Employee Perspectives On Employee Ownership --澳洲留学生Essay代写范文

澳洲留学生Essay代写范文:“Employee Perspectives On Employee Ownership”，这篇论文主要描述的是员工是企业发展和进步的重要动力，本文讲述的是通过员工持股的方式来提高员工对于公司的归属感和工作的积极性对于企业发展的意义，员工持股的方式在经济危机当中是比较的常见的策略之一，这种方式能够让员工认为其工作不仅仅是为了企业的发展，也是为了个人利益的实现而奋斗。

The current financial and ensuing economic crisis has had negative impacts on the majority of enterprises around the world. This has led to massive public bail-outs of private, investor-owned businesses which in turn have led to an economy-dip in many parts of the world. The most visible consequences of these events have been waves of large scale job shedding (with profoundly different regional impacts) accompanied by persistently high unemployment rates. This time period has also seen steeply rising small and large firm failure rates, a major reshuffling in the ownership of many businesses and a crisis of consumer confidence (Geroski and Gregg, 1993).

Employee-owned businesses have often been the strategy that governments and enterprises resort to during times of economic crisis (INTERNATIONAL LABOUR ORGANISATION, 2007). Deputy Prime Minister of the UK, Nick Clegg earlier this year said “We don’t believe our problem is too much capitalism – we think it’s that too few people have capital. We need more individuals to have a real stake in their firms. More of a John Lewis economy, if you like and what many people don't realize about employee ownership is that it is a hugely underused tool in unlocking growth” (BBC, 2012). Employee-owned businesses are commercial enterprises owned by the people who work for it (Farlex, 2012). The most common motives that make firms convert to employee-owned businesses are to: provide additional remuneration to employees, take advantage of tax breaks, protect the firm from take-over and dismemberment on the exit of the owner and also ‘paternalist’ sentiment that employees should share in the cake they had helped to make (Pendleton, 2001).

Employee-owned businesses grew to prominence in the 1970s and early 1980s in Europe due to a restructuring industry that led to mass unemployment. The response of employees was a wave of takeovers through employee-owned cooperatives and businesses that managed to get the unemployed people back to work (Birchall and Ketlison, 2009). There are definite benefits to having an employee-owned business such as being more risk-averse to profits because of no pressure from external stakeholders to maximize profits at the expense of the employees (Street, 2012). When the purposes of the firm are aligned with the employees who are both owners and employees of the organization, the results are loyalty, commitment, shared-knowledge, participation, underpinned by strong economic incentives (International Labour Organisation, 2007). These are the kind of qualities any business would want which the investor-owned business can only achieve by mimicking the idea of membership.

The employee-owned business model has comparative advantages but it is not a panacea to every economic problem today. As with any business, if an employee-owned firm is badly managed or has serious weaknesses in its business strategy it will fail (Birchall and Ketlison, 2009). Some of the obvious arguments against the employee-owned business model have been that it is an outdated model which cannot provide enough incentives to attract the best managers and raise enough capital to compete in global markets (Pendleton, 2001). Another argument is that employee ownership dilutes incentives and control rights in an organization which can make decision making at times cumbersome especially when the purposes of the business are not aligned with that of the employees. (cf. Jenson and Meckling 1979)

Employee Ownership in Nigeria

Nigeria gained independence from Great Britain in 1960, joined the Organisation of the Petroleum Exporting Countries (OPEC) in 1971 and with it brought the right for Nigeria to exercise permanent sovereignty over its natural resources in the interest of national development. Military dictatorship over the years and the over reliance on crude oil have made Nigeria’s economy a predominantly state-owned economy. Thus by 1990, there were over 1500 public sector enterprises in Nigeria, 600 of which were owned by the Federal Government and the rest by State and Local Governments ( see Jerome, 1995). This event limited employee ownership in Nigeria to certain types.

However, in 1988 the Technical Committee on Privatization and Commercialization (TEPC) was set up to implement a SOEs reform process of which 101 Public utilities were slated for privatization and another 35 commercialization (Jerome, 2002). The Nigerian Telecommunications Limited (NITEL), the Nigerian Postal Services, the Nigerian Airways and the Nigerian Electric Power Authority (NEPA) among others were restructured for higher efficiency. The privatization process allowed for other forms of employee ownership to be available in Nigeria.

