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The International
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Robert Mcnabb & Keith Whitfield
Published online: 18 Feb 2011.

To cite this article: Robert Mcnabb & Keith Whitfield (1999) The
distribution of employee participation schemes at the workplace, The
International Journal of Human Resource Management, 10:1, 122-136,
DOI: 10.1080/095851999340675

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 The International Journal of Human Resource Management 10:1 Feb 1999 122-136

The distribution of employee participation

schemes at the workplace

Robert McNabb and Keith Whit® eld

Abstract Recent years have witnessed a burgeoning literature on the type of work
organization which is most conducive to high performance. A common theme running
through this literature is the need for ® rms to introduce schemes for enhanced employee
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participation. In this paper the distribution of such schemes is considered and the factors
associated with their adoption examined. The willingness of establishments to embrace
different forms of employee participation is found to be particularly strong in larger
establishments that are part of big organizations. More recently established workplaces
and those using advanced technology are also highly likely to have introduced a number
of different employee participation schemes. The presence of unions at the establishment
is not found to constrain their introduction. Employee participation is, however, a wide-
ranging phenomenon and individual schemes differ markedly. It is therefore important to
distinguish between unlike schemes. Their distribution is seen to conform to a four-way
demarcation proposed by Marchington et al. (1992) and signi® cant differences are found
in the correlates associated with the incidence of these groups. In particular, representa-
tive participation is favoured by very different types of establishments over other types of
employee involvement, though these are also far from internally homogeneous.

Keywords Employee involvement, ® nancial participation

Introduction
There is a burgeoning literature on the emergence of new forms of work organization
(Appelbaum and Batt, 1994; Brown et al., 1994; Osterman, 1994; Wood, 1996). These
have been variously termed, `high performance work organizations’ , `¯ exible special-
ization systems’ and `high commitment organizations’ . It is postulated that ® rms have
introduced these structures in an attempt to gain competitive advantage in the face of
changing product markets. In short, the emergence of product markets in which
commercial success results from product quality, attention to rapidly changing demands
and high product differentiation rather than or in addition to low price has resulted in
the replacement of work organizations based on mass production by those focused on
high value added.
A theme running through this literature is that a necessary (though by no means
suf® cient) condition of such high performance is extensive employee participation
(employee involvement and/or ® nancial participation) (Brown et al., 1994; Osterman,
1994). It is postulated that ® rms which do not have such mechanisms in place are
unlikely to develop organizational structures that result in the attainment of competitive

Robert McNabb and Keith Whit® eld, Economics Section, Cardiff Business School,
University of Wales, Cardiff, CF1 3EU. Robert McNabb tel: 01222 875210 Fax: 01222
874419. E-mail: mcnabb@cf.ac.uk
Keith Whit® eld tel: 01222 876870. E-mail: whit® eld@cf.ac.uk

Copyright € Routledge 1999 0958±5192

 McNabb & Whit® eld: Employee participation schemes 123
advantage in product markets in which extra-price competition is important
(Marchington et al., 1992).
There has, however, been very little analysis of which ® rms have made extensive use
of employee participation and which have not. The focus has largely been upon the
overall extensiveness of such schemes and their growth through time (see, for example,
Millward et al., 1992). It is clear that there are major variations in their distribution and
that this differs for different types of participation scheme (Marchington et al., 1992;
Millward et al., 1992). It is this gap that the current paper attempts to ® ll.
The objectives of this study are threefold. The ® rst is to investigate the characteristics
of workplaces which introduce a wide range of employee participation schemes. The
second is to examine the way in which establishments combine different forms of
employee participation scheme. Such an analysis will not simply provide insights in
terms of identifying combinations and interactions between different types of scheme
which are internally consistent but also enable the compatibility of conceptually and
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empirically based classi® cations of groupings to be evaluated. Third, in so far as there

is heterogeneity between types of scheme, an analysis is made of whether there are also
differences in the types of establishments which adopt particular combinations of
schemes.

