative participation, in which employees are involved through representatives drawn from among their number, often – though not always – on the basis of union membership, for example JCCs, advisory councils, works councils, co-determination and collective bargaining.

In many organisations a combination of these forms of communication and EI schemes will exist, hopefully supporting and complementing each other.In a book of this nature it would be impossible to examine all of these approaches, but a closer study of some of the more popular and recent schemes in each category may serve to illustrate current trends.

  • Downward communications
  • The company magazine or newspaper

One of the most common methods of downward communication, which has witnessed a considerable increase over the past 20 years, is the company newspaper or magazine (CBI, 1989). Reviewing methods of communication in six surveys of organisations conducted between 1975 and 1983, Townley (1989) indicates that most put the company newspaper or house journal as either the most popular or the second most popular form of communication.

The problem is that they can vary in quality from amateur desktoppublished affairs produced by employees in their ‘spare’ time, to the lavish glossy productions that have been part of the communications systems of many large companies for a number of years. There is also the question of editorial control, which may restrict the messages conveyed to the workforce. Continual glowing reports of the company successes or anodyne and meaningless information may have negative results in the long run.

Genuine expressions of employee feelings via letters pages or forthright quotes from employee representatives, even of a negative nature, may show the management’s desire to achieve fairness. Of course, the judgement of the editor will come into play in deciding the content of the newspaper or journal, which in turn will be affected by the organizational culture and management views.

For example, during a dispute a militant shop steward called the managing director a ‘fascist’, which the personnel director urged the editor to expunge as being insulting. The editor defended the decision to retain the quote on the grounds that he had sought a comment from the shop steward, and not to print it would look like corporate censorship. In addition,such a quote was so patently absurd that it would have a negative effect.

In the event the quote was left to stand, and the prediction of the editor proved true when the shop steward was spurned by his fellow employees and the union felt moved to apologise publicly for the comment (Wilkinson, 1989). Unfortunately, many company journal editors are still unable or unwilling to follow such boldly democratic policies, and the workforce often regards publications as a conduit for managerial views. Given their primarily one-way nature and editorial control, this is not surprising.

  • Team-briefings

There has been a considerable increase in team-briefings in the past five years, although they have been in existence in some organisations for longer (Marchington et al., 1992). Employee involvement and empowerment They are often used to cascade information or managerial messages throughout the organisation. The teams are usually based around a common production or service area, rather than an occupation, and commonly comprise between 4 and 15 people.

The leader of the team is normally the manager or supervisor of the section, and should be trained in the principles and skills of how to brief. The meetings last for no more than 30 minutes, and time should be left for questions from employees. Meetings should be held at least monthly or on a regular pre-arranged basis. Surveys often reveal considerable satisfaction with team-briefings by both employers and management (e.g. CBI, 1989) as they are effective in reinforcing company aims and objectives at the personal, face-to-face level. However, Ramsay (1992a) urges caution in accepting this rosy picture, because success depends on ‘context to a significant extent’.

For example, briefings might be postponed or cancelled at times when business is brisk, which may lessen commitment to holding them at all in the long run. If the intention is to undermine union messages, the success will very much depend on the strength of the union and the conviction of the management. A sceptical and undertrained management and supervisory force can do much to undermine the effectiveness of team-briefings.

  • Upwards, problem-solving forms of communication

These schemes can also be described as two-way communication, and are most associated with ‘new’ managerial concepts such as HRM. They are clearly aimed at increasing employee motivation and ‘influence’ within the organisation, but usually at a localized level – workshop, office or service area. They also aim to improve employee morale, loyalty and commitment, with a view to increasing service and efficiency. Another facet of these types of schemes is that they facilitate acceptance of changes in work practices, functional flexibility and new technology, as well as engendering an atmosphere conducive to cooperation and team-building (Ramsay, 1992a).

  • Quality circles

One of the first methods identified with the ‘new’ involved approach to management was the quality circle (QC). This first arrived in Britain via the USA from Japan, although the concept was implanted in Japan in the years after the Second World War by two US consultants, W. Edwards Deming and J.M. Duran (Clutterbuck and Crainer, 1990). QCs are made up of 6–10 employees, with regular meetings held weekly or fortnightly during working time.

Their principal aim is to ‘identify problems from their own area and, using data collection methods and statistical techniques acquired during circle training, analyse these problems and devise possible solutions; the proposed solutions are then presented formally to the manager of the section who may decide to implement the circle’s proposal’ (Brennan, 1991). Tremendous interest was shown in QCs by British managers in the early 1980s, but within a few years they began to decline in popularity.