The Telecommunications Industry in Nigeria has also witnessed deregulation with the Nigerian Communications Commission (NCC) licensing a wide variety of telecoms operators. The Nigerian services telecoms market at the end of 2002 was worth USD 1.1 billion and also experienced an annual growth of 37% (Africa Analysis, 2003). The deregulation of the communications industry has afforded greater employee ownership in the Nigerian Telecoms Industry through the many operators that now offer share schemes to its employees.

RESEARCH AIM 研究目的

The aim of the research is to investigate employee ownership in Nigerian companies. It considers the employee’s perspective on employee ownership in Nigeria which has to do with employees’ awareness, attitude, and feelings about employee ownership. The research then looks at the main factors for promoting employee ownership such as Government Policy and company-level objectives for the employees. The study will focus primarily on the Telecommunications Industry in Nigeria.

SIGNIFICANCE 重要性

Aside commentaries from multilateral institutions such as the World Bank and International Labour office, there have been little research on the development and effects of employee ownership schemes in Nigeria (Wright et al., 2000). Most of the research available is about employee ownership in North America, Europe and Japan. In this study, the researcher will investigate whether employee ownership is a more sustainable way of doing business. The research will look at the development and drivers for employee ownership and also employees’ awareness, attitude and feelings of employee ownership. The report will help companies conduct business in a more sustainable way and help Nigerian companies to find out about employees’ attitudes on employee ownership, employee participation and company performance.

RESEARCH APPROACH AND OBJECTIVES

The research problem in this study is to investigate a sustainable business model which has been successful in North America and Europe and now apply the findings to the Telecommunications industry in Nigeria. Given the little amount of research available on employee ownership in Nigeria, the proposed strategy here is twofold.

First, it is essential to use existing economical and financial data available from other parts of the world to investigate employee ownership as a whole. This would highlight the drivers necessary for employee ownership to take place successfully in an organization. It would also reveal the strong points of employee-owned businesses and the procedures to take when engaging in employee ownership. Second stage is to use a set of interviews and questionnaires with employees and stakeholders in the telecommunications industry to provide a detailed analysis of the strategies needed to promote employee ownership in Nigeria and the issues to address in dealing with employee-owned organizations.

Primary objectives of the study are:

Why is the employee-owned business model considered to be a more sustainable way of doing business?

What type of employee ownership structure exists in Nigerian companies?

What are the factors necessary for encouraging employee ownership in Nigeria?

What are the effects of employee ownership on employee performance, employee participation and company performance?

What are the differences in performance between organisations involved in employee ownership and those not involved in employee ownership?

LITERATURE REVIEW

The topics to be reviewed in this study are defined as

Employee Ownership

Government Policy

Employee Participation

Employee Ownership

In the first section, some basic concepts of employee-owned businesses or employee ownership are introduced; definitions, benefits, motives and factors that affect employee ownership in an organization.

Definition

Employee ownership or Employee-owned firms as it stands today are businesses in which the majority of the shares are owned directly by employees, or owned on behalf of all employees in some sort of special purpose legal entity, such as an Employee Benefit Trust (EBT) (Employee Ownership Association, 2012).

Development of Employee ownership

Employee ownership refers to any commercial enterprise owned by the people who work for it. The earliest form of employee ownership was the Cooperative model (Pendleton, 2001; Birchall and Ketilson, 2009). A Cooperative according to the International Labour Organisation (2002) is defined as an autonomous association of persons united voluntarily to meet their common economic, social and cultural needs and aspirations, through a jointly owned and democratically controlled enterprise. This usually entails employees to be involved in the ownership and governance of the firm. The workers’ cooperative came about in the early nineteenth century as a result of the dehumanizing characteristics found in the factory system of the industrial revolution (Wright et al, 2011). This led to labour movement struggles for better working conditions’ for employees. The workers’ cooperatives created the avenue for employees to be owners of the work organizations and in turn direct the overall policies of the firm. The Cooperative form of organisation allowed employees basic human needs such as housing, schooling etc just as the International Labour Organisation describes the cooperative model as a way to meet fundamental human needs (Birchall and Ketilson, 2009). Examples of the earliest cooperatives are the retail consumer cooperatives among textile workers in the UK in the 1840s and the agricultural cooperatives set up during the Great Depression in the 1930s in the USA.

