for
EUROPEAN FOUNDATION FOR THE
IMPROVEMENT OF LIVING AND WORKING CONDITIONS
By
Erik Poutsma
Nijmegen Business School
University of Nijmegen
March 2000
There is growing
interest in the theme of financial participation of employees in their enterprises
within Europe. The latest PEPPER (Participation by Employed Persons in Profits
and Enterprise Results) report of the European Commission however concludes
that there is more diversity than
unity in the use of these employee financial participation schemes. There
appears also to be a lack of empirical research on the application of different
schemes, their success or failures, advantages or disadvantages. Against this background the European Foundation
for the Improvement of Living and Working Conditions initiated a project to
develop research on the application of employee financial participation. In
the exploratory stage in 1999 the European Foundation commissioned a report
on the state-of-the-art knowledge on employee financial participation in European
Union Countries.
The main objective
of this report, therefore, is to provide the up to date situation of financial
participation in Europe. It is based on a review of available international
research and publications and interviews with country-experts. It attempts
to present a systematic overview of existing forms of employee financial participation,
the reasons for its application, the preconditions for its existence and its
impact on the employment relationship. Special attention is given to types
of employee share ownership and the relationship with the three other pillars
of employee participation, i.e. direct participation, representative participation
and participation through collective bargaining.
A first interim report was discussed and
commented on by experts on the Joint European Foundation / Nijmegen Business
School Conference 9/10 September 1999 in Leiden.
This project was
carried out by Dr. Erik Poutsma of
the Nijmegen Business School, University of Nijmegen.
This project is an endeavour of a number of people.
First, Kevin O’Kelly and Hubert Krieger of the European Foundation set the
course of the project and were convinced of the necessity and also the possibility
of success of this endeavour. I thank them for their expertise and their trust.
Second, the project is embedded in the research group PARTNER (Participation
& New Employment Relationships) of the Nijmegen Business School, University
of Nijmegen. Fred Huijgen and Willem de Nijs are real partners in comments
and as critics. Third, parts of this report could not be written without the
support of experts. I thank the following for their valuable contributions:
Joseph Blasi of Rutgers University, NJ, USA; Andrew Pendleton of Manchester
Metropolitan University; Takao Kato, Colgate University, Hamilton, NY, USA;
Virginie Pérotin, ILO, Geneva; Francine Van Den Bulcke, Catholic University
Brussels; Daryll d’Art, University of Limerick, Ireland; Mark van Beusekom,
Participation Solutions, the Netherlands; Mariá González-Menéndez, University
of Oviedo, Spain; Thomas Coutrot, Ministry of Labour and Solidarity, Paris,
France; Peter Mozet, Ministry of Labour, Germany; Hans Schneider, University
of Nuernberg, Germany; Peter Wilke and Stefan Würz, ISA consult, Hannover;
and all the participants who attended the workshop in Leiden, on September
9 / 10 1999 and the Netherlands Participation Institute for organising this meeting.
Finally, I would
like to thank everybody who helped me, knowing that any mistakes and misunderstanding
that still remain are mine.
Preface
Acknowledgements
Summary
1.
Introduction
2.
The pillars of participation
3.
Motives and effects
4.
Recent developments in Europe
5.
Research perspectives
Literature
Biographical note
There is growing
interest in the theme of financial participation of employees in their enterprises
within Europe. The latest PEPPER report of the European Commission, however,
concludes that there is more diversity
than unity in the use of these employee financial participation schemes. PEPPER
stands for Promotion of Employee Participation in Profit and Enterprise
Results and is the acronym that the European Commission uses to denote
financial participation schemes. There appears also to be a lack of empirical
research on the application of different schemes, their success or failures,
advantages or disadvantages. Against this background the European Foundation
for the Improvement of Living and Working Conditions initiated a project to
develop research on the application of employee financial participation. In
the exploratory stage in 1999 the European Foundation commissioned a report
on the up to date situation as regards employee financial participation.
The main objective
of this report is to provide this up to date situation. It is based on a review
of available international research and publications. It attempts to present
a systematic overview of existing forms of employee financial participation,
the reasons for its application, the preconditions for its existence, and its impact on the employment
relationship. Special attention is given to types of employee share ownership
and the relationship with the three other pillars of employee participation,
i.e. direct participation, representative participation and participation
via collective bargaining.