The nature of employee participation

At a general level, employee participation is concerned with those schemes which allow
employees either greater involvement in decision making or a ® nancial stake in their
organizations. Such schemes are often seen as a means of increasing economic
performance through encouraging greater commitment on the part of workers.
Employee participation is, however, an extremely heterogeneous concept and varies
from, at one extreme, active joint consultation to, at the other, the existence of a
suggestion scheme. Moreover, the focus of different schemes varies markedly. For
example, joint consultation is typically about general issues of concern to large sections
of the work-force, whereas quality circles often concern communication in distinct parts
of the production process. It can therefore be expected that different forms of employee
participation will be distributed in distinctively different patterns across the
economy.
Both Eaton and Voos (1992) and Blyton and Turnbull (1994) have indicated that
researchers use the term employee participation to cover a variety of different schemes.
Such a looseness of approach can introduce an inexactitude into analysis and thereby
bias results and policies which are based on them. A basic test of this hypothesis is to
examine whether different types of employee participation schemes are distributed
similarly. The greater the heterogeneity in their distribution, the more important it is to
de® ne clearly what is meant by `employee participation’ .
To allow for such heterogeneity and to reduce a myriad of schemes to manageable
proportions, Marchington et al. (1992) have proposed a four-fold classi® cation of
employee participation schemes. These are: downward communications, which include
team brie® ngs; upward problem-solving techniques, such as quality circles; the
® nancial involvement of employees in, for example, pro® t-sharing schemes; and,
® nally, representative participation, a category which covers activities such as joint
consultation. This classi® cation is based on theoretical reasoning relating to the
characteristics of the schemes concerned. An alternative technique is to classify
schemes according to those which are commonly found together. If it is the case that the
classi® cations used by the two approaches are distinctively different, attention needs to
 124 The International Journal of Human Resource Management
be paid to which is superior for the purpose at hand. If not, this is of less importance
for empirical research.
There are strong grounds for expecting that the various types of scheme (however
de® ned) will be distributed differently across establishments, re¯ ecting heterogeneous
origins. Joint consultation committees represent attempts to develop bipartite arrange-
ments to discuss issues which are deemed inappropriate for either collective bargaining
or unilateral decision making (Marchington et al., 1992). Upward problem-solving
systems and downward communication schemes are typically of a more recent lineage
than joint consultative committees and represent one of the more wide-ranging elements
in the development of human resource management techniques (Guest, 1987). They are
generally introduced on management’ s initiative and re¯ ect a concern to increase
communications. Financial participation schemes developed extensively in the 1980s,
aided by a number of tax concessions (Poole and Whit® eld, 1994). In some cases they
have been linked to the introduction of new human resource management techniques
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but in others they have been introduced in isolation.

It has also been suggested that there is a difference in the type of ® rm introducing,
on the one hand, upward problem-solving schemes and, on the other hand, downward
communication mechanisms. Thus, Appelbaum and Batt (1994) distinguish between
two types of high performance work system developing in the United States. The ® rst
they entitle `American Lean Production’ and is seen to involve employee involvement
in which a selected subset of workers participates in problem-solving committees
directed by ® rst-line supervisors or other managers. Contrastingly, `American Team
Production’ is seen to rely heavily on decentralized decision making through
collaborative teamwork and on joint labour±management structures that allow workers
to be represented in decision making at every level of the company. There is evidence
that the lean production approach is most successful in non-unionized ® rms and the
latter in unionized.

Methodology

Data description
Data are derived from the third British Workplace Industrial Relations Survey
(WIRS3). The sample is restricted to establishments operating in the trading sector and
which do not sell the majority of their product or service to other parts of their
organization. Most of the information used in this paper was supplied by the manager
most responsible for employee-related issues. In some cases, information on ® nancial
performance was provided by a ® nancial manager. The data are weighted to allow for
differential sampling by size of establishment. Further details of WIRS3 can be found
in Millward et al. (1992).
In this paper the focus is upon ten different types of employee participation scheme.
These are:
1 The presence of a joint consultative committee
2 Regular meetings among work groups to discuss aspects of their performance, such
as quality circles
3 Regular meetings between junior managers/supervisors and workers for whom they
are responsible (brie® ng groups)
4 Regular meetings between senior managers and all sections of the work-force
5 Systematic use of the management chain for communication with all employees
6 Suggestion schemes
 McNabb & Whit® eld: Employee participation schemes 125
Table 1 The incidence of employee involvement schemes (%)

Presence of joint consultative committee 22.8

Regular meetings among work groups 30.9
Regular meetings between junior managers/supervisors and workers 45.6
Regular meetings between senior managers and workers 40.4
Systematic use of the management chain 61.1
Suggestion schemes 28.2
Regular newsletters 41.1
Surveys or ballots of employees’ views or opinions 18.7
Pro® t-related pay or bonuses 40.0
Share-ownership scheme 34.6

7 Regular newsletter
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8 Surveys or ballots of employees’ views or opinions

9 Pro® t-related payments or bonuses
10 Share-ownership schemes.
The incidence of the schemes is shown in Table 1. Clearly, there is a signi® cant
degree of variation in the extent to which establishments have implemented them.
Systematic use of the management chain for communication with all employees is the
most commonly used practice, with nearly two-thirds of establishments reporting that
they have adopted this type of scheme. At the other extreme, less than 20 per cent of
establishments make use of surveys or ballots of employees’ views or opinions. On
average, establishments combine four schemes, though the data suggest a signi® cant
amount of variation in the combinations adopted (see Table 2).

