THE LATERAL DIMENSION TO EMPLOYEE PARTICIPATION

Journal ofManagement Studies, 21, 4, 1984 0022-2380 $3.50

T H E LATERAL DIMENSION TO EMPLOYEE PARTICIPATION D. WALL CHRISW. CLEW AND TOBY zMRC/ESRC Social and &plied Psycholocy C’nil, Uniaersio of Shejjeld

INTRODUCTION

literature on participation, be it descriptive, analytical or polemical, has focused almost exclusively on the vertical aspects of decision-making. The concern has been with how to involve employees from different levels within organizational hierarchies in information-sharing and decision-making processes. Whether formulated in terms of control and power, or information and influence, the emphasis has been on how to transcend the boundaries between ‘managers’ and ‘managed’ in such a way as to broaden the scope of those with an input to decision-making. More particularly, the predominant focus has been on the design of structures, procedures and processes for involving shop-floor employees in managerial decision-making. Partly as a consequence of this emphasis, the practice of participation has often been restricted to single functions, usually those which are of primary importance to the organization. In the manufacturing sector, for example, interest has largely focused on the production hierarchy and little detailed attention has been paid to the role of other functions such as marketing, accounts, quality control, or engineering. Even where these different functions have been included in a participative system, they have tended to operate separately within their own hierarchy and have come together only in the upper reaches of the organization. This ‘vertical’ perspective pervades the literature. It is enshrined in many definitions. Sawtell (1968, p. l), for example, argues that participation refers to ‘the processes by which employees rather than managers contribute positively towards the reaching of managerial decisions which affect their work’; and the International Institute of Labour Studies defines participation as ‘any process whereby workers have a share in the reaching of managerial decisions in the enterprise’ (see Butteriss, 1971, p. 6). Similarly it is evident in the literature on forms of participation and the process of change. The report of the Bullock Committee (1977) was almost exclusively concerned with the vertical aspect of participation; preference for a ‘bottomup’ or ‘top-down’ approach reflects the emphasis ( e g . Emery and Thorsrud, THE

Address f o r reprint.r: Mr. C. W. Clegg/Dr. T. D. Wall, MRC/ESRC Social and Applied Psychology Unit, Department of Psycholo%gy,University of Sheffield, Sheffield, SIO 2TN.

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1969); and orthodox management theorists who emphasize participative approaches (e.g. Likert, 1967; McGregor, 1960; Tannenbaum et al., 1974) stress the vertical dimension. The same view is prevalent in the practice of participation at the organizational level, where the dominant and almost exclusive concern of those from management and tradc unions attempting developments in participation within their own firm, is with vertical integration in information-sharing and decision-making. That such a focus should exist is neither surprising nor inappropriate. The pursuit of vertical integration is a defining characteristic of participation systems. Nevertheless it has led, in our experience, to a neglect of lateral factors, in particular the inlegration oJ lraditionally separa~eJinctiona1hierarchies. Yet once onc gets down to the reality of participation, be this at the stage of designing or operating a particular system, this lateral dimension assumes considerable importance. Thus, not only does participation involve information flow and mutual influence between manager and managed; equally salient are difficulties in how to communicate, make available, transmit and co-ordinate information across functions - and how to arrange for mutual influence between the different interest groups who often have different values, objectives and perceived 'rights'. In practice, precisely because these issues have not been anticipated and planned for, they provide stumbling blocks against which even a well-designed vertically oriented system will falter. It is our aim in this paper to dcvelop this theme, and to consider aspects of organizational design which serve to encourage or impede the development of participative practices. In following this path we draw upon two sources. First, our practical experience in implementing participation systems; and secondly, the work of organizational theorists such as Lawrence and Lorsch (1967), Galbraith (1977), and Tushman and Nadler (1978), whose analyzes of organizational behaviour represent a literature which, though clearly relevant to the practice of participation, has nevertheless developed relatively independently. We are therefore attempting to promote a synthesis of these two areas of study. It is our thesis that, in other than simple organizations, the development of an effective and comprehensive participation system will require complementary consideration of organizational design. Moreover, those circumstances in which participative systems are most necessary may, at the same time, foster organizational structures and processes most hostile to the promotion of participation. In the first half of the paper, ease study material is used to illustrate some of the lateral problems we have encountered in our applied research into employee Participation. These practical difficulties stimulated in us a more general interest in the lateral dimension and the second half of this paper offers a more abstract account of these experiences using concepts and ideas drawn from organization theory. The paper closes with two theoretically derived propositions on the practice of employee participation.