The core principles of cooperative operation were derived from the Rochdale Society of Equitable Pioneers in 1844. It was the first successful cooperative enterprise and is often used as a model for modern cooperatives. These principles are currently set out in a statement of principles emanating from the International Co-operative Alliance (ICA). They are listed below

Voluntary and Open membership

Democratic member control

Member economic participation

Autonomy and independence

Education, training and information

Cooperation among cooperatives

Concern for the community

The first four are core principles without which a cooperative loses its identity; they guarantee the conditions under which members own, control and benefit from the business. The education principle is seen to make membership effective and in turn promote democratic control. The cooperation among cooperatives may be viewed as a business strategy to protect cooperatives from being economically vulnerable while concern for the community relates to a common niche for members of the cooperative.

The Cooperative Federation of Nigeria (CFN) was formed in 1945 and was registered in 1967. It currently has more than 50,000 registered cooperatives. Most cooperatives in Nigeria stay true to the core principles as stated by the ICA unlike other countries such as the UK and USA where supplementary requirements allow for assets of companies to be owned collectively rather than individually (Hobbs and Jefferis, 1990).

Although cooperatives have enjoyed growth globally which indicates a degree of success for this form employee ownership and organisation, there are in fact many shortcomings of the cooperative model (Pendleton, 2001). The first is that cooperatives often find it difficult to raise capital from financial institutions because of doubts that debts can be repaid. Since one of the core fundamentals of cooperatives is autonomy and independence, they are often excluded from raising finance by issuing equity to outsiders. They instead depend on the financial resources of their members which may be limited. Thus, cooperatives are often under captialised and display low levels of capital productivity (Abell, 1983).

The second shortcoming deals with problems in management. Generally it is seen that cooperatives do not function efficiently due to lack of managerial talent (Birchall and Ketilson, 2009). The members (employees) or elected representatives are not experienced enough to manage the firm; even when the firm has a cadre of professional managers, the ideals of the cooperative are often lost when these group of managers emerge (Meister, 1984; Pendleton, 2001). Limited capital also means that cooperatives are able to get the benefits of professional management.

There is also the problem of pay differentials in cooperatives. The underdevelopment of the managerial function, coupled with an emphasis on equality, means that managerial pay is lower than in ‘conventional’ firms. (Robinson and Wilson, 1993) found that pay differentials were significantly lower in cooperatives than in small private firms, and that the average managerial pay was significantly lower in cooperatives than other firms. This has led to the phenomenon that managerial incentives are weak in cooperatives and that they cannot attract the best managers. It reinforces the underdevelopment of management in cooperatives.

However, despite the flaws in the cooperative model, there are quite a few successful large cooperatives still around today. Rabobank in the Netherlands is an example which has 50% Dutch citizens in membership, and is the world’s third safest bank (Global Finance Magazine, 2007).

The second contextual influence that affected the development of employee ownership is the ‘Paternalist’ common ownership. Common ownership involves the conversion of a firm to form a collective ownership by the paternalistic owners (Pendleton, 2001). The key feature in this form of employee ownership resides in the use of Trust structures to bring about employee ownership in a firm. The most well known example of this form of employee ownership is the John Lewis Partnership in the UK. The John Lewis Partnership has following features – it has been owned by its employees through a Trust since 1929, its employees or partners receive all of the profits after retentions in the form of a partnership bonus and it has a constitution that encourages employee participation including the power to elect their own board representatives (Street, 2012). The main objective of this form of employee ownership is not to distribute equity to individual employees who might subsequently choose to sell their shares to outsiders for profit but to rather maintain the equity on the employees’ behalf in perpetuity (Wright et al, 2003). Unlike the workers’ cooperative, common ownership firms do not aspire to be labour managed firms (Cohen, 2006). The employees have rights of representation in corporate governance but are not directly involved in management as such. There is a distinct managerial group responsible for the managerial functions of the firm unlike the cooperatives where employees are both the owners and managers. Employee ownership in this sense deals with representation in governance rather than in the day-to-day management of the firm.