Estimating framework
New work systems involving employee participation are costly to introduce and
represent a long-term investment on the part of the ® rm. Such investments are
characterized by large up-front costs and uncertainty (Osterman, 1994). The probability
that a ® rm will undertake such an investment will depend on the expected net bene® ts

Table 2 Number of employee involvement schemes implemented

Number of schemes Proportion of

establishments

0 8.6
1 13.0
2 16.4
3 18.3
4 10.9
5 12.3
6 6.4
7 4.6
8 6.1
9 4.0
10 0.2
Mean 5 3.63
Variance 5 6.0
 126 The International Journal of Human Resource Management
associated with introducing employee participation schemes. However, these net
bene® ts are not observable, though information on whether or not a company is using
a particular system is available. It is thus the incidence of the different types of
employee involvement scheme at the workplace which forms the basis of the analysis
presented here.
The examination of the extent to which establishments have adopted a range of
different work practices to encourage employee participation is based on a measure of
the number of schemes implemented. To analyse the covariates of the range of schemes
adopted we have used a Poisson regression model. This is appropriate in count data
analysis in which the dependent variable can only take non-negative integer values
(Winkelmann and Zimmerman, 1995).
The examination of possible heterogeneity in the incidence of the various types of
employee participation makes use of the classi® cation proposed by Marchington et al.
between (1) representative participation, (2) schemes to promote upward problem
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solving, (3) those used for downward communications and (4) ® nancial participation.
The analysis is in two stages. First, an analysis is undertaken using cluster analysis. This
involves an examination of clusters generated from the ten schemes. This clustering,
which is based on a statistical analysis of the combinations of schemes used by
establishments, is then compared with that based on the Marchington et al. theoretically
based classi® cation.
This is followed by an analysis of the association of the types of employee
participation with a vector of potential covariates via the estimation of four separate
logit models, one for each of the different types of employee participation scheme that
can be identi® ed.1

Potential covariates

A number of potential correlates of the adoption by ® rms of employee participation

