This interpretive study explores employee engagement in employee-owned organisations & factors that contribute to EE

Home, - Evaluating the Factors Contributing to Successful Employee Engagement

Over the past century, management – “the art of getting things done through people” (Mary Parker Follett, 1868-1933) – has evolved through the times. From Taylorism and Fordism to laissez-faire approaches, different methods of management have worked for different organisations. As the UK has changed from being dominated by manufacturing industries to the service sector, management has changed to an approach that emphasises the people factor. In the 21st Century, employees are often irreplaceable as the nature of work has become knowledge-intensive, thereby creating a need to retain and attract the best employees. This research study does not address management as a whole, but instead its focus lies on a variety of practices that can be used to help attract and enthuse employees. Such practices are also understood to have the capability to enhance management itself.
Organisations increasingly seek to harness their employees’ interest through employee engagement. It is claimed from using engagement practices employees become more productive and effective workers. Some conclusive research has been carried out on employee engagement illustrating the positive outcomes of engagement such as studies conducted by Harter et al. (2004) and Baumruk (2006). Furthermore, Kahn (1992) claims that engagement was shown to have positive correlations with organisational outcomes. Despite the research on employee engagement showing correlations to organisational outcomes, there is a lack of a universal definition in the literature specifically defining what employee engagement is. Moreover, intensive research of employee engagement has only been carried out in ‘traditionally’ owned organisations such as privately and publicly-owned companies. The lack of literature concerning employee engagement in different types of organisations provides an opportunity to generate much needed research. The employee ownership sector is one that is growing and has gained significant interest from the Government (EOA, 2010). Employee ownership’s viability as a successful business model results from how it attempts to secure interest of its employees by making them shareholders (directly or indirectly), inviting them to become involved in the organisation, and rewarding them appropriately. Employee engagement in this
interesting type of business model has received little attention from academics and researchers, hence the need for further exploration and investigation.
This research study brings together two different but potentially complimentary texts. Firstly, attention is drawn to the growing literature on employee engagement where it is identified that, although the consequences of employee engagement are well documented, the understanding of the concept has received little attention. Secondly, the nature of employee ownership provides a utilitarianism perspective to the meaning of work and formally invites employees to have an active interest in the organisation. Given that employee ownership attempts to secure interest from its employees, comments have been made declaring that employee ownership enhances employee engagement. However, these comments have very little research behind their claims.
Bringing together these two volumes of existing research, this research study aims to address the literature gap to understand how employee ownership can contribute to successful employee engagement. Undertaking a qualitative, empirical investigation of three employee-owned companies (EOCs), the research provides insight as to how employee ownership effects employee engagement, as well as assessing how employee engagement affects employee ownership. Through researching the chosen organisations, these overall aims will reflect how different types of employee ownership models and employee engagement practices in organisations can stimulate different types of behaviours. Furthermore, the study identifies a need to evaluate whether employee engagement is required when the employee is an employee- owner. As there is a lack of empirical research evaluating employee engagement in the specific context of EOCs, there is a need for investigation. By doing so, this will clarify the relationship between employee engagement and employee ownership. As a result, the findings will indicate whether employee engagement has the capability to aid the success of EOCs.
Introducing the Literature
Employee ownership is the term given to organisations where employees hold shares either directly or indirectly in the organisation (Rosen et al., 1986). Employee ownership can be an all-encompassing term used to describe a variety of employee
ownership options. This study concentrates on employee ownership when the majority of the organisation is owned by its employees (Pendleton, 2009). Furthermore, employee ownership is described to be when a level of employee share ownership in an organisation crosses “a threshold which is based on an informed calculation that measures the percentage of employees benefiting from ownership and the percentage of the business owned by those employees” (Baxendale Ownership, 2013). Employee ownership typically arises due to an organisation being passed into a trust for the benefit of its employees. This is understood to commonly be as a result of an altruistic founder who desired an exit strategy from the organisation (Pendleton, 2009). EOCs are perceived to be different to private and publicly-owned organisations because they are able to encourage performance through not only offering financial reward, but through providing an inherent meaning to work. It is claimed that this is achieved by employees having something they have ownership of and thereby control of. To this effect, Matrix Evidence (2010) describe that EOCs are able to achieve enhanced employee engagement as a result of employee ownership. Furthermore, as Postlethwaite et al. (2005:5) describe:
“employee owned companies are now arguably setting the pace on at least one of the most prized yardsticks for competitiveness: the ability to harness the true commitment and creativity of their employees. Employee ownership, not surprisingly, is good for employee engagement”.