A number of reasons have been identified for this decline, but principal among these was the attitude of middle managers. For example, it is crucial that a manager or supervisor with the requisite qualities and training leads the circle. Technical competence alone is not enough, and studies began to highlight the need for interpersonal skills. Some managers also felt that their power and authority were undermined by the QC, and others lacked commitment in the initial stages, which had the effect of making the circles difficult to develop effectively.

There were also difficulties from overenthusiastic facilitators who deliberately gave an overtly positive but false impression of the circle’s operation, possibly for career progression reasons. This made it difficult to identify problems within the circle or improve its effectiveness (Brennan, 1991). Suspicion of circles could be engendered if they were seen as a way of undermining trade union functions. Lack of consultation with the union, particularly when setting up QCs, often bred suspicion that this was another anti-union management ploy, and the initiative was therefore effectively undermined by non-cooperative attitudes.

Other circles failed because suggestions by the workforce were not in fact applied or even considered, thus rendering them a waste of time in the minds of the participants. Finally, many circles simply ‘ran out of steam’ after the initial burst of enthusiasm. The need for continual reinforcement of their function and purpose was evident (Collard and Dale, 1989; Ramsay, 1992a).

  • Teamworking

Teamworking is one of the most recent initiatives in EI; like QCs it was strongly developed in Japan. It emphasises problem solving in a teamworking situation, and in order to function effectively it must be bound up with policies of task flexibility and job rotation (Price, 1989). Teams vary in size from seven to ten, or even more, people and extensive training is necessary to ensure that workers, team leaders, supervisors and managers have the requisite skills to enable the team to function efficiently. A large part of such training is of a managerial or interpersonal skill and communicational nature, as well as of a technical nature.

  • Job design and teamworking

Implicit in teamworking developments is its relation to job design. The car industry in particular has experimented with differing types of job design for a variety of reasons, principally to facilitate greater employee motivation by designing jobs that employees could ‘own’ as a team. This would stimulate a more committed and therefore productive approach to work as jobs are designed to enhance work diversity.

In the past the reorganization of work and job design has been associated with job rotation, job enlargement and job enrichment and is now attached to the more generic form known as ‘teamworking.’ In the first half of the twentieth century job design was associated with forms of scientific management. These tended to be Fordist and Taylorite assumptions that jobs and work could be designed on a scientific basis to extract the highest amount of effort from the workforce. Under Fordist principles this was carried out by interfacing employees with machines and mechanised work processes such as the conveyor belt.

This had the effect of speeding up production, lowering cost and thus increasing output and sales. Frederick Winslow Taylor and Elton Mayo tended to see the human being as an adjunct to a more efficient process in job design. Trained observers could study the time and motion of a job in order to improve its operating functions, by breaking it down into component parts and redesigning it to be performed more efficiently by the operator.

Later observers such as Blauner (1964) and researchers at the Tavistock Institute noted the alienating effect of concentrating on the job design and not the feelings and perceptions of the employee carrying out the work process. Scientific management tended to leave the human factor out of the equation. In reality the Fordist type systems were largely confined to the vehicle production industry and some types of large manufacturing. It is not surprising therefore that innovations in job design and work groups tended to appear in these types of industry. In the 1970s various car manufacturers experimented with job rotation, job enlargement and job enrichment.

Job rotation is, as its name suggests, simply rotating jobs between members of a work group to give wider experience and relieve the monotony of job repetition. Employee involvement and empowerment literally means enlarging the job by increasing other functions to add variety to the work process. Job enrichment is more in line with later teamworking initiatives in that it gives the workforce degrees of autonomy and control over how they achieve targets or even having some input in designing the job.

Combinations of these approaches were instituted in the Volvo Kalmar plant in Sweden in the 1970s and the ‘Saturn Project’ run by General Motors and Toyota in the early 1980s. None survived long, although it has been argued that lessons were learnt and elements of these schemes were incorporated in the development of other forms of teamworking. By the late 1980s job design in many companies was being integrated with forms of functional flexibility and being combined with HRM and other management initiatives such as total quality management, business process re-engineering, customer service programmes and, in the 1990s, empowerment schemes.