schemes can be identi® ed. The ® rst concerns ® rm size. Larger ® rms are more likely to
have both the resources and the need to undertake such an investment in developing
formal channels of communication. On the other hand, larger ® rms tend to be more
cumbersome and consequently less able to respond to human resource management
innovations (Osterman, 1994). Smaller ® rms, in contrast, are more likely to adopt
informal employee participation arrangements re¯ ecting the fact that many small
establishments are relatively young and their work-forces are more likely to identify
with the organization. In such organizations, workers will often work with only limited
supervision in the context of what Marchington et al. call `responsible autonomy’ .
Where formal employee participation practices are used, they are likely to focus on
upward problem solving. It is also important to consider the impact of both the size of
the establishment and the size of the organization to which it belongs on the
introduction of employee participation schemes. Both variables have been found to
have an impact on the nature and range of employment practices adopted (Brown,
1981) and, in particular, that larger establishments would tend to favour downward
communications schemes (Marchington et al., 1992).
To consider whether establishments which face intense competition in their product
markets are more likely to introduce employee participation schemes, we have included
a variable which takes the value `1’ if the establishment dominates its product market
or if the organization has less than ® ve competitors, and `0’ if the establishment has
many competitors. It has been suggested that establishments which have some control
over their product market exhibit more ¯ exibility and opportunity to experiment with
 McNabb & Whit® eld: Employee participation schemes 127
their employment practices (Marchington et al., 1992). In contrast, those facing
signi® cant competition will have less room for manoeuvre and will be reluctant to opt
for changes which may have an uncertain impact on organizational performance. This
reluctance must, of course, be balanced against the potential employee participation has
for promoting competitive advantage.
It is also likely that establishments which operate in national and international
markets are more likely to introduce more innovative human resource management
systems than those operating in local and regional markets. The former will be exposed
to a wider range of new work systems and will be under more pressure to adopt them.
This question is addressed in two ways. First, a dummy variable is included that takes
the value `1’ if the establishment operates on a national/international scale and `0’ if the
establishment serves a local/regional market. Second, consideration is given to whether
UK or foreign-owned establishments are more innovative in the introduction of
employee participation systems by including a dummy variable that takes the value `1’
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if the establishment is foreign owned; otherwise it is `0’ . The question of whether UK-
owned establishments will be more forward looking in their employment practices has
been subject to some scrutiny, though the conclusions of studies in this area are far from
de® nitive; there is, however, evidence to suggest that they favour the adoption of a wide
range of participation schemes (Purcell et al., 1987; Marchington et al., 1992).
It has been suggested that new work systems involving enhanced participation are
often adopted where it is dif® cult to measure individual productivity and effort and that
such systems emphasize `paying attention to people’ and a `high effort work norm’ by
developing a culture of positive peer group pressure (Lazear and Rosen, 1981; FitzRoy
and Kraft, 1987). This suggests that the composition of an establishment’ s work-force
will be an important consideration in whether new systems of employee involvement
will be introduced. The ability to develop a work-force culture favourable to group
effort will be constrained by the employment of part-time workers and possibly in those
establishments that employ relatively more female workers.
As Osterman (1994) notes, the gains from introducing employee participation will be
more signi® cant in those establishments which employ more complex technologies.
Establishments using more advanced technology are also more likely to provide a work
environment that is stable and predictable, employing skilled workers who are more
fully involved in the production process (Marchington et al., 1992). To proxy the nature
of technology employed by an establishment we have followed Bosworth (1993) and
constructed a dummy variable which takes the value of `1’ if the establishment reported
using microelectronics for design, machine control, process control, automated handling
or testing/quality control, otherwise it takes the value `0’ . Second, a variable is included
to measure the level of technical skills of the work-force, which is the proportion of
unskilled workers employed in the establishment.
An analysis is also made of the impact of trade unions upon the introduction of new
human resource management systems. There is a general presupposition that unions
constrain the introduction of new work practices. Gregg and Machin (1988), however,
show how unions have had a positive impact on the introduction of some forms of
performance-linked pay schemes. Moreover, Marchington et al. (1992) have found that
establishments where union membership is high are more likely to introduce a wider
range of employee participation schemes. Unions have also been found to have a
positive impact on the introduction of new systems of work organization in the US
(Eaton and Voos, 1992). One explanation for this is that, in the context of an
increasingly competitive economic environment, unions agree to revise established
work practices and/or the introduction of new types of work organization in exchange
 128 The International Journal of Human Resource Management
for job security and/or favourable wage concessions. It is thus seen as a development
within the framework of traditional productivity bargaining between unions and
management (Eaton and Voos, 1992). The impact of unions on the introduction of new
work systems is measured in two ways: ® rst, a variable is included which measures
whether a closed shop exists at the workplace and, second, a variable indicating whether
a union is recognized by management is introduced. The former can be viewed as a
proxy for `strong’ unionism and the latter as a more general indicator of union
in¯ uence. Our expectation is that establishments with `strong’ unions will be less likely
to have employee participation schemes.
Two further explanatory variables are included to measure whether the establishment
is in an expanding market and the age of the establishment. The ® rst takes the value of
`1’ if the ® rm has experienced a growth in employment in the last year and `0’
otherwise. It is a proxy for the direction of demand in the product market the
establishment operates in. There is evidence, moreover, that establishments often
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introduce new employment practices which emphasize participation during those

periods the establishment is facing severe problems (Marchington, 1987). They are seen
as a way of obtaining the co-operation of the work-force at a time when cutbacks have
to be introduced. On the one hand, a declining product market can be expected to
prompt ® rms to introduce new forms of work organization aimed at improving
productivity. On the other hand, however, it is likely that such ® rms will be less able to
® nd the resources to fund such initiatives. Periods of expansion may also be the time
when organizations feel most able to promote commitment through participation. The
expected sign on this variable is therefore uncertain. To re¯ ect the possibility that
younger ® rms are more likely to implement new forms of work organization several age
dummies have been included. Of course, not all employee participation practices can be
labelled `new’ and it is possible that this variable will be more likely to be positive for
more recent employee participation practices, such as downward communications and
® nancial participation.
Finally, a number of industry dummy variables are included. This follows
Marchington et al. (1992) who suggested that pressure from customers also impacts
upon the introduction of employee participation. Where demand is variable and
unpredictable, employee participation schemes will be more extensive. When customer
pressure is less, a wider range of employee participation schemes will be introduced.
Although we cannot directly measure customer pressure, Marchington et al. point to the
variations that exist between industries. We would therefore expect to observe
signi® cant industry effects, which re¯ ect, in part at least, differences in the nature of
customer pressure.
The means and standard deviations of the variables used are shown in Table 3.
De® nitions are given in the Appendix.

