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
Getting

• Individualist (Smith, Taylor) Getting

– Shareholders prioritised Admiring?

– Self-interest = Common Good Individualist

Giving

• Communitarian (Marx, Durkheim) Giving

– Community/Company prioritised
Admiring?
– Common Good = Self-interest
Communitarian

Giving - Getting

• Liberal Communitarian (Tam, Etzioni) Getting - Giving

– Stakeholders as risk takers
Admiring?
– Common Good = Equilibrio
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 Departments

(all members)
Elects
Elects

Consults
Active Governing Council Social Council

Joint Body Appoints Appoints

MD Nominates
Executive
 Management (Custom Products)

General Assembly Departments

(all members)
Elects

Passive Governing Council Policy and Info.

Legal Board Appoints

Consults
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 Liberal Communitarian Individualist

Collective pursuit of Entrepreneurial pursuit of Pursuit of private

shared goals social goals goals
Community Mutual Benefit Personal Benefit
Benefit
Social gain Integrate Financial
gain
Subordination of Integrate Subordination of
capital labour
Culture based on Culture based on humanistic Culture based on
normative values values market values
Member focus Stakeholder focus Investor
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