T H R E E C .4SE S’IU 111ES : LATEKA I. I MPE UI M ENTS 1’0PARI’IC I PAT ION

1 Local AuthoriQ This first illustrative case study involved an attempt to increase the opportunities for participation in decision-making of blue-collar employees in two separate departments in a large local authority in the North of England. The objectives were twofold: first, to encourage employees to become involved in local problem-solving and decision-making; and second, to allow them to have information on and an input to, more distant policylevel dccisions. (For a fuller account of this project see Wall and Lischeron, 1977). The participation system enabled members of a natural workgroup to meet with their immediate supervisor and manager on a regular basis during work time to raise and discuss any issue, excluding those appropriate for collective bargaining. In practice much of the emphasis was on problems and issucs having an immediate impact on the groups and thus the system operatcd i n ways similar to other direct, problem-solving forms of participation, as rxemplified by ‘Quality Circles’ and ‘Werkoverleg’ (Koopman and l>rrnth, 1979). In the early stages, the system encountered predictable, localized problems. For example, managers and supervisors were nervous about running meetings and felt threatened at giving people the opportunity to challenge their decisions, whilst the ‘shopfloor’ participants were cynical of whether anything would change. However, with the resolution of some longstanding local problems, the groups began to work well and managers and managed developed a much improved understanding of one another’s problems and viewpoints. Over time, however, the participation system met with different degrees of success in each of the two departments. In one, the issues under discussion gradually extended beyond those amenable to straightforward internal decision-making into those either originating in or affecting other areas on which local managers often had little information and, more importantly, over which they had no direct control. This broadening of interest was not because people were demanding wider participation per se, but rather because certain apparently ‘local’ problems inherently involved other functions. Unfortunately, because these other groups were not committed to, or an integral part of the system of participation, the net result was a residue of unresolved problems. These failures led to frustration and, over two years, to the demise of the participation system. In the second department the system fared better. A much greater proportion of the issues fell within the compass of local management and could be addressed directly. This was because the department was relatively independent of other functions. With a history of success, the system

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persisted much longer, its eventual cessation being the result of a major reorganization of local government. The general point illustrated here concerns the match between the participation system and the organizational structure. In the first department, although many of the issues and problems were interdependent and systemic in nature, the participation system was incompatible with this, being limited to a single organizational hierarchy. It could accommodate vertical dialogue between managers and managed on purely local matters, but not the inter-functional exchange so necessary to address interdependent problems. With this impediment, the momentum of the system could not be maintained. In the second department, which was relatively independent, it achieved greater success. This suggests that a participation system based on interaction and influence within a hierarchy, will succeed only to the extent it can operate independently of other parts of the organization.

2 Engineering Firm A The second illustrative case study was undertaken in a small factory making capital engineering products to customer specification. It is part of a large national corporation. Two distinct problems were identified. The first was concerned with the vertical dimension and was characterized in terms of poor communications and relationships between managers and managed. T h e second focused on lateral integration, and was described in terms of failures of coordination particularly between the function heads who operated so as to meet their own, organizationally sub-optimal interests. (See Clegg and Fitter, 1981, for a full description of this study). In this case the researchers undertook an analysis which suggested these two problems were linked and stemmed from an underlying mismatch between the environment in which the firm operated and the structural arrangements it adopted. The critical dimension was the lateral one. The organization operated in a highly uncertain market and displayed high levels of differentiation across functions, each of which performed a distinct specialism (such as purchasing or product design). The functions adopted objectives specific to their own priorities and needs and, because of the way the firm was managed, interacted on other than a fire-fighting basis, only at managerial level. However, the actual manufacturing process required high levels of cooperation amongst the functions to ensure, for example, that manufacturing had the correct parts and drawings available at the right time. This often failed to happen whereupon senior management, encouraged by pressures from the parent corporation, reacted by setting demanding targets for each function and by holding people ‘personally responsible’ for their attainment. The functional managers tried hard to meet their ascribed targets regardless of the impact of their actions on other departments. They also became heavily involved in the jobs of their subordinates in an effort to make sure everything was done properly. Thus, on the one hand, the