Results

Intensity of employee participation

Estimates of the Poisson regression model of the intensity of participation are shown in
Table 4. The results indicate the covariates of the number of expected employee
participation practices adopted at the establishment level. 2
The notion that systems of human resource management which involve employee
participation are more likely to be found in larger organizations is supported by our
® ndings. This suggests both that larger organizations have a greater need to promote
 McNabb & Whit® eld: Employee participation schemes 129
Table 3 Means and standard deviations

Variable Mean Standard deviation

Representative participation .189 .392

Upward problem-solving system .406 .491
Downward communication system .775 .418
Financial participation scheme .492 .500

Establishment size 82.8 139.6

Organization size
500±9999 .168 .374
10000 1 .233 .423

Closed shop .042 .200

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Recognized union .355 .479

% Female .399 .295
% Unskilled .215 .270
% Part-time .173 .455
Level of technology .434 .496

Establishment age (years)

0±5 .187 .389
6±9 .145 .352
10±15 .164 .371
16±20 .078 .268
21 plus .426 .495

UK owned .912 .283

Five or fewer competitors .376 .484
National/international market .136 .343
Positive employment growth .546 .498

ef® ciency through employee participation and that such companies have the resources
to fund the necessary investments required to transform workplace practices. Establish-
ment size is also found to increase the expected number of employee involvement
schemes; there is no evidence that the relationship is non-linear.
The results also indicate that establishments that have a closed shop or that have a
recognized union are not less likely to have adopted employee participation schemes
nor are they more likely to have encouraged their introduction. This ® nding contrasts
with that reported by Marchington et al. who suggest that establishments that are more
unionized were also those employing a mix of employee participation schemes. They
contend that management in establishments with less or no unionization had greater
¯ exibility in employee relations.
One reason for these apparently contradictory ® ndings is that the approach adopted
by Marchington et al. is basically a bivariate analysis. The results reported here are
multivariate and consider the impact of variables holding other variables constant. As
Marchington et al. recognize, their result concerning the effect of unions may be
affected by the joint in¯ uence of organization size; larger establishments and
organizations are more likely to have higher union representation and are also more
likely to have implemented a wider range of employee participation schemes. The
 130 The International Journal of Human Resource Management
Table 4 Poisson analysis of employee participation intensity

Variable Coef® cient

Constant 0.462*** (0.158)

Establishment size 0.009*** (0.003)
Establishment size squared 1000 2 0.0002 (0.0002)
Organization size
500±9999 0.209*** (0.08)
10,000 1 0.519*** (0.008)
Closed shop 2 0.126 (0.157)
Recognized union 0.082 (0.065)
% Female 0.209* (0.129)
% Unskilled 2 0.003** (0.001)
% Part-time 2 0.129 (0.08)
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Level of technology 0.209*** (0.062)

Age of establishment (years)
6±9 0.0004 (0.096)
10±15 2 0.123 (0.095)
16±20 2 0.099 (0.119)
21 plus 2 0.151** (0.077)
UK owned 2 0.148 (0.097)
Five or fewer competitors 2 0.032 (0.06)
National/international market 0.118 (0.085)
Employment growth 2 0.148** (0.059)
Model log likelihood 2 1181.6
Number of cases 551
Notes
1 Standard errors are given in parentheses
2 *** denotes signi® cant at 1%, ** at 5%, * at 10%

® ndings reported here suggest that organization and establishment size, and not union
presence, are important in determining the intensity of employee participation.
The positive coef® cient on the proportion of females is at odds with expectations and
with the results reported in other studies which have looked at the introduction of
performance-linked pay schemes (Gregg and Machin, 1988). One possible explanation
is that employee participation schemes are more likely to be a feature of newer
establishments which are also more likely to employ proportionally more women. Some
evidence for this can be seen in the fact that older establishments are signi® cantly less
likely to have introduced a number of different schemes.
The propensity to develop employee involvement schemes is also strongly related to
the level of technology in use in the establishment. First, establishments using advanced
technology are more likely to have adopted a wider range of employee participation
schemes. Second, there is a positive correlation of this propensity with the skill level of
the work-force. This is re¯ ected in a positive coef® cient on the technology variable and
a negative coef® cient on the proportion of unskilled workers variable. The suggestion
that establishments whose operations are characterized by more advanced levels of
technology will also adopt a wider range of employer participation schemes is therefore
supported in our results.
There is no evidence to suggest that product market competition or whether the
establishment operates in a national or international market encourages the use of
employee participation schemes. Nor is there evidence that foreign-owned ® rms will
 McNabb & Whit® eld: Employee participation schemes 131
have a greater mix of employee participation schemes. Finally, establishments which
are facing job cut-backs are more likely to introduce a wider range of employee
participation schemes than those which are expanding. This supports the idea that such
schemes are often introduced as a way of explaining to employees the signi® cance of
the problems faced by the organization and thereby convincing them of the need for job
losses.