The problem with this model is that conversions to common ownership are heavily dependent on the goodwill and initiative of the owners of the firm. The transfer of equity from the owner to employee trusts is usually a donation (Taylor, 1989). Few business owners are able to follow the example of John Lewis either because of the need to secure their own financial future by selling the firm or the inheritance claims of their descendants (Pendleton, 2001). The other alternative would be for the owners to sell directly to the workforce but this is rarely a practical option due to the limited capital resources amongst the workforce. In order for this form of employee ownership to grow, a lot of enlightenment on the benefits of common ownership has to be put in place. This kind of employee ownership doesn’t yet exist in Nigeria today.

The third contextual influence in the development of employee ownership is the employee share ownership schemes (ESOS) which became widespread in the US and UK in the 1980s. Government legislation passed in the late 1970s resulted in the privatization of state-owned enterprises (SOE) (Bradley and Nejad, 1989). This allowed for the public and employees of SOEs to participate in personal share ownership during the public flotation of public corporations (Pendleton, 1995). They encouraged awareness of employee ownership amongst workers and trade unions. Some of the Acts which encouraged employee ownership in the US and UK are

The United States:

The Employee Retirement Income Security Act of 1974 (ERISA) to help assure economic security in retirement

The Revenue Act of 1978 which gave employees certain limited voting rights to their trust accounts (Murphy, 2005).

The United Kingdom:

Approved Profit Sharing (1978 Finance Act) which gave tax benefits to employees for buying shares in a company.

Company Share Option Plan (CSOPs) (1995 Finance Act) which gave employees the option to buyout shares in their employing company at up to 80% discount on current market values.

ESOS in Nigeria came about in the 1980s following the successful privatization process which occurred in the UK (Jerome, 1992). The most famous case in the UK is the National Freight Consortium (NFC), which combined an employee buyout with privatization of the National Freight Company in 1989 (Taylor, 1989). The NFC was floated on the London Stock Exchange with considerable success. The resort to privatization/commercialization in Nigeria was informed by several considerations. First, the quantum of resources required to sustain the SOEs had become an unbearable burden on the Nigerian Treasury. Secondly, privatization was seen as a way of improving operational efficiency, broadening share ownership and attracting foreign investment to the poor SOEs (Jerome, 2002). Finally, the efforts of multilateral organisations such as the World Bank and the International Labour Office which gave endorsement to privatization policies further aided the Nigerian Government to commence the privatization process. (INTERNATIONAL LABOUR ORGANISATION, 2007). The aim was to allow to the private sector which had better capabilities to operate the SOEs more efficiently (White and Bhatia, 1998). In view of this, the Government set up the Privatization and Commercialization Decree of 1988 which allowed for up to 10 percent of equity to be made available for employee purchase (see Etukudo, 1997).

ESOS are almost the polar opposite of cooperatives in their distribution with many of them being concentrated in large, multi-site, financially successful firms (Gonzalez-Menendez et al. 2000). In contrast to cooperatives, employee share schemes are primarily a form of remuneration rather than a means of fostering employee partnership and employee ownership (Pendleton, 2005). ESOS do not provide the rights or the basis for employees to take the responsibility for the management of firm (Pole, 1988), there are other mechanisms available in ESOS to facilitate employee participation such as team briefing, quality circles, work teams etc. (Gonzalez-Menendez et al. 2000). These ‘high performance work practices’ – team briefing, quality circles etc are designed to promote information sharing and give a sense of involvement to the employees (Pendleton, 2001).

The limitation of ESOS is the amount of equity that is usually available for employee to purchase as stipulated by legislation (Wright et al. 1989). The amount of equity available for employees under ESOS rarely exceeds 10%, as a result of this, employees have limited governance rights and management responsibility within the firm.

Following the encouragement given to share ownership by the government in the US in the 1970s, employee ownership campaigners such as Louis Kelso lobbied for further legislative support for full employee-owned firms (Blasi 1988: 18-28). Kelso’s argument was that capitalism would benefit from much wider ownership of productive assets and saw employee ownership as a means of overcoming fundamental divisions between capital and labour (Gates, 1998). The result of this was the Employee Share Ownership Plan (ESOP) which is very popular today in US, UK and China (National Center for Employee Ownership, 2012). ESOPs are different from ESOS in the sense that they allow the facilitation of massive transfer of equity to employees and the public (Pett, 1994). They involve the use of financial and legal institutions called Trusts to acquire, hold and distribute equity to employees (Employee Ownership Association, 2012). Most ESOP firms normally have more than 10% equity reserved for employees to purchase which is to serve as an aid to increase employee participation in governance and management responsibilities in the firm (Pendleton, 2001).