The report gives an overview of forms of
financial participation. It outlines the broad spectrum of financial participation
systems and points to the complexity of the process. It also reviews the differences
between the concept of PEPPER schemes, covered by the European Commission
report and the more broad spectrum of existing schemes.
Recently
there has been a shift from statutory to more decentralised arrangements of
participation and discussion has focused on participation’s organisational
impacts. Arguments have focused more on organisational efficiency than on
workplace humanisation or social justice.’ It can
be said that this shift is mainly caused by four developments:
First, experience
with real participation in numerous contexts demonstrates that, while participation
has many advantages, it is unlikely to transform society or make the workplace
into paradise. In other words not full participation but an optimal level
is requested and participation should not be considered as a goal on its own.
Second, the lengthy European
economic recession has required greater attention to productivity than to
social justice. This means that participation is put into a context of contributions
to be made to a better economic performance.
Third, the political
pendulum has swung generally towards the dominant coalition of management
and owners in their striving to increase share-holder value. Unions have lost
power at the company level in most countries. This has resulted in a trend
towards a more decentralised form of negotiations.
Finally, to a large extent
participation has already established and institutionalised workplace humanisation
and social justice which means that the need for deliberate action to promote
more participation has diminished.
More recently, the trend of greater deregulation by governments has turned
the focus of responsibility on private business and on the individual. This
has influenced the re-distribution of contributions and resources and financial
participation became an alternative for channelling this re-distribution.
In summary, recent developments
suggest that there is more emphasis on:
n on organisational
efficiency than on power sharing;
n decentralised arrangements
than on collective central arrangements;
n direct participation
than on statutory indirect participation;
n parties contribution
than on collective redistribution;
n remuneration, through
additional income and savings, than on fixed wages.
Under the heading of financial participation a broad range of schemes can
be classified but four broad categories are covered:
· Cash based profit
sharing
· Deferred profit
sharing
· Employee savings
plans
· Employee share ownership
It is important to make a distinction between profit sharing and share
ownership. The differences in character between the two may well outweigh
the similarities. Whereas one form of financial participation (profit sharing)
is essentially employment-related, the other is ownership-related
(employee share ownership). These fundamental differences may well have
important effects on the relationship with decision-making participation.
Profit sharing and share ownership plans can vary in a number of dimensions.
For this discussion, the following are the most important:
· Pure company level
agreement or multi-employer plans;
· Broad based or only
eligible for certain categories of personnel;
· Dependency on performance
of the company or less dependent;
· Negotiated and agreed
with employee representatives or not;
· Degree of worker
control.
The PEPPER schemes are company level, broad based plans dependent on company
performance, while not excluding participation in other companies assets.
Given our focus on participation and commitment and following the PEPPER definition
there is an argument to exclude such schemes as gainsharing, irregular cash
based profit sharing and share options schemes.
Despite the lack of empirical research there is a growing body of knowledge
and research on the possible impacts of financial participation. However,
this research lacks a complete reference to types of financial participation
and research on the impact of financial participation on the employment relationship
is limited. Besides, in most research the relationship with other pillars
is not questioned.
This project made an attempt to discover available empirical research by
presenting an extensive bibliography based on a search of libraries and internet
sites. Next, discussions were held with researchers specialised in this field.
Specific focus was on recent research results on the conditions for financial
participation and its functions, implementation problems and the risks for
parties involved.
In general, the motives for
putting financial participation into practice appear to fall in four broad
categories:
· productivity increase;
· enhancing flexibility
of remuneration;
· gain tax advantages;
· to provide an employee
benefit and, hence, increased commitment of employees (labour market argument).
More defensive ones are:
· discouraging unionisation;
· used for take-over
defence;
· financing companies
in trouble.
From a macro perspective the
most important reasons to promote financial participation are:
· wider distribution
of wealth (assets and other savings);
· sustaining employment.
The research up to now indicates
that financial participation schemes are found more often in:
· larger (publicly
owned) companies;
· more profitable
firms;
· financial sector
companies (banking and insurance);
· firms with higher
than average skills;
· young growing companies.
Given these results, it is
suggested that large, more profitable companies also tend to develop more financial participation regulations
and other employee benefits. However, this implies the reversal of the cause-effect
relationship which implies that there is an expected productivity increase.
A considerable body
of evidence suggests that the introduction of financial participation is associated
with a rise in the level of productivity in the firm. However, the debate
on the link between performance and financial participation is not closed.