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functions became even more separated and blamed one another when things went wrong. O n the other, excessive ‘managerial interference’ led to a worsening relationship between those making the decisions and their subordinates who were held responsible but who were given little authority or control. These separations between both functions and levels exacerbated the performance failures, the net result being a vicious circle as management tried to ‘tighten up’ their control of the operation. This analysis suggested that the most pressing need was to alter the internal structural arrangements in the firm by adopting a system of project management which would cut across all of the functions. T h e manufacturing manager agreed since he felt most acutely any failures of coordination. However the other managers disagreed and subsequently they attempted to resolve some of their difficulties by instituting a n ‘involvement committee’ made u p of representatives from all levels which met periodically to discuss operational matters. This system, however, over a period of one year, fell into disuse. O u r interpretation of this case is that in a firm where uncertainties prevail and where problems and issues are inherently cross-functional, the success of any attempts at improving vertical relationships through participation, will be limited by the quality of lateral arrangements.

3 Engineering Firm B T h e final case study concerned a large batch-production engineering plant wishing to develop a system of participation acceptable to the major interest groups involved. T h e plant is situated in the North East of England and is one part of a n American-owned multi-national corporation. As a first step local management a n d the two local unions agreed to the institution of a representative steering group to examine what, if anything, could be done to promote employee participation in the plant. This group was chaired and advised by the researchers and its work included, over a period of two and a half years, the administration of a largc prograrnmc of intcrviews couplcd with a n extensive attitude survey, the aims of which were to ascertain employees’ views on participation both as it currently existed and as it might evolve (in a variety of forms). This project is now a t the stage where the steering group has made its recommendations to the interest groups, and local management a n d the two unions have begun negotiations. O n e of the outstanding features of this exercise has been the pattern of differences that has consistently emerged from all parts of the research programme, i.e. from the attitude survey, the interview programme, informal discussions, meetings and observations, as well as from the behaviour of the steering group itself. T h e differences comparing attitudes a n d aspirations displayed a t different levels in the firm (the higher levels being less favourable) and by comparing union representatives with their constituents (the former being more committed) are entirely as one might predict. A third

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pattern, however, was not anticipated and highlights the differences that exist within supposedly homogeneous groups such as ‘management’ o r the ‘shopfloor’. T h u s a t all levels in the plant, ‘line’ employees (i.e. those directly concerned with the production process) were found to be more positive about and sympathetic towards participation than their counterparts in ‘staff’ roles. This was most manil‘rst at the managerial level where the gulf between production and engineering managers on the one hand, and accountancy and commercial managers on the other, was very wide, the former group being much more positively inclined. For example, ‘line’ managers viewed participation as a continuing and inevitable development with which their ‘staff collcques must come to terms. For their part, the ‘staff managers perceivcd no need for participation, viewing it as a potential hindrance to effectiveness. Senior managers were concerned about this functional split and saw it as a major organizational problem. I n this situation it was difficult to see how any meaningful information exchange a n d mutual influence could take place over significant issues of plant-wide concern. As in the local authority case, participation wilhin the ‘line’ functions could occur, indeed it already did, but as soon as significant issues arose which crossed functional boundaries then any participative system would encounter severe difficulties. Since the enterprise operated in a very unstable market, and since the levels of commercial activity had a substantial impact on such issues as manning levels, inter-functional issues were inevitable. As a first stage in the development towards participation, it is therefore necessary to resolve the differences between line and staff functions such that they are more fully integrated. In practice the organization is currently reorganizing the local structure from being functionally based, into one operating as a series of business entities within which each manager has both ‘line’ and ‘staff responsibilities. T h e researchers are convinced this organizational restructuring provides the best opportunity for promoting employee participation within this plant.