Teamworking took on various forms, depending on the company and its products and services, but essentially the ‘team’ concept was being perceived as the central operational unit in the work process and more ‘progressive’ organisations began to concentrate their recruitment, selection, training, development and reward around it. (For a more detailed discussion of job design see Damian O’Doherty’s chapter in the first, second and third editions of this book.)

  • Financial participation

The general aim of financial participation schemes is to enhance employee commitment to the organisation by linking the performance of the organisation to that of the employee. Thus, it is argued, employees are more likely to be positively motivated and involved if they have a financial stake in the company through having a share of the profits or through being a company shareholder.

Although such schemes are by no means new – early profit-sharing schemes were in operation in the nineteenth century (Church, 1971) – their recent popularity has been partially spawned by the Conservative government’s philosophy of creating a property-owning democracy in the 1980s and 1990s in an attempt to individualise work and societal relationships, and also by the rise in human resource management initiatives (Schuller, 1989).

The Labour government has continued to encourage financial involvement schemes and in the 2000 budget the all employee share ownership plan and the enterprise management incentive programme (EMI) were introduced. In addition, legislation has been introduced to bolster and lay down legal parameters for such schemes in the form of the Finance Acts 1978, 1980, 1984, 1987 and 1989. Evidence suggests that most managers’ aims in introducing forms of financial participation are for positive reasons associated with employee motivation, rather than attempts to undermine trade union influence (although this is an objective in some organisations), and schemes were indeed welcomed by most employees in the organisation (Badden et al., 1989; CBI, 1989; Poole and Jenkins, 1990a, 1990b; Marchington et al., 1992; Pendleton et al., 2001).

  • Types of financial participation

Schuller (1989: 128) categorises financial participation schemes on a scale that ranges from individualism to collectivism. Towards the individual end there are personal equity plans, profit-related pay, profit-sharing and employee share option schemes; at the collective end there are workers’ cooperatives, management buy-outs, pension fund participation and wage earner funds.Of these categories, individual forms of financial participation are the most common, especially profit-related pay and share option schemes (CBI, 1989; Marchington et al., 1992).

Profit-related pay and employee share options

As already noted, profit-related pay schemes have a long pedigree, and were stimulated by the Finance Act of 1978. In essence, profit-sharing or profit-related pay schemes are those ‘where a cash bonus or payment is made to employees based upon the share price, profits or dividend announcement at the end of the financial year’ (Marchington et al., 1992: 11).

Employee share options are schemes ‘using part of the profits generated or earnings of employees to acquire shares for the employee in the company concerned, or discounted shares on privatisation or public quotation’ (Marchington et al., 1992: 11). There are four main types of scheme (Poole and Jenkins, 1990b):

  • profit sharing – with cash rewards;
  • profit sharing – through shares in the company (approved deferred share trust, ADST);
  • save-as-you-earn share option schemes (SAYE);
  • executive share schemes.

There is a degree of overlap in these schemes: for example, ADST and SAYE both concern share options, but the former is often bracketed with profit sharing, where shares are part of the reward, and the latter with employee saving schemes, which lead to the purchase of shares. A considerable amount of financial legislation, and the fact that successive chancellors of the exchequer have made concessions in successive budgets since 1978, bear testimony to the importance that governments have given to such schemes.

Between 1978 and 1990 the Inland Revenue approved, for tax purposes, 6349 schemes, which are made up of 909 ADSTs, 919 SAYEs and 4521 executive share option schemes (Dunn et al., 1991: 1). How effective are these schemes, given their apparent popularity? In general terms, commentators and researchers divide into two basic camps – the optimists and the more sceptical. The optimists are backed by a plethora of positive literature emanating from consultants and the more popular business journals.

The question of success, however, rests on the criteria by which they are judged, and here opinion is much more mixed, but even in-depth studies differ in some of their conclusions (Badden et al., 1989; Poole and Jenkins, 1990b; Dunn et al., 1991; Marchington et al., 1992). Poole and Jenkins (1990a, 1990b) represent the more optimistic view, but they still distinguish between the effect of such schemes on employee attitudes and the effect on employee behaviour.

They believe that employee attitudes are favourably affected in the sense that employees have increased their identity with company goals, feel more involved, and have a more positive attitude towards the company. ‘Indeed, the most important impact of profit sharing is almost certainly to improve organisational identification and commitment and hence, indirectly, to enhance industrial relations performance’ (Poole and Jenkins, 1990a: 96).