There seems to be an indication that this link is present for the introduction
of profit sharing but less in the case of employee share ownership. The research
indicates, therefore, that there is no automatic connection between employee
ownership and productivity or profitability. Subsequently it is concluded
that there has been little study of the salient organisational mechanisms
that might help explain the actual connection between employee ownership and
performance and also very little study of the range of other human resource
policies that might produce positive impacts with financial participation.
The research also indicates that employee ownership does not automatically
improve employee attitudes and behaviour whenever it is implemented. There
are indications that perceived participation in decision-making, either by
itself or interacting with employee ownership, will have positive effects
on employee attitudes. Evidence also appears to suggest that employee share
ownership, when combined with participation, does increase productivity. Put
another way, employee share ownership and participation (both direct and indirect
representative on company level) tend to reinforce each other.
Trade union de-recognition
has also been put forward as an argument for the introduction of financial
participation schemes and this has led trade unions to be sceptical about
financial participation. While
research shows a positive association between union recognition and other
participative structures there is no evidence that employees seek or desire
a change in union representation in firms which arranges employee ownership.
Moreover, research indicates that when trade unions and employee representatives
are involved in the implementation of financial participation plans the further
development of employee participation appears to be an important objective.
A potential shortcoming of financial participation schemes
is that they may not result in higher motivation when the relationship between
input and output is weak, thus failing to meet expectations both for employees
and for employers. This is especially true for non-management employees, whereas
top executives are more directly connected to organizational performance.
Financial participation schemes, therefore, tend not to be broad based but
directed to higher skilled, core staff.
Another important obstacle might be the costs to companies in the initial
design stage, the implementation
and the ongoing costs for administration. These are not inconsiderable and
there is the additional expense associated with the need to have an annual
appraisal of the company’s value by an outside expert. Generally speaking,
unless a company is big enough these costs will probably outweigh any tax
advantages.
Drawing on the PEPPER II report, this review attempts to update the developments
of financial participation in European countries. A more in-depth description
is given of the developments in the most elaborated ‘financial participation’
countries such as France, Germany and the United Kingdom, and three other
countries with specific patterns and activities concerning financial participation:
Ireland, the Netherlands and Spain[1].
The developments in these countries by and large cover the variety of characteristics,
and developments of schemes and also the variety of empirical insights on
relevant topics.
From this short overview of developments in Europe the following conclusions
can be drawn:
· The full range of
financial participation schemes can be found throughout Europe.
· These systems are
more diffused in a limited number of countries. In most European countries
financial participation is not an issue in national debates. Any plans in
those countries are very local or implemented through foreign companies.
· Countries differ
from each other not only in the development and diffusion of schemes, but
also in the nature of schemes and the emphasis on certain objectives. Therefore,
the pattern of financial participation differs between countries.
· A country’s pattern
of financial participation reflects the industrial relations system, the corporate
governance system and the prevailing business and corporate culture.
· France has a pattern
that consists of more state regulated (mandatory) broad based deferred profit
sharing with the aim of enhancement of employee savings and wider distribution
of wealth and wage flexibility. Financial participation systems are also used
for income and employment policies. The corporate governance system provide
for a limited scope of employee share ownership due to more concentration
of capital and the substance of tightly controlled family firms.
· Spain has a pattern
of minor regulations for share-based profit-sharing. The developments at present
are not substantial although an increase is expected. It is significant that
the Spanish government considers its fiscal support for share-based profit-sharing
as one of its measures favouring small- and medium-sized firms. In fact, the
development of enterprise-level pension plans and the support for workers’
co-operatives and labour firms should be looked at as complementary to plans
to improve workers’ financial participation in the firm.
· Germany has a pattern
that consists of investment savings plans with the principal aim to increase
(employee) ownership of capital savings and other assets for the future security
of low earners. The main actors are employers and government. The consensus
based corporate governance system of Germany has led to the operation of collectively
agreed schemes. Like France, the capital market is not elaborated in Germany.
Many firms are tightly controlled or are privately owned, which leaves little
scope for the development of full employee share ownership and trade unions
appear to initiate any discussions which might take place.
· The Netherlands’
pattern of financial participation is largely based on a nation wide wage
savings plan. This plan allows profitable tax provisions on contributions
of both employer and employee to a share based plan. However, most employees
opt for the less risky saving in a special account with less profitable tax
provisions and trade unions are not demanding collective schemes.