Overview of Case Studies T h e three case studies described above are drawn from detailed first hand experiences of longitudinal projects but otherwise differ markedly. For example, they were undertaken in both the public and private sectors; concern different numbers of people in different sized firms in different industries; focus on local and site-wide issues; are at dissimilar stages of development; and have met with varying degrees of success. They d o however share a common theme. I n each case it became evident that the chances of implementing and successfully operating systems of employee participation of whatever kind, were affected by the nature of lateral relationships in the organization. I n this context it is worth stressing that the researchers had no axe to grind regarding this dimension having no particular brief to study it nor any preconceived notions about it.

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I n the light of these experiences we sought a more abstract account of events and processes, one which promoted a n understanding of what we thought was happening in particular projects and which might enable us to trace more generally the links between these lateral issues and the theory and practice of participation. T o this end we turned to the literature on organization theory.

THEORETICAL PERSPECTIVE

T h e above case studies illustrate the relevancc of lateral factors to the practice of employee participation. T h e morc gcncral underlying point is that participation cannot be fully analyzed or understood independently of the context within which it takes place (see, Dickson, 1981; IDE, 1981 and Warner a n d Peccei, 1977). Adopting this perspective the important next step is to identify particular yet ‘universal’ organizational and/or contextual characteristics which promote or constrain participative practices. This moves the argument from the idiosyncratic and descriptive to the more gencral and predictive. I n pursuit of this objective we examined a range of theoretical perspectives on the factors which influence organizational structure and functioning, such as those emphasizing organizational age (see, for example, Filley and House, 1969), size (e.g. Pugh, Hickson, Hinings and ‘I’urncr, 1968), and tcchnoloq (t.g. iVoodward, 1965). Howcvcr the approach we found of greatest value to the refinement and elaboration of our concern with the lateral dimension of cmploycc participation was that which focuses on uncertainty and its ramifications in terms of information processing, diffrrcntiation and integration. Below wc outline the salient aspects of this theoretical approach before considering its implications for employee participation. T h e resultant synthesis is necessarily inductive, speculative and incomplctc, but it is, we belirve, instructive.

lJncertaint3, and its Consequences f o r Structure and Functioning Sincc. the pioncrring work of Burns and Stalkcr (1961), the notion of uncertainty has provided a major focus for theorists adopting a contingency perspective to thc design and structuring of organizations. Much emphasis here has been placed on the amount of turbulence, instability o r uncertainty which exists within the environrncnt in which the firm operates and which it must accommodate. A textile firm competing in fashion markets provides an example of a firm having to face unpredictable changes concerning product range, type, quality and quantity. However, the notion of uncertainty also extends to cover unpredictability inherent within the organization as a result of the way it is structured and operates. For example, a firm making individual capital products to customer specification will typically be organized so that the different functions or departments are heavily

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interdependent, the outputs of one becoming the inputs of another. In this instance the separate functions can generate uncertainty for one another as decisions taken in one have an impact in the others (see Thompson, 1967, for a discussion of pooled, sequential or reciprocal forms of interdependence). Thus all organizations can, in principle, be considered in terms of the degree of uncertain9 they face. Whether externally or internally caused, uncertainty is positively associated with the amount of information processing demanded of an organization if it is to perform effectively (Tushman and Nadler, 1978). Organizations operating in a stable market (low external uncertainty) with few internal interdependencies (low internal uncertainty) will experience a light information processing load. They will be able to operate using simple structures and straightforward rules, programmes and procedures (Galbraith, 1973, 1977). In other words, because they can predict the nature of most of the decisions that must be made along with the majority of problems that will be encountered, they can develop and utilize widely applicable and predetermined ways of handling them. Theirs is most likely to be a mechanistic and relatively simple structure in which problems are handled by fiat. In contrast, organizations facing high external and internal uncertainties will have a heavy information processing load requiring repeated decisionmaking activities at both the strategic and operational levels. Change will be the norm, exceptions the rule, and no simple, widely applicable rules or procedures will be sufficient to cover the variabilities encountered. A typical organizational response to high levels of uncertainty and the concomitant heavy information processing load is one of dzfferentiation which can be seen in the emergence of specialist groups (Lawrence and Lorsch, 1967). These groups will typically diverge in a number of interrelated ways. Thus they may well be functionally separated with different departments responsible for such activities as sales, design, purchasing and manufacturing. Given the nature of organizational life these functional distinctions will be reflected in political differences as the separate departments adopt both formal and informal objectives which may be unique to their own interests and in conflict with one another (sec Pettigrew, 1975). Furthermore these specialisms will attract and recruit experts in their own areas, people with specific professional training and standards who may well have quite dissimilar perspectives as well as a language of their own. This point is well illustrated in the work of Marchington and Loveridge (1979). In this view, the state of differentiation is not simply the result of similar people having conflicting objectives: it has a distinct psychological component reflected in different attitudes, cognitions and behaviours so that people in sales and marketing for example, react and behave quite differently from their colleagues in manufacturing. When differentiation occurs at this level the ability of the organization to achieve adequate coordination of activities to meet overall goals is severely impaired (Emery, 1967; Selznick, 1949). The