Ramsay et al. (1986) are less optimistic in their view, and claim that many surveys play down the negative effects, while Dunn et al. (1991: 14) using evidence from their longitudinal survey, claim that there is not even a correlation between improved employee attitudes and the introduction of such schemes. Both studies point to the fact that the ‘them and us’ attitude that the schemes attempt to break down may well reinforce the status quo, because executives and older workers tend to be the majority of employee shareholders as younger and less senior employees cannot afford shares.

Marchington et al. (1992) and Dunn et al. (1991) also state that a number of internal and external factors affect employee attitudes and behaviours, and these are difficult to disentangle from perceptions of financial participation schemes. Marchington et al. (1992) state that employees viewed the scheme much more negatively in one company that was unable to pay out dividends on shares because of market pressures, than in another company that was relatively financially buoyant.

Whatever the criticisms levelled at financial participation schemes, a recent survey shows that they are on the increase, not only in Britain, but across Europe. Pendleton et al. (2001) surveyed 2500 European companies concerning financial participation. The evidence revealed that broad-based schemes (which include all employees) of share ownership and profit sharing were becoming more widespread. More than 20 per cent of UK companies in the survey had share ownership schemes and more than 20 per cent in France and the Netherlands.

Of the 14 European Union countries surveyed, all had some companies with share ownership schemes and the authors claim that this seems to be on the increase. Profit-sharing schemes were particularly popular in France and the Netherlands where they are backed by government legislation. The European Union is also supportive and put forward a recommendation for support of financial participation schemes in 1992.

Correlating the findings against other HR and employee relations factors it was found that companies requiring high levels of knowledge are more likely to have these schemes. They also found that thos with financial participation schemes tended to spend more on training and have other employee involvement mechanisms. There was no correlation with union membership and many highly unionised companies had these schemes, thus perhaps providing some evidence that not all companies see these schemes as a way of undermining union presence.

  • Representative participation
  • Joint consultative committees

Apart from collective bargaining, the most common form of representative participation in the UK is joint consultative committees. As already noted, these received a considerable impetus in the Second World War, declined somewhat in the 1950s and 1960s, and witnessed a revival in the 1970s, which – according to various surveys – has continued. In the late 1990s and early twenty-first century JCCs have been and will continue to be given a considerable boost when the European Union Directive on Works Councils comes into effect in March 2005.

According to Badden et al. (1989), one-third of companies had consultation machinery, and the CBI (1989) survey puts this figure at 47 per cent, though both stress that such mechanisms are more likely to exist in larger organisations. Shop stewards also tend to be employee representatives in unionised firms, indicating a retreat from the view held by many unionists that JCCs were mere talking shops without power, set up to dupe the employees and undermine union presence.

In examining JCCs it soon becomes evident that they operate differently in various organisations and sectors, at different levels within organisations and with different degrees of power (Marchington, 1989b). Thus in one organisation they could be rubberstamping bodies for management initiatives, discussing at the most ‘tea, toilets and trivia’, and in other organisations they could be genuine conduits for the expression of employees’ views, with some degree of decisional power.

According to Marchington et al. (1992) joint consultation is defined as Organisations with a strong union presence attempt to keep issues such as pay bargaining off the JCC agenda, leaving them to collective bargaining issues. This has led some commentators to the view that management in organisations that encourage employee participation may see JCCs as a less important channel of communication.

This relative powerlessness may ‘often leave JCCs with a marginal role in labour management relationships’ (Ramsay, 1991). Marchington (1989a; Marchington et al., 1992) is, however, more optimistic, and sees their role as often complementing and supporting other channels of communication and EI, such as collective bargaining. All commentators agree that if JCCs are given only unimportant issues to deal with, then employees themselves will view them as ineffectual, and they will be marginalised.

Ramsay (1992a) recommends that for the joint consultation medium to be effective it needs to be consulted in advance of decision-making, to have a representative range of a mechanism for managers and employee representatives to meet on a regular basis, in order to exchange views, to utilise members’ knowledge and expertise, and to deal with matters of common interest which are not the subject of collective bargaining. issues to discuss, to be adequately resourced with proper administrative backup and to have an effective feedback mechanism to employees; management representation should be seen to be of the requisite level (that is, senior managers); action on proposals should be carried out quickly; and unions should be kept officially informed.

This would be very much in line with, and in the spirit of, recent European Union directives on co-determination where JCCs can be perceived as a form of works council. Obviously some JCCs in the UK will have to change procedures and practices to conform with the directive. (See below for more information on EU works councils.)


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