The link between employee ownership and employee engagement, despite the literature by Postlethwaite et al., is theoretically weak as a result of the lack of research evidence. This is particularly heightened due to ambiguity in the employee engagement literature as to what engagement ultimately is. The literature and research provides evidence for different facets of engagement; job and organisational engagement (Saks, 2006); intellectual, affective and social engagement (Alfes et al., 2010); physical, cognitive and emotional presence (Kahn, 1990); as well as transactional and emotional engagement (Gourlay et al., 2012); to name a few. Employee engagement is concerned with the “hands, head, and heart” (Ashforth and Humphrey, 1995:110). It warrants a “positive attitude held by the employee towards the organization and its values” (Robinson et al., 2004:2). Engagement entices “the harnessing of organization members’ selves to their work roles; in engagement, people employ and express themselves physically, cognitively, and emotionally during role
performances” (Kahn, 1990:694). It is a discretionary, psychological construct that occurs at an individual level.
Employee ownership and employee engagement are understood to have similar agendas. They both desire to maximise employee performance through encouraging a positive relationship with the organisation. Employee ownership primarily influences performance by offering employees a financial and controlling stake in the organisation, therefore linking the organisations success to employees’ financial returns. Whereas employee engagement entices performance by offering more than financial returns to enhance the employment experience. This thesis aims to evaluate the factors contributing to successful employee engagement in the context of EOCs.
Theory and Research
Chapter 2 explores a variety of employee engagement definitions and discusses the facets associated with it. The term employee engagement has been passed off by some critics as a fashion because it is questionable as to how it differentiates from other existing constructs such as job satisfaction and organisational citizenship behaviour. However, Alfes et al. (2010) suggests that employee engagement is different from such constructs because there is an emphasis on “the willingness of employees to discuss work-related improvements with those around them” (p.5). Thereby it is understood that employee engagement harnesses an element of social engagement. To this effect, Alfes et al. define employee engagement as “being positively present during the performance of work by willingly contributing intellectual effort, experiencing positive emotion and meaningful connections to others” (p.5). Scholars such as Kahn (1990), Schaufeli and Bakker (2003), and May et al. (2004) suggest that engagement is a psychological state because it requires a positive psychological connection between the employee and the actions of the employer.
The MacLeod Report provides much insight to employee engagement and seeks to reaffirm its position in human resource management. MacLeod and Clarke (2009) argue that “employee engagement is a workplace approach designed to ensure that employees are committed to their organisation’s goals and values, motivated to contribute to organisational success, and are able at the same time to enhance their own sense of well-being” (p.9). They identified four drivers of engagement as
leadership, employee voice, engaging managers, and integrity. However, a recent study by Alfes et al. (2010) has provided further clarity not only to what employee engagement means, but also to how it can be achieved. Their model of employee engagement identifies that in order to achieve a full state of employee engagement, organisations have to provide, and employees need to identify as well as invest their self, with the drivers of engagement. These drivers have been identified by Alfes et al. as; meaningfulness of work, employee voice and upward dialogue, vision and communication from senior management, line management style, a supportive work environment, and achieving a person-job fit. The literature on employee engagement does not prescribe a universal approach to enable engagement to be secured. Furthermore, there are neither rights nor wrongs as to how, when, or where employee engagement theory can be applied. The literature does not give any consideration to how employee engagement exists in different types of organisations.
As Chapter 3 discusses, working in an EOC is perceived to identify a new meaning to work. How ownership affects engagement and vice-versa is a vastly under-researched field. Over a century ago Catherine Webb (1912) proposed that “by making [an employee] a shareholder in the business employing him...it stimulates his zeal and careful working” (p.138). More recently, there has been a spotlight on employee ownership thereby warranting a need for these literatures to be brought together. By doing so, the viability of employee ownership models will be evaluated in terms of how employee engagement is understood to support and sustain ownership.