· The UK has a pattern
that consists mainly of deferred share option schemes which have the principal medium term aim
of employee incentive. The main actors are employers and government. A well
developed and elaborated stock market provides ample opportunity for share
based investments. The development is heavily supported by UK Government policy
and measures.
· Ireland has a pattern
of financial participation that more or less reflects the UK pattern. The
difference is that in Ireland it is just starting. Based on the promotion
of a national programme, Programme for Prosperity and Fairness, the trade
unions are also committed to the promotion of share based plans.
· In general, the
use, pattern and diffusion of schemes are influenced by government policies
on tax advantages and other incentives.
· Government positions
in individual EC countries range from those that are strongly and actively
in favour of financial participation, to those that try to have a positive
influence on the social partners, to those that leave the matter solely to
the individual employers, to those without a defined view on the topic.
· Throughout Europe
there is a growth of financial participation and this is expected to continue.
· This growth is prompted
by the decision of individual employers in larger companies and is mainly
in the form of investments savings plans, share option schemes or deferred
profit sharing schemes and in a growing number of cases, for future securities
(including retirement funding).
· Throughout Europe
there is a growth in share options schemes for staff and executives, especially
in the booming financial and high technology sectors.
· Generally, throughout
Europe, smaller privately owned companies are not in favour of financial participation
systems.
· The number of typical
ESOP’s in European countries is very low.
· The incentives and
the amounts for financial participation usually fall between 2 to 5% of annual
employee earnings and between 2 to 5 % of the wage bill.
· The development
of financial participation is generally dealt with outside the collective
bargaining process and is the subject of agreement between employee representatives
and employer at company level.
· In most countries,
the attitude of trade unions is changing to a more pragmatic interest.
· Financial participation
systems are mainly used as an additional employee benefit to increase workforce
commitment, as an instrument to gain tax advantages and other bonuses. It
is used less as an instrument for diminishing wage rigidity or as a broad
based performance related pay scheme.
· Employee share ownership
is used less as a defensive mechanism to prevent a take over or as a means
of financing companies in trouble.
· The low diffusion
of financial participation in most European countries and in most companies
might also reflect another use of reward systems in Europe. European managers
do not seem to be convinced of the connection between variable pay and corporate
performance.
· In most countries
there is little data and knowledge about the impacts (on employee attitudes,
on actual change in employee behaviour or on actual changes in performances
of companies) of financial participation systems. Likewise, there is not much
knowledge of the relationship of these systems to the other pillars of participation,
and is the impact of corporate governance systems on the nature and use of
financial participation is not fully understood.
This report identifies topics that has had minor attention in the research
literature and suggests a specific focus and research strategy. Discussions
on research could focus on the question: at this stage of the development
in Europe what is needed most? The theoretical debate and research has not
on the whole yet produced decisive results. More empirical evidence is, therefore,
needed to identify the relationships and the impact of financial participation.
The focus might be the process to discover salient organisational mechanisms
that might help explain the actual connections.
Much research has been done on the characteristics of companies that use
these schemes, compared with companies that have no schemes. Chapter 3 shows
some of these findings.
Our knowledge of determinant factors stemming from task structures, social
structure, employee relations and work related variables is limited. We also
appear not to know much about employees’ opinions about different schemes
and the reasons for their decision to participate in a given scheme. Research
has also followed the prevailing idea that trade unions take a negative view,
while recent experiences with the more positive positions of trade unions
is getting more attention. Finally, our knowledge of attitudes and behaviour
of employee representatives and their assessment of schemes, is limited.
As mentioned above, in the course of determining factors the relationships
with external factors have been researched more than the theoretical proposition
of the interaction between the pillars of participation and the subsequent
HRM instruments. The possible relationship with HRM -strategies should get
more attention. Research also needs to move beyond measuring financial participation,
non-financial forms of participation and firm performance and presuming that
a direct connection can either be established or not. Research could measure
a wide variety of elements of the employment relationship, the firm’s culture
and competitive strategy. In other words a move in the direction of researching
the high performance workplace.
In summary, future research on determinant factors should focus more on:
· employee participation
and choices made, for instance through a EU-wide survey of individuals about
employee stock ownership, profit sharing and participation;
· social structure
and work related characteristics, for instance the differences between categories
of personnel and between broad based plans and executive types of plan; between
team-based workplaces and conventional workplaces;
· Trade unions and
employee representatives’ responses and experiences with different types of
schemes, in different settings;
· Other stake holders
attitudes and opinions about financial participation.