Participation clusters
Before considering the determinants of the four-way grouping of employee participa-
tion schemes suggested by Marchington et al., compatibility tests based on the clusters
generated from values of the ten schemes were undertaken. The purpose of this cluster
analysis was to examine whether the actual combination of schemes present in the data
was consistent with the Marchington et al. classi® cation. The Euclidean measure for
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distance between cluster centroids and the within-group average method of forming
clusters was used to derive four clusters. The results of this analysis produced the
following four-way grouping for the ten employment participation schemes:
(a) Representative participation ± Scheme 1
(b) Upward problem solving ± Schemes 4 1 5 1 7
(c) Downward communications ± Schemes 2 1 3 1 6 1 8
(d) Financial participation ± Schemes 9 1 10
Although this clustering is not identical to that proposed by Marchington et al., it does
indicate a signi® cant degree of overlap between the two classi® cations. Indeed, only
scheme 3 (regular meetings between senior managers and all sections of the workforce)
is in a different group from the classi® cation shown earlier. We have chosen to proceed
therefore on the basis of the Marchington et al. four-way classi® cation, which can be
justi® ed both conceptually and on the basis of the cluster analysis.

Covariates of participation clusters

The results of the logit analysis of the covariates of the four types of scheme taken
separately are presented in Table 5 and clearly show that the schemes have markedly
different correlates. This is to be expected and is in line with the expectations of Eaton
and Voos (1992). The results for the analysis of representative participation (joint
consultative councils) are distinct from those for the other types of schemes in a number
of respects.
Representative participation is more likely to be found in larger establishments which
do not have recognized unions. This possibly re¯ ects the fact that such establishments
have introduced some form of representative consultation as an alternative to collective
bargaining, implying that joint consultative committees are a substitute for union
representation rather than being complementary to it.
The impact of unions on the introduction of other forms of employee participation
further highlights the importance of distinguishing between the four types of employee
participation schemes. The results indicate that the presence of a recognized union at
the establishment is positively associated with the introduction of upward problem-
solving schemes but negatively associated with the incidence of ® nancial participation
at the establishment. Unions appear to have no signi® cant in¯ uence on the introduction
of downward communication schemes. Finally, there is no evidence that the presence of
strong unions at the workplace, as proxied by the existence of a closed shop agreement,
acts as a constraint on establishments introducing employee participation schemes.
 132 The International Journal of Human Resource Management
These results are rather different from those reported in Marchington et al. We noted
earlier that their ® ndings indicated that unions were associated with a greater mix of
employee participation schemes, a result which was not supported in our analysis. This
we attributed to the fact that the analysis presented in this study holds constant the
impact of other variables, such as size, which are ignored in bivariate correlations. It
would also seem that our earlier ® ndings also re¯ ect the fact that the way unions affect
employee participation schemes depends upon the type of scheme being considered.
A further distinction between the incidence of representative participation and the
other three forms of employee participation is that the latter are all positively associated
with the use of advanced technology. It is clear that technology has played an important
role in in¯ uencing the nature of employee relations. Those establishments operating
with more advanced technology have most fully embraced new forms of employee
participation. The incidence of new work practices is also responsive to the nature of
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the product market in which the establishment operates. Both upward problem-solving
and downward communication schemes are features of establishments operating in
product markets characterized by few competitors which suggests that it is not the
pressure of competition that promotes change in work organization, but the ability of
establishments to control their product markets. It is, however, worth noting that
representative participation and ® nancial participation are associated with establish-
ments operating in more competitive product markets, though these relationships were
not found to be statistically signi® cant.
Establishments producing for national and international markets are more likely to
favour downward communication and ® nancial participation schemes. Exposure to
national and international competition thus encourages establishments to seek to
achieve competitive advantage by both providing employees with information about the
organization and encouraging commitment through some term of ® nancial participation.
It is also interesting to note that being UK owned and controlled is a strong positive
in¯ uence on whether an establishment possesses ® nancial participation, while establish-
ments that are part of foreign-owned and controlled organizations are more likely to
favour downward communication schemes. Downward communication is also neg-
atively associated with employment growth, again highlighting the need for manage-
ment to inform employees through some form of formal participation mechanism when
job losses are involved.
A common feature of the results for all types of scheme is that they are more likely
to be found in establishments which are part of large organizations. Size of organization
appears to be more important than the size of the establishment, with the latter being
found to be signi® cant only in the case of representative participation and upward
problem-solving schemes. 3
Age of establishment appears to have no impact on the incidence of any of the
employee involvement schemes, which seems to contrast with the Marchington et al.
suggestion that there are distinct waves in the introduction of employee participation.
However, a more aggregated speci® cation of the age variable produced rather different
results. When age is included as only three dummy variables measuring whether the
establishment is less than ten years old, ten to twenty years old or more than twenty
years, we found that establishments which have adopted representative participation are
more likely to be aged over twenty years. In contrast, those establishments which have
introduced either upward problem-solving or downward communication schemes are
more likely to be less than ten years old. This suggests that establishments tend to retain
the type of participation scheme which they established at their inception.
 McNabb & Whit® eld: Employee participation schemes 133
Table 5 Logit analysis of employee participation