However, research by Blasi and Kruse (1991) has found that employee participation in management and governance in public sector ESOP firms in the US are very similar to the conventional ESOS firms. On the other hand, Logue and Yakes (1999) found worker directors to be involved in 17% of management and governance cases within private sector ESOPs.

As in the case of the development of share schemes, ESOPs rely not just on supportive legislation but also on good financial institutions which are so designed for the purpose of acquiring or holding equity on behalf of the employees. ESOPs in Nigeria are not common because of the lack of use of financial structures – Trusts that have become common in the USA and to a lesser extent in countries such as the UK and China (Wright et al. 2000). This has made equity purchases by employees in Nigeria to rarely exceed 10 per cent. In Nigeria today, there is just one case of employees having more than 10% equity share and it is found in the National Cargo Handling Company where 60% of the equity was sold to its managers and employees. For ESOP forms of employee ownership to be common in Nigeria, legislation supporting wider ownership has to be made and there also has to be in place the necessary financial institutions to support employee ownership.

Summary

The development of employee ownership can be seen arising from the conjunction of several trajectories. The first was the development of cooperatives and the perception in the trade community that this form of organisation was either inefficient or inappropriate. The second was the minority appeal of common ownership with firms like the John Lewis Partnership trying to persuade departing owners to pass their business onto their workforce. The last factor was the encouragement given to share ownership and financial participation by governments following the privatization of state-owned enterprises.

Theoretical Basis of Employee Ownership

Principal-Agent Theory

The principal-agent theory is the most fundamental theory for employee ownership, which shows the relationship between owner and employee (Cao, 2008). The central theme of the principal-agent theory revolves around how to get the employee (agent) to act in the best interest of the owner (principal) when the employee has an informational advantage over the owner and has different interests from the principal (see Jensen and Meckling, 1976). This theory is also known as the separation of ‘ownership and management’. Employee ownership can be seen as a motivational mechanism which based on this theory aims to make the interests of employees consistent with that of the owners of the firm.

Since the 1980s, there has been a growing interest among researchers about the management styles that take place in an employee-owned business whether this model of business encourages greater commitment and enterprise from the workforce.

Human Capital Theory

The human capital theory is another fundamental theory for employee ownership (Cao, 2008). This concept was first mentioned by Theodre W. Schultz in 1961, he described human capital as the skills and knowledge gained by an employee through education and experience to produce economic value. He further added that the economic prosperity and functioning of a nation depends on its human capital.

The development of employee ownership led to a shift in how employees are perceived which is based on the Human capital theory. Prior to the theory, employees were seen as a source of physical labour only (Pole, 1988). However, following the advent of employee ownership via the cooperative model, workers were seen as not just a source of physical labour but also of economic value to the organisation (Cotton, 1993; Kruse and Blasi, 1997). Employee ownership can be seen as a development tool for firms on the basis of this theory through the education and welfare of workers thereby motivating them to work harder to improve company performance.

Motives/Objectives of employee ownership

It is clear that modern forms of employee ownership (ESOS and ESOP) are inextricably bound up with the privatization of state-owned enterprises or assets (Wright et al, 2011). This means that government objectives have a critical impact on the forms of employee ownership found in different countries. Many observers suggest that government encouragement of financial participation via legislation and tax concession is the single most important factor encouraging the take-up of employee ownership (Uvalic, 1991; Organisation of Economic Cooperation and Development, 1995; Vaughan-Whitehead, 1995). While some American observers such as Gordon and Pound, 1990 may have expressed doubts concerning the role of tax concessions in financial participation, the importance of legislation seems unquestionable in the development of employee ownership (Pendleton, 2001).