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net result is a need for integration and it is recognition of this that has led to the proposal of systems such as Matrix Management and Project Managrment (Galbraith, 1977) which are explicitly aimed at improving lateral coordination and cooperation. The basic model which reflects several influential views of organization design is thus relatively simple. Though resting uncomfortably somewhere between an evolutionary and a prescriptive perspective, these propositions converge on a linear causal explanation of organizational structure and functioning. In its most simple form, the underlying model holds that uncertainty results in a heavy information processing load which together lead to a state of differentiation. This in turn creates problems of and a need for lateral integration. Empirical support for this view is persuasive. As Cummings (1982) observes: In general the hypothesis that environmental change, turbulence, and complexity cause increases in organizational differentiation and integration mechanisms has been supported . . . the totality of evidence across researchers, types of organizations and methods does lend credence to the generalizability of the general nature of findings. We turn now to consider the implications of this model of organization structure and functioning for the practice of employee participation. Uncertainty, Structure and Participation The relevance of organization structure to effective participation has not passed totally unnoticed in the literature. Walker ( 1974), for example, makes the general point that the participation potential of an enterprise will be determined, inter alza, by its structural complexity which in turn reflects the stability of its environment. Gowler and Legge (1978) consider the issue in greater detail. Distinguishing between mechanistic and organic structures on the one hand and between stable (attenuative) and unstable (accentuative) organizational processes on the other, they predict four different forms of participation. Interestingly the notion of uncertainty is salient to both these dimensions and its significance to the practice of participation was further stressed by Marchington ( 1980), and Marchington and Loveridge (1983). No-one however shares our present analysis of the situation which leads us to the view that the very factors which promote the need and opportunity for participation, at the same time encourage organizations to develop in ways which undermine its efficacy. We turn now to this argument. The organization in a stable environment, which has adapted to this through the development of clearly defined and widely applicable rules and procedures offers relatively little scope for participation. It has a light information processing load and, in the idealized case, the only significant area for influencing decision-making is in devising the rules on which the