Future research on relationships might include propositions that cover
the relationship between different financial participation schemes and:
· organisational performance
(employee involvement and flexibility);
· industrial relations
performance (conflict and levels of absenteeism, recognition of employee influence);
· levels of intrinsic
and extrinsic commitment;
· the other pillars
of participation (direct participation, representative participation and collective
bargaining) and its interactive effects on performance (the high performance
workplace);
· other HRM instruments
(compensation, appraisal, competence development, recruitment and selection)
and its interactive effects on performance.
A survey
and panel type research approach could cover the determinant factors and relationships
that have had minor attention. Policy orientation requests for a focus on
discovering of diffusion patterns of different schemes based on the most important
determining factors. Next the research should focus on objectives and impacts
as it is important is to know employee and trade union representatives views
and responsiveness. For the purpose of policy at the EU level, and as an exchange
of experiences between countries the case studies might be used as a research
strategy.
This report describes recent developments in financial participation in the
European union. It discusses the backgrounds of the phenomenon, research results
and presents an overview of the situation in the European Union. The aim of
the report is to present insights that serve as a basis for discussion by
social partners, European governments and the European Commission. The information
has been based on a literature search, interviews and extracted from secondary
sources and information provided by local experts.
There is growing interest in the theme of financial participation of employees
in their enterprises within Europe. The European Commission has promoted the
phenomenon in the 1990s under the heading of PEPPER. The PEPPER II (1996)
report conclude that there is more diversity
than unity in the use of these employee financial participation schemes. There
appears also to be a lack of empirical research into the application of different
schemes, their success or failures, advantages or disadvantages. Against this
background the European Foundation for the Improvement of Living and Working
Conditions initiated a project to develop research on the application of employee
financial participation. In the exploratory stage in 1999 the Foundation commissioned
a report on the up to date situation with on employee financial participation.
The main objective of this report is to provide that up to date situation.
It is based on a review of available international research and publications.
It presents a systematic overview of existing forms of employee financial
participation, the reasons for their application, the preconditions for their existence, and impacts on the employment
relationship. Special attention is given to types of employee share ownership
and the relationship with the three other pillars of employee participation,
i.e. direct participation, representative participation and participation
through collective bargaining.
In Europe the participation issue has always been an important aspect of
organisation and management in companies. Different European governments have
traditionally developed legislative arrangements to promote the involvement
of employees. Recent shift towards the issue of direct participation has been
notified away from the more statutory indirect participation. Generally this
shift is explained by global competition and increased flexibility requirements.
The significance of direct participation is widely recognised by the social
partners, as the EPOC’s study of their views confirms (Regalia, 1995). There
was a general consensus on the objectives of direct participation, as well
as widespread understanding of what was involved, even though different labels
were used and concerns expressed that there were sometimes drawbacks like
work intensification, stress and self-exploitation. Employer representatives
often emphasised the social, as well as the economic, benefits of direct participation,
while their trade union counterparts did not limit their expectations to improving
working conditions, but also mentioned improved economic performance.
This suggests, at the very least, a shared industrial relations culture
and, in some cases, increasing co-operation between the social partners.
Also on European
level the issue of involvement and new forms of work organisation is seen
as a major step towards improved quality of production and improved quality
of working life as expressed by the European Commission’s Green Paper Partnership for a new organisation of work
published in April 1997. The need for direct participation in the organisation
of work has become a ‘new conventional wisdom’ (Osterman, 1994: p.173).
Widespread conventional wisdom of such a
need cannot be discovered for financial participation. Although the European
Commission has developed resolutions and studies to promote this type of participation
the spread and use in Europe is rather low (PEPPER II, 1996). Recently a growth
of management’ interest in increased application of profit sharing and share-options
as an involvement instrument has led to an increase of experiments in recent
years. Some governments (the UK, France, the Netherlands, Finland and Ireland)
have recently developed or improved legislation and tax provisions.
One of the arguments for putting financial
participation into practice is to commit employees to the company and to develop
an entrepreneurial attitude and enhance the co-operation between employees
and management. Of course, this argument suggests an alignment with direct
participation. In some instances this alignment is presented as the partnership
company which covers high participation on all levels and all issues, i.e.
the high involvement company. However, this alignment-argument is not without
dilemma’s. Both pillars of employee participation can have quite different
and conflicting objectives and functions. Financial participation might aim
at flexible profit related pay on an individual basis, while direct participation
might aim at improving the co-operation between workers. Also, the third and
fourth pillars of employee participation, i.e. indirect representative participation
and collective bargaining might conflict with financial participation since
these are mainly focused on collective schemes, solidarity and social justice.
