The Power of Participation? Power Relations and Processes in Employee-owned Companies

Abstract

Introducing employee participation in a company can be expected to change the power relations and the power processes within the organization. This is particularly true when the majority ownership of a company moves into the hand of its employees. Drawing on three case studies of East German companies this paper describes how the introduction of employee ownership interrelates with power relations and processes in the company. Moreover, some overarching patterns were derived from the analysis finally resulting in seven propositions about how employee ownership and power are linked to each other. Die Macht der Partizipation? Machtbeziehungen und Machtprozesse in Mitarbeiterkapitalbeteiligungs-Unternehmen Die Einführung von Mitarbeiterkapitalbeteiligung in einem Unternehmen lässt in der Regel auch die Machtverhältnisse und Machtprozesse innerhalb der Organisation nicht unberührt. Das gilt insbesondere in jenen Fällen, wo die Mehrheit der Unternehmensanteile in die Hände der Mitarbeiter übergeht. Auf der Grundlage von drei Fallstudien in ostdeutschen Unternehmen wird beschrieben, in welchem Interaktionsverhältnis die Einführung von Mitarbeiterkapitalbeteiligung und die Machtverhältnisse und-strukturen in den betroffenen Unternehmen stehen. Darüber hinaus werden firmenübergreifende Muster herausgearbeitet, die in sieben Thesen über das Verhältnis zwischen Mitarbeiterkapitalbeteiligung und Macht münden.

The Employee as the Unknown Actor? A Discourse Analysis of the Employee Share Ownership Debate with Special Emphasis on Central and Eastern Europe

“…Most often the share of capital on the employee side is very limited in relation to the total capital (Pendleton et al, 1998) and, consequently, the potential for control and participation in decision making does hardly exist (Blettner et al, 1995). Hammer and Stern (1980) found that the employees usually keep on regarding the management as the 'real' owners of the company and that they do not take any activity to change the internal power balance (similar Steger and Hartz, 2008). Van Dyne and Pearce (2004: 439) identified some positive effects of ESO on organisational commitment and pride, however their results "fail to show an incremental value of psychological ownership in predicting employee performance".…”

“…Ends and assumed effects If the idea of 'economic participation' through ESO becomes connected with participation in the entrepreneurial process, this also raises several questions about power (distribution) in the company (Steger and Hartz, 2008). Pendleton and Poutsma (2004) point to the fact, that ESO could be interesting from the unions' perspective since it possesses some potential to increase industrial democracy.…”

“…Several authors argue that ESO would not automatically lead to the modification of the company power balance (Hammer and Stern, 1980;Bartkus, 1997). Steger and Hartz (2008), based on case study evidence, demonstrated that traditional hierarchies usually tend to remain in place. ESO could even bring along a limitation of the classic participatory rights (Pendleton and Poutsma, 2004).…”

“…However, this may raise the danger that unions and other forms of indirect participation could be considered obsolete (similar Ackers et al, 2006). Moreover, conflicts were found to arise between (external, non-involved) unionists and (internal, involved) works council members regarding how to interpret ESO (Guski and Schneider, 1983;Steger and Hartz, 2008).…”

Empowering the 99%...One ESOP at a Time

“…All twenty acquiring companies interviewed had well-designed power point presentations defining the ESOP culture for their target company employees, because the new employeeownership culture certainly does not bloom overnight. Steger and Hartz (2008) report that during the cultural integration phase, the employee ownership culture needs to be woven into the daily business of the company and that how the employee owners view themselves is critical for the continued success of the employee ownership culture (pp.…”