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operation is based. Given the high levels of stability, this is an infrequent occurrence. I n effect discretion and decision-making tend to be removed from people: instead ‘choices’ are pre-determined and regulated by bureaucratic rules and procedures. In contrast the organization experiencing high levels of uncertainty offers much more scope for participation. Here there is a heavy information processing load and decisions are taken a t all levels in the enterprise. In such cases decision-making is regulated by people acting in particular roles and authority structures rather than by rules and procedures. At the same time, however, such high levels of uncertainty are accompanied by specialization and differentiation which together are manifest in structural, political, psychological and behavioural barriers between the lateral groups in the enterprise. As was demonstrated in the case studies, such lateral divisions act as significant constraints to the practice of employee participation in any form other than that limited to a single function. Two other factors serve to exacerbate these difficulties. In the first place the whole issue of employee participation is emotive insofar as it raises concerns over managerial prerogatives and the legitimacy of particular interest groups becoming involved in this way. Specialist groups with high levels of professional expertise experience these doubts most keenly. T o many such individuals participation in ‘their area’ is anathema since they have earned their right to make particular decisions through the long term acquisition of specific knowledge, attitudes and skills. Put bluntly, the nonexpert should not ‘interfere’. The second constraining factor also revolves around specialist groups. There is reliable research evidence (for example, Kolaja, 1965; Mulder, 197 1) that specialists and experts, when present, tend to dominate participative structures largely because they have the necessary skills and expertise to make the most contribution to what may be highly complex and technical decisions. Since we have already demonstrated that specialist groups are more likely to exist in organizations facing uncertain conditions, these two factors serve to highlight the difficulty of operating effective systems of participation in such enterprises. Our conclusion, therefore, is that the very circumstances which promote a need and opportunity for employee participation, at the same time encourage the organization to structure itself and function in a way which severely constrains the effectiveness of this way of making decisions. O u r theoretical account of the reasons for this paradox has been described above and is summarizcd in figure I . In bald terms an enterprise experiencing conditions of uncertainty has a heavy information processing load which is reflected in high levels of specialization and differentiation. These result in problems of lateral integration which serve to inhibit and constrain the practice of effective participation even though there is ample scope for it. At the other extreme the firm in a relatively predictable context finds participation much easier

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internal and external

Information Dracessinq load

Specialisation and differentiation

1

Scope and opportunity for part icipatian

Problems of lateral integration

The practice of participation

Figure 1. The paradox of participation

since it exhibits much lower levels of specialization and differentiation and, hence, is much better integrated laterally. However, the prevailing level of stability also means there are many fewer decisions in which to participate.

CONCLUDING REMARKS

As a result of trying to relate theoretical and abstract formulations of employee participation to our own experience of it in practice, we are in no doubt that the theoretical accounts leave much to be desired. In particular there is an overwhelming need to analyze and understand participation in its environmental and organizational contexts. Only rarely has this been attempted (see Marchington, 1980), perhaps as a result of the perception apparently prevalent amongst researchers that employee participation is essentially a vertical phenomenon. I n particular, we have become convinced of the need to incorporate explanations of the structure and functioning of organizations into any analysis of the practice of employee participation and, in so doing, to consider explicitly the highly significant lateral dimension to organizational behaviour. The theoretical account described above thereby represents an early attempt at such synthesis, one which can be summarized in the form of two propositions. Proposition 1. Organizations functioning in relatively predictable contexts have a light information processing load. Their operation is guided by rules and procedures and, consequently, there exists little scope for participation as a continual mode of decision-making.

440 Participation systems in this context will be perceivcd as relatively superficial and restricted and for this reason will not be self-sustaining. T h e impediment to participation is thus one of impoverished content.

Proposition 2. Organizations functioning in relatively uncertain contexts have a heavy information processing load. Their operation requires continual decision-making and, consequently, they offer much scope for employee participation. T h e implementation of participation systems in this context will be regarded as highly significant and of considerable interest. However such organizations are also characterized by high levels of differentiation manifest in structural, political, psychological and behavioural differences across interest groups. These groups have little in common and may find it very difficult to share information and interact in a way that allows for mutual influence and thereby promotes a positive climate in which to make decisions. T h e principal impediment to participation in this context is thus one of process. It follows from these two propositions that the optimum circumstances for employee participation arise when an organization operates under conditions of uncertainty (thus ensuring meaningful content) but which has internal systems fostering successful integration of the differentiated interest groups (thus facilitating process). For any organizations seeking to promote and sustain employee participation, the implication is that such systems cannot simply be grafted onto extant structures and established ways of functioning. I n this view participation is one important aspect of organization design. As such it should be recognized that any serious attempts to promote participation should be approached systemically and may well involve organizational restructuring, particularly with regard to lateral relationships. This theoretical analysis has attempted to account for the processes by which certain specific environmental and organizational factors influence the practice of employee participation. To the best of our knowledge this analysis with its particular focus on the lateral dimension of organizational behaviour breaks new ground in the literature. At a general level we hope our practical experiences and our theoretical account of them excite some interest in others and provide an impetus which may lead to a better understanding of the contextual complexities of employee participation.

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