Employee share ownership has often been associated with many contexts like changes in employee attitudes/behavior and improvement in company performance within the American and European literature, it is however possible to discern additional objectives in Nigerian companies to those identified in European and American contexts. Employee share ownership have at times been perceived in the Nigerian context as a vehicle for redistributing wealth to disadvantaged ethnic groups (e.g. the south south zone in Nigeria). Another major attraction of the Nigerian government to employee share ownership is that employee share ownership apparently provides a means of retaining some localized control or participation while allowing for majority ownership by foreign companies and investors (Wright et al. 2011)

Objectives of international agencies such as the World Bank and the International Monetary Fund (IMF) must be added to those of the Nigerian government in the reasons for employee ownership advancement in Nigeria. Their influence on privatization in Nigeria has been great because of its weak economy and financial position (Birchall and Ketlison, 2009). The World Bank favors employee share ownership because of its ability to encourage competition, improve company performance and develop capital markets. Furthermore, it has the advantage of inhibiting re-nationalisation should government policy change (Gates and Saghir, 1995).

The evidence above suggests that employee share ownership in Nigeria has a mix of social and economic objectives. However, in practice employee share ownership is usually a subordinate objective in privatization programmes to those of raising capital, reducing state debt and improving company efficiency (Wright et al. 2011). The result of this is a low incidence level of employee share ownership in Nigeria.

Summary

The objectives for employee share ownership in Nigeria range from government legislation to widen ownership and retain some form of localized control while still allowing for foreign participation in ownership to the influence of international agencies like the World Bank and the IMF in promoting employee ownership for increased competition and improved company performance.

Financing employee ownership

There are two main types of financing methods for securing employee ownership. The first requires the employees to purchase shares directly themselves in much the same way as other individual investors (Pendleton, 2001). There are situations at times where shares are specifically earmarked for employees purchase. The second financing method involves the purchase of shares on employees’ behalf on the basis of present or future profit streams (Wright et al. 2001). The first method often requires the employee to bear the cost of share ownership directly and immediately, this is usually at a discount rate on the market value of the shares. The second method on the other hand involves zero or minimal costs to the employees.

The first method of financing employee ownership is what is prevalent in Nigeria today. The reason for this is that the trust structures which are necessary for purchasing and owing equity on employees’ behalf do not exist in law and hence are not recognized as appropriate by financial institutions (Wright et al. 2011). A major benefit of using the first method in Nigeria led to the development of Nigeria’s share capital market which as at 1999 had 262 listed securities worth about 1.8 billion US dollars (Nigerian Stock Exchange, 2011). Another benefit of using the first method is the degree of risk and financial commitment on employees’ part which is thought to more likely lead to responsible employee-shareholder behavior than other forms of employee ownership conversion (Pendleton, 2005). This is because in the second method, most of the risk is shouldered by the trust firm and, given the uncertain performance prospects of many firms; many are unwilling to take this risk (Wright et al. 2011).

The downside to this method of financing is whether it meets the objectives of policy makers. It is often perceived that most share option schemes have mainly been taken up by managers, which means that low income groups within the workforce force are least able to take advantage of share schemes (Smith, 1988). The result is that the social objective for redistributing wealth to the south south people of Nigeria has not succeeded.

The second method of financing employee ownership is popular amongst developed countries. The reason being the existence of loan providing financial institutions aided by legislation which purchase and own shares on employees’ behalf (see Pendleton, 2001). The result of this is that ownership by employees in Nigeria rarely exceeds 10%. The second method helps to achieve this by acquiring and holding equity on behalf of the employees which means employee ownership exceeding the 10% value usually found in Nigerian enterprises.

Summary

Financing employee ownership is either done by the employees directly purchasing shares like individual investors or by financial institutions called trusts which acquire the shares of behalf of the employees.

Employee shareholding and decision making

Any modern forward-looking business would not keep its employees in the dark about vital decisions that affects them. It trusts them and involves them in decision making at all levels (Kuye and Sulaimon, 2011). “Command and control” is no longer an adequate model for decision making, decision making in firms now involve a much more open and collaborative framework which will exploit the talents of all employees (Hewitt, 2002). A core rationale of often conversion to employee ownership is the advancement of employee involvement in decision making (Wright et al. 2011). There is a substantial body of literature from observers in the USA which indicate that for the performance benefits of ownership to be realized, there needs to be participation in decision making (see Conte and Svejnar, 1990).