Pierce et al. (1991) claim that employee ownership can influence outcomes for both individuals and organisations. It is understood that ownership creates bonding and integration with the organisation due to psychological ownership, which affects employee behaviour. Their research identifies conditions that induced socio- psychological and behavioural effects to create this psychological ownership. Furthermore, they present that ownership can be defined by addressing three fundamental rights: “(1) the right to possession of some share of the owned object’s physical being and/or financial value, (2) the right to exercise influence (control) over the owned object, and (3) the right to information about the status of that which is owned” (p.125). These rights contribute to psychological ownership. Pierce et al. (2001) suggest in a later study that psychological ownership emerges through the presence of three factors; the extent to which employees have control over an
organisational factor, the degree of knowledge that an employee has concerning an organisational factor, and the level at which an employee invests their self into ownership. Reviewing this in the context of employee engagement, links emerge between the two fields. In particular, Kahn’s (1990) notion of one wanting to invest their self into work. Furthermore, the employee ownership literature which explores participation (such as Pendleton, 2001; Conte and Svejnar, 1990; Cleverley and Goyder, 2001) identifies with aspects of the model of engagement as presented by Alfes et al. (2010) reflecting on the presence of employee voice and meaningfulness of work. However, the current literature does not address ownership and engagement in a unified discussion therefore, the significance of such as not been ultimately identified.
Positioning of the Study and Research Objectives
From the literature review (Chapters 2 and 3), the relationship between employee ownership and employee engagement is proposed and direction for this research study is identified. From the two literatures, it is understood that employee engagement could potentially be heightened in EOCs as employee ownership formally provides avenues for participation and involvement. By understanding how engagement and ownership could prove to be complementary, the research questions evolved. This line of questioning sought to ascertain if EOCs are successful in their own right by harnessing engagement, or if they need something more to successfully secure engagement.
A gap in the literature has been identified to evaluate how EOCs are effective in securing high levels of engagement, whether they need something more to drive engagement, or if ownership itself is sufficient to drive it. Delving deeper into this line of enquiry, it is acknowledged that there is a further avenue for investigation; identifying what prevents engagement and what actively disengages employee- owners. Again, this is identified as a gap in the literature as employee engagement is not explored in the context of EOCs. Finally, the lack of literature and studies providing evidence of employee engagement in EOCs, led the research study to consider the alternative perspective as to how employee engagement may strengthen employee ownership. The development of the research questions have been designed to explore engagement from all angles to explore the role of employee ownership in this
constructed reality. The literature review presents many avenues for exploration of the relationship between employee ownership and employee engagement. However, the research direction was dictated by a fundamental need to form an understanding of the occurrence of employee engagement in EOCs, before considering specific mediating factors.
Adopting an interpretive approach, this research study explores experiences and perceptions of employee-owners in an attempt to create a body of literature that evaluates the relationship between employee ownership and employee engagement. Exploring the occurrence of employee engagement in several EOCs, notions of good practice will be sought to provide insight and potential impact to other EOCs. Furthermore, considering that the experiences and perceptions of employee-owners are a product of their social environment, a qualitative research design has been used to capture the sense making of the employee-owners participating in this study. By implementing this research design, it is aimed to explore several different EOCs to provide a spectrum of realities from which comprehensive new understandings of employee engagement in EOCs can evaluated.
The key research questions for this thesis are identified as:
1. Is ownership sufficient to secure engagement or do organisations need to do something more?
2. Which company practices are most effective in securing high levels of engagement? What is good practice? Which measures are most practical?
3. Are there any obstacles to securing engagement, and how might these be overcome?
4. How does employee engagement support and sustain ownership?
In order to examine these research questions, several lines of enquiry will be developed to extensively address the research questions. Taking a three-tier approach to evaluating the factors that contribute to successful employee engagement, the data collection process will start with a semi-structured interview with a human resources (HR) representative. The purpose of this is to gather an understanding of the practices that the organisation uses in attempt to secure engagement. Two focus groups will subsequently take place in each organisation in a semi-structured