Representative Upward problem Downward Financial

participation solving communications participation

Constant 2 2.33 2 2.245*** 1.22* 2 1.47***

(0.600) (0.504) (0.631) (0.493)
Establishment size 0.004*** 0.022** 0.0017 0.0007
(0.001) (0.012) (0.002) (0.0012)
Establishment size squared/ 2 0.008*** 2 0.0005 2 0.0004 2 0.0003
1000 (0.004) (0.0004) (0.0006) (0.0005)
Organization size
(employees)
500±9999 0.647** 0.055 0.859*** 1.28***
(0.288) (0.239) (0.305) (0.24)
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10,000 1.785*** 0.887*** 1.356*** 2.383***

(0.294) (0.244) (0.337) (0.28)
Closed shop 0.688 2 0.782 0.042 0.493
(0.529) (0.493) (0.515) (0.455)
Recognized union 2 0.858*** 0.372* 0.130 2 0.388*
(0.257) (0.208) (0.245) (0.221)
% Female 2 0.538 1.62*** 0.462 0.310
(0.478) (0.403) (0.474) (0.412)
% Unskilled 2 0.004 2 0.004 2 0.001 2 0.002
(0.004) (0.003) (0.004) (0.004)
% Part-time 2 0.238 2 0.609** 0.219 0.107
(0.262) (0.321) (0.543) (0.299)
Level of technology 0.083 0.818*** 0.749*** 0.769***
(0.228) (0.202) (0.234) (0.205)
Age of establishment (years)
6±9 0.192 2 0.053 0.483 0.121
(0.381) (0.299) (0.375) (0.315)
10±15 0.313 2 0.695** 2 0.342 2 0.614
(0.361) (0.294) (0.325) (0.307)
16±20 0.461 2 0.234 2 0.399 0.213
(0.435) (0.371) (0.405) (0.384)
21 plus 0.473 0.205 2 0.179 2 0.291
(0.302) (0.242) (0.282) (0.251)
UK owned 0.218 2 0.165 2 0.959** 0.737**
(0.387) (0.296) (0.469) (0.311)
Five or fewer competitors 2 0.072 0.319* 0.361* 2 0.108
(0.217) (0.181) (0.210) (0.187)
National/international market 0.411 0.394 0.769** 0.834***
(0.307) (0.258) (0.345) (0.267)
Employment growth 2 0.099 0.075 2 0.425** 0.107
(0.213) (0.18) (0.203) (0.186)
Model log likelihood 2 324.19 2 425.23 2 350.5 2 401.23
Number of cases 551 551 551 551
Notes
See Table 4

Finally, signi® cant industry effects were found in the models used to explain the
incidence of upward communication schemes and ® nancial participation. In the former,
wholesale/retail, transport/communication, banking/insurance and ® nance and other
 134 The International Journal of Human Resource Management
services were found to be positively associated with the introduction of upward
problem-solving schemes, while ® nancial participation is likely in manufacturing (non-
metals), transport/communication and other services.

