Employee Participation

The Development of Management, Governance and Ownership Models
Rory Ridley-Duff (March 2008)
r.ridley-duff@shu.ac.uk

Sheffield Hallam University

Introduction
• Philosophical Perspectives • Psychological Perspectives • Case Study Findings • Business Practices • Conclusions

Philosophical Perspectives
• Individualist (Smith, Taylor)
– Shareholders prioritised
– Self-interest = Common Good

Getting Getting

Admiring?

Individualist
Giving

• Communitarian (Marx, Durkheim)
– Community/Company prioritised – Common Good = Self-interest

Giving Admiring?

Communitarian
Giving - Getting Getting - Giving

• Liberal Communitarian (Tam, Etzioni)
– Stakeholders as risk takers – Common Good = Equilibrio

Admiring?

Liberal Communitarian

Psychological Perspectives
• Cognitive Psychology (Individualist)
– Rational choice to protect self-interest
– Distortion occurs due to imperfect perception

• Critical Social Psychology (Communitarian)
– Context specific mediated by race, gender, status

– Outcome of relationship dynamics within a culture

• Social Psychology (Integrated)
– Context (objective) and social meaning (subjective) – Subjects resist or distort objective world to resolve cognitive dissonance (Festinger, 1957) – Value systems arise out of rational self-justification

Case Study
• 18 Month Ethnographic Study
– Worked inside the company (7 months)
– Critical approach

• Primary Case - Medium Size UK Firm
– Rapid growth – Market-leader (niche market) – Entrepreneur-led (130 staff)

• Comparative Cases - Linked
– Start-up firm (employee-owned)
– Multi-national corporation (co-operative)

Management (Mondragon)
General Assembly
Elects Consults

Departments (all members)
Elects

Active

Governing Council
Appoints

Social Council
Appoints

Joint Body

MD

Nominates

Executive

Management (Custom Products)
General Assembly
Elects

Departments (all members)

Passive

Governing Council
Appoints

Policy and Info.
Consults

Legal Board

Appoints

MD

Appoints

Executive

Themes
• Management
– Both economic and social objectives
– Both unitarist and pluralist management philosophies

• Governance
– Advocacy of “democratic” forums and rights
– Control linked to labour investment / membership

• Ownership
– Balance of collective / private ownership – Alignment of interests through employee-ownership

Observed Constraints
• Management
– Balancing economic efficiency / social democracy
– Executive control of “shared values” (Griseri, 1998)

• Governance
– Attitudes to “management prerogative” – Attitudes to existence of group interests – Line management v democratic accountability

• Ownership
– Maintaining access to financial capital – Employee attitudes to ownership

Business Practices
Communitarian
Collective pursuit of shared goals

Liberal Communitarian
Entrepreneurial pursuit of social goals

Individualist
Pursuit of private goals

Community Benefit Social gain
Subordination of capital Culture based on normative values Member focus

Mutual Benefit

Personal Benefit Financial gain
Subordination of labour Culture based on market values Investor focus

Integrate
Integrate
Culture based on humanistic values Stakeholder focus

Conclusions
• Philosophy driven by experience
– Starts with personal and inherited social learning
– Modified by process of confronting and resolving social problems

• Rational Self-Justification

(Aronson, 2003)

– Suggests reason for different cognitive models – Suggests reason for divergent philosophical positions

• Case Studies
– Progressively evolved “liberal communitarian” values (equilibrio)
– Provide unitarist and pluralist “democratic” models

References and Reading
• Aronson, E. (2003) The Social Animal, Ninth Edition, New York: Worth Publishers.

• •

Cladis, M. (1992) A Communitarian Defence of Liberalism, Stanford University Press. Etzioni, A. (1995) The Spirit of Community, Fontana Press.
Festinger, L. (1957) A theory of cognitive dissonance. Stanford, CA: Stanford University Press.

• Griseri, P. (1998) Managing Values, London: Macmillan.
• • • • Marx, K. (1984) Capital III, London: Lawrence & Wishart. Smith, A (1937) An Inquiry into the Nature and Causes of the Wealth of Nations, New York Modern Library (original publication 1776) Tam, H. (1999) Communitarianism, Macmillan Press Ltd. Taylor, F (1911) Principles of Scientific Management, Harper & Brothers

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