Employee ownership on its own conveys two sets of rights. The first is the right to enjoy the benefits emanating from ownership (i.e residual earnings) and the second is the right to control the use to which assets are put, including the right to dispose of it and to exclude non-owners from using it (Pendleton, 2001). This means employee participation caters for two sets of roles; one in work decisions and the other in governance decisions. Employee participation in employee ownership often contrasts with classic labour ideals in Marxist and economic accounts where employees sell their labour power and in return lose their independent power to direct themselves (Pendleton, 2005). In practice, however, employee participation in form of direct involvement is common in most advanced industrialized nations because of the need to enlist cooperation to turn labour power into work outcomes. The case of employee involvement in governance is much rarer because most formal governance rights are usually held by the capital providers in Anglo-American systems (Dow and Putterman, 1999). The result is that capital providers hire labour rather than involve them in governance of the firm.

Employee participation in decision making can be viewed as all forms of activity whereby employees have some involvement in either the formulation or communication of decisions about work relations, employment relations and industrial relations (Gospel, 1992; Marchington et al. 1992). Recent studies on employee participation have been concerned about the impact of participation on individual and organizational performance. According to Levine and Tyson (1990), there are two main arguments about the impact of participation to organizational performance. One is that participation can counter asymmetries in work-relevant information. An instance is found in complex organisations where workers are likely to have knowledge about production processes and services that are not held by managers and other workers. Employee participation provides a forum for sharing this information, which can then be used to improve the quality of goods and services. The second argument focuses more on motivation and discipline to the end that participation encourages co-operative modes of working amongst employees. An important point to note about employee participation is the role incentive structures play in their success (Weitzman and Kruse, 1990). Economists are of the notion that employees need a pay-off from participation; otherwise information sharing will be underdeveloped or ineffective.

The effect of conversion to employee ownership on employee participation leads to an increase in direct forms of participation. These forms range from information provision to task discretion, as employee owners seek to take more control of their working lives and to find ways of improving the performance of their firm (Pendleton, 2001). Firms can either have a high degree of involvement in decision making from the employees or a low degree of involvement from the employees (Barringer and Bleudorn, 1999). A high degree of involvement means that all categories of employees are involved in the planning process while a low degree of involvement refers to a fairly exclusive involvement in the planning process of the firm. The act of conversion to employee ownership may in itself encourage co-operation, participation and information sharing within the firm. This may be due to increased employee rights as they are now able to influence the outcomes of the participation process (Chang and Lorenzi, 1983; Pendleton, 1995)

Employee participation in decision making as it relates to corporate governance deals majorly in the control rights of employees as shareholders of the company (Blair, 1995). The result is that decision making is limited to a right to vote on company resolutions and also, the right to attend an Annual General Meeting (AGM) of shareholders. These AGM’s in practice however, rarely deal with matters affecting governance and the strategic direction of the company (Pendleton, 2001).

Employee participation in decision making and Culture

Employee participation in decision making cannot however be meaningful without embedding it in a national culture context (Hofstede, 2001). Researchers such as Sagie and Aycan (2003) proposed a framework that links various types of employee participation to a cultural context. The framework dealt with two dimensions: Power distance and individualism-collectivism because of their strong link to participation in firms as compared to other cultural dimensions (Heller et al., 1998).

Power distance refers to how individuals regard power differentials within the society (Menzel et al., 2006). This has a major influence on how employee participation is practiced within the firm. Therefore it can be assumed that in a high power distance culture, decision making is the sole responsibility of management and employee participation is considered an infringement to management rights. This type of culture is typical of investor-owned firms. Whereas in a low power distance culture, every employee has the potential to contribute to the decision making process like in the cooperative business model (Sagie and Aycan, 2003).

Individualism-collectivism (I-C) on the other hand deals with identifying with the person or groups responsible for decision making within a firm (Kuye and Sulaimon, 2011). This culture trend deals with how an individual aligns himself within an organisation either as an individual agent or part of a collective group. Cultures which are high on individualism but low on collectivism emphasize the welfare and interest of an individual within an organisation. The result is an employee’s participation in decision making is not necessarily the business of anyone else. Conversely, cultures which are high on collectivism but low in individualism emphasize collective participation in decision making (PDM).

There are four different participation approaches that can arise as result of a combination of power distance and individualism-collectivism in a firm (Sagie and Aycan, 2003).

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