Conclusions

The main conclusion of this paper is that the determinants of different types of
employee participation scheme are extremely heterogeneous. There is a clear
difference between representative participation based on joint consultation and what
might be called the new HRM schemes of upward problem solving and downward
communications. The former are typically found in older and larger organizations
which do not have recognized unions and which operate in national or international
markets. This suggests that the positive correlation between representative participation
and unionization which has been found in other (bivariate studies) re¯ ects the joint
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association between unionization and both establishment age and size, rather than the
in¯ uence of unions per se. The newer types of involvement scheme are more typical in
younger and larger organizations with advanced technology. Financial participation is
found in larger organizations without recognized unions, with advanced technology,
operating in national and international markets and which are UK owned and
controlled.
It is therefore important for researchers to bear in mind that different types of
employee participation scheme should be clearly distinguished and that the term must
not be used loosely to cover structures which exhibit considerable heterogeneity. The
analysis also suggests that the four-way classi® cation proposed by Marchington et al. is
compatible with an empirically based technique based on cluster analysis.

Acknowledgements

The authors would like to thank participants in a BUIRA HRM Study Group for helpful
comments on an earlier draft of this paper. We are also grateful to Mick Marchington
for extremely helpful comments.

Notes
1 We have chosen to estimate four separate logits in order to make interpretation of the results
manageable. The alternative multinomial logit model would involve sixteen possible outcomes
(the four schemes alone and all possible combinations). The complexity of such an analysi s
would not readily promote an understanding of whether distinct types of employee participatio n
scheme are adopted by different types of establishment. The focus is therefore on the
distribution of each scheme separately, ignoring whether or not it has been combined with one
or more of the other three schemes.
2 A potential problem with using the Poisson model is that the underlying Poisson distributio n
has the restrictive assumption that the mean and variance of the dependent variable are
equal (conditional on the covariates). The data shown in Table 3 suggest that this may not be
the case and that there might be over-dispersion in the data. However, a formal test for over-
dispersion (based on Cameron and Trivedi, 1990) indicated that the Poisson model can be
used.
3 We also experimented by including establishment size as a series of dummy variables for the
following employment bands: 25±49, 50±99, 100±199, 200±499, 500 or more. This produce d
 McNabb & Whit® eld: Employee participation schemes 135
similar results to the ® rst functional form with the establishment size dummies being signi® cant
only in the representative participation and ® nancial participation models. Interestingly, in these
equations the signi® cant size dummies were 50±99 and 100±199, suggesting that it is medium-
sized establishments which have adopted these two forms of participation .

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 136 The International Journal of Human Resource Management
Appendix: De® nitions of variables
Variable
Representative participation
Upward problem solving
Downward communications
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Financial participation
Establishment size
Organization size
Closed shop
Recognized union
% Female
% Manual
% Part-time
Level of technology
Age of establishment
UK owned
Five or fewer competitors
National/international market
Employment growth
De® nition
`1’ if establishment has a joint committee of managers
and employees which is primarily concerned with
consultation rather than negotiation, `0’ otherwise.
`1’ if establishment has one of: regular meetings among
work groups to discuss aspects of their performance;
suggestion schemes; surveys or ballots of employees’
views or opinions; `0’ otherwise.
`1’ if establishment has one of: regular meetings between
junior managers/supervisors and all the workers for
whom they are responsible; regular meetings between
senior managers and all sections of the work-force;
systematic use of the management chain for
communication with all employees; regular newsletters
distributed to all levels of employees; `0’ otherwise.
`1’ if establishment has one of: pro® t-related payments
or bonuses; a deferred pro® t-sharing scheme; SAYE
share option sheme; discretionary or executive share
option scheme; `0’ otherwise.
Number of employees on the payroll of the establishment
(including representatives, sales persons and similar).
Number of employees of the ultimate controlling
company in the UK.
At least some workers in the establishment need to be
union members to get or keep their jobs.
At least one union/staff association recognized by
management for negotiating pay and conditions.
Proportion of total employees in establishment who are
female.
Proportion of total employees in astablishement classed
as manual.
Proportion of total employees in establishment working
part-time.
`1’ if the establishment uses microelectronics for: design,
machine control, process control, automated handling,
automated storage or testing/quality control.
Length of time establishment has been operating at the
current address.
Ultimate controlling company is solely UK owned or
controlled.
The market for the establishment’ s product or service has
® ve or fewer competitors.
The market for the establishment’ s product or service is
primarily national or international.
`1’ if employment of establishment has grown in last
® ve years; `0’ otherwise.