On the other hand there are several forms of financial participation that
adhere to different objectives that might support synergy with the other pillars
of employee participation.
The European Foundation for the Improvement of Living and Working Conditions
aims with this research to discover topics for research into the phenomenon
of financial participation for its research programme.
The report starts with an overview of forms of financial participation. It
discovers the broad spectrum of financial participation systems and points
at the complexity of the phenomenon. It also concludes on the differences
between the concept of PEPPER schemes, as promoted by the European union and
the more broad spectrum of existing schemes. Chapter 2 presents the overview.
The research will focus on concepts and theories that apply to the use of
financial participation in conjunction with the other pillars of participation.
It will focus on conflicting explanations of the impact of the different pillars
of employee participation. More specific it will make references to recent
theoretical and empirical insights related to the different functions of (broad
based) financial participation: satisfaction, commitment, binding, incentives,
savings, participation, performance in relation to different forms of FP (employee
shares, options, profit sharing).
Despite the mentioned lack of empirical research there is a growing body
of knowledge and research on the possible impacts of financial participation.
However the research lacks full references to types of financial participation
and research on the impact on the employment relationship is limited. Besides
in most research the relationship with other pillars is not questioned. The
research will make an attempt to discover available empirical research by
presenting an extensive bibliography based on search of libraries and internet
sites. Next to this discussions will be held with researchers specialised
in this field. Specific focus will be on recent research results on the conditions
for financial participation and its functions, implementation problems and
risks for parties involved. Chapter 3 presents a summary.
Given the differences in industrial relations systems within Europe, it is
to be expected that divergence rather than convergence will be the outcome
in the way participation schemes are implemented in different European countries
(Hampden-Turner & Trompenaars,1993; Gatley (1996). The way in which organisations
and subsequent employment relationships in a country are structured and managed
is strongly influenced by national specific social and cultural factors in
such a manner that one can even speak of societal patterns of management and
organisations. The PEPPER reports on the promotion of financial participation
reveal some of these differences.
Drawing on the latest PEPPER II report this report makes an attempt to
update the developments of financial participation in European countries.
A more in depth descriptions is given of the developments in the most elaborated
‘financial participation’ countries: France, Germany and the United Kingdom,
and three other countries with specific patterns and activities concerning
financial participation: Ireland, the Netherlands and Spain[2].
The developments in these countries by and large cover the variety of characteristics
of schemes and its developments and also the variety of empirical insights
on relevant topics.
This part of the research was mainly based on interviews with and supplied
resources by national experts. Specific focus will be on the explanations
for the developments so far, recent developments and future perspectives and
the relationship with the other pillars of employee participation. Chapter
4 presents these recent developments.
Chapter 5 gives a first overview on existing knowledge gaps and possible
research topics as an input for debate at the workshop. Given the suggested
positive impact on a number of desirable objectives of parties concerned (employers,
employees and governments) the question of implementation and its problems
becomes important. It is expected that knowledge about these problems are
dispersed and locally. There is a need to systematise these and discover knowledge
gaps especially when it concerns the combined effort of improved employee
participation as supported by the different pillars. This part of the research
was mainly based on available research on experiences and on discussions with
experts at the workshop.
In the end the aim of the final report is to highlight important knowledge
gaps and hence priorities in research that should be developed for a full
understanding of the phenomenon.
We seem to enter the Age of
Participation. Governance is an important word in this respect. It refers
to the way in which stakeholders in an institution live their power, rights
and responsibilities. The authoritarian form of governance has prevailed since
people began to organise economic institutions. Participation seems to emerge
as an alternative form of governance. Definitions of participation abound.
Some authors insist that participation must be a group process, involving
groups of employees and their boss; others stress delegation, the process
by which the individual employee is given greater freedom
to make decisions on his or her own. Some restrict the term ‘participation’
to formal institutions, such as works councils; other definitions embrace
‘informal participation’, the day-to-day relations between supervisors and
subordinates in which subordinates are allowed substantial input into work
decisions. Finally, there are those who stress participation as a process and those who are concerned with participation as a result.
For the moment we will define participation as a process which allows
employees to exert some influence over their work, over the conditions under
which they work and over the results of their work.
We distinguish four forms of
participation: