Archive for the ‘Employee participation’ Category

Just published! Employee Participation in Governance. A Legal and Ethical Analysis.

May 28, 2010

My monograph Employee Participation in Governance has just been published by Cambridge University Press.

Click here for more details.

Review of “Reinventing the firm” by William Davies (published by Demos)

May 10, 2010

Introduction
This is a review of Reinventing the firm by William Davies (published by Demos). Davies suggests that it would be a pity to let a good crisis go to waste. The shock to the system caused by the credit crunch can lead us to think about new ways of organising business organisations. His is not an unrealistic call for revolution. He doesn’t call for the existing ways of organising business to be abandoned. Rather, he would like to see a richer ecology of types of business organisation. He would like to see a greater prevalence in the UK of businesses that belong to the private sector but that are imbued with a sense of public purpose. He believes that firms that espouse employee participation can achieve this. Further, he argues that the UK already has experience and models on which to draw in promoting wider use of employee participation. There is no path dependence problem but there is a need to broaden an existing pathway within the UK’s economic system.

Employees and the firm
Davies points out that it is too simplistic to think of the firm as being an asset that can be bought and sold. At the heart of any business, especially the modern ‘knowledge economy’ business, lie the knowledge, expertise and commitment of the employee and the relationships that exist within the firm. Given that slavery is no longer an option, how can we possibly think that the business can be owned by anyone? We have been conned into accepting the claim that shareholders own the business. In fact, all that they own is their shares.

Organising a business as if employees are mere cogs in a machine who will do what they are told is passé. This way of doing things isn’t compatible with unleashing the energy and initiative of the firm’s employees.

What is employee participation?
Employee participation partly concerns the idea of the ownership of the firm. Davies cites studies showing that employee ownership has a beneficial impact on productivity that cannot be fully accounted for by economic considerations. It seems that employee participation has a psychological impact on how employees relate to the firms that they work for. This positive effect is only achieved, however, where financial participation is accompanied by more participatory forms of governance.

It is important to distinguish between direct and indirect forms of employee ownership. Direct ownership involves individual employees buying, or being given, shares in their employer. Clearly, it is one way of encouraging employee participation but it is not without difficulty. It can lead to employees being poorly diversified, having both their human and their financial capital in one basket. Davies seems to favour indirect ownership. This often involves a trust or a trust-like structure where ownership of the firm is held on behalf of employees but not by employees directly. This is the approach used by the John Lewis Partnership. There is a management board so that employee participation does not impede effective decision-making. At the same time, ownership of the business is vested in trustees on behalf of employees and employee participation pervades governance at every level of the firm. The John Lewis structure achieves the difficult balance of making thorough-going employee participation compatible with strong management.

The meaning of work
There is a human dimension to Davies’ analysis. A central idea is that employee participation, properly designed, often makes economic sense at the same time as it creates a more humane working environment. A participatory firm offers greater opportunities to be creative and to take responsibility for one’s work. Davies acknowledges that not every employee will feel comfortable with a participatory workplace for participation is a two-way street; it makes demands on employees as well as bringing benefits. Employees will need to learn about governance and financial issues if they are to play their part in a participatory firm. And it will no longer be so easy to hide behind managerial shortcomings as an excuse for failure. The power that participation brings with it also entails personal responsibility.

Employee participation is good for business
Davies cites studies showing that employee participation results in greater productivity and lower staff turnover. In governance terms, managerial decisions have greater legitimacy when employees have had a say in formulating them. And employees are well placed to hold senior management to account, having both the information and the incentives that good monitors need.

Making it happen
“Reinventing the firm” takes the view that employee participation is already part of the UK experience. The UK has a history of employee participation and knows both when it can succeed and when it is likely to fail. Davies’ call is for an existing pathway in the UK economy to be further explored and developed. The final chapter is devoted to case studies of the John Lewis Partnership, Make (a firm of architects) and Parfetts cash and carry. These are three examples of businesses that have made a go of employee participation. They, and other examples, show that employee participation is a viable method for organising a business. Employee participation is an option that more businesses should be aware of.

Davies refers the reader to the work of the Employee Ownership Association and Oxford University’s Centre for Mutual and Employee-Owned Business.

Conclusion
Davies wants to find ways of making employee participation more widespread. It is an idea with a respectable pedigree in the UK. We know which structures will work. Employee participation is good for business and good for employees.

Podcast Review of “Reinventing the firm”

May 10, 2010

A podcast version of this review is available on the CUHK podcast webpage (click here for the general CUHK page). Click here for a link to the review.

The ethical case for employee participation

March 16, 2010

The ethical case for employee participation

Introduction

I’d like to invite you to think about the meaning of your work. What do you get out of your job? A salary, of course. But is that all there is to it? Do you enjoy your job? Or could you imagine a job or career that would be fulfilling? If so, it is probably not only because of the money but also because you enjoy the work itself and think it is worthwhile. Work might also go a long way towards providing a social dimension to your life through relations with colleagues and with clients or customers.

If you thought about the questions I have just posed then you have engaged with the ethical dimension of work. Ethics looks at the building blocks of a worthwhile life and at how these building blocks can be deployed to pursue a life that we would think of as being worthwhile and, in a deep sense, happy and fulfilling. Ethics helps us to make decisions, form plans and make commitments that will develop our personality.

Doing your work well and having at least some say in what is done and how it is done make an enormous contribution to your flourishing and personal well-being. Being bossed around and treated as a cog in a machine are stressful, frustrating and alienating.

If you work in an organisation, as most of us do, there has to be some discipline so that your work can fit into that of the team. But there is still room for personal responsibility and for employees to exercise initiative. In the well-designed work place employees can be entrepreneurs too.

Work as a basic human good

My book draws on Catholic Social Thought to provide the ethical perspective for a study of employee participation.

Catholic Social Thought sees work as being central to human dignity.

In the Garden of Eden, Adam was set to work. Through his work, he was a co-creator with God. Adam, and all human persons, are called to be stewards of creation. We are invited to take care of it, make it productive and improve it.

John Paul II reflected on this idea. He pointed out that work has both an objective and a subjective dimension.

When we work, we make something or we provide a service. That is work’s objective dimension. It obviously goes to the very core of what we mean by work.

At the same time, work will inevitably produce a change (for good or ill) within the worker. We admire people who work hard and well. We think more highly of them. We think that it would be good to be like that.

Work makes us sensitive to the needs of co-workers and of customers or clients.

Work’s impact within the worker is its subjective dimension.

The objective and subjective dimensions go together of course.

It is work well done that improves the worker. A propensity to do shoddy work undermines both the objective and subjective dimensions of work.

The corporation is a community of persons and a community of work

Most of us work in an organisation of some kind such as the business corporation.

Many of the products or services we now enjoy can only be provided by large and complex organisations.

Thus, for many of us it is the organisation that provides and organises work, making us much more productive than we could be if we worked alone.

The organisation brings together very many resources (people, money and know-how). It is a system that makes it possible for employees to act collectively.

Catholic Social Thought sums it up by saying that the corporation is a community of persons. It brings employees, management and finance together.

It is a community of work. Its particular characteristic is that it provides and organises work. It promotes the objective and subjective dimensions of work.

Effective participation v alienation

A central theme of my book is that the way that work is organised is of vital importance.

Work will only be truly fulfilling if it is my work. Even though I work as part of a team or group it is vital that the personal dimension of work is respected.

Suppose that we worked in conditions of drudgery. Imagine that we were told exactly what to do and had no contribution to make but mindless obedience.

We could still make the best of things. We could still work hard.

But work is much more humane if we are able to take responsibility and exercise personal initiative.

Participation in the management of one’s job and workplace promote the subjective dimension of work.

Pure drudgery, being a cog in a machine, alienates us from our work.

The ethical case for employee ownership

Catholic Social Thought has argued for employees to be given some form of ownership of the business that they work for.

Property ownership is a good thing because it gives people security and so enhances freedom and the ability to make longer term plans.

An ownership interest in one’s own business is especially appropriate from an ethical perspective.

It provides a human link between the worker and the object of his work. It obviously also provides an incentive to build up the organisation.

The ethical case for profit-sharing

Similarly, profit-sharing arrangements such as bonuses make a legitimate appeal to self-interest and provide incentives to work hard.

Bonuses have got a bad name at the moment because of the role that bankers’ bonuses are thought to have played in bringing about the financial crisis.

The problem, though, is not with bonuses but with the incentives to which they were attached and, fundamentally, with the philosophy of the human person and human communities on which the bonus schemes were predicated.

Can employee participation really work?

My book acknowledges that there are some serious economic objections to employee participation and explains some of the most important difficulties.

That said, there are businesses that have taken employee participation to heart and, in doing so, have shown that employee participation can be good for business. In the book I look in some detail at the constitution of the John Lewis Partnership.

The constitution is a sophisticated document that puts employee participation at the centre of governance arrangements.

It certainly hasn’t been bad for business. John Lewis and Waitrose are among the UK’s most successful retailers.

Employee Participation in Governance – podcasts

March 5, 2010

My monograph on ‘Employee Participation in Governance’ (Cambridge University Press) is due to appear in May.

To complement the book, I’ve started a podcast series to explain and supplement the book’s treatment of certain ideas and to comment on and update the legal commentary.

The podcasts are available at http://podcast.cuhk.edu.hk/

The first podcast provides a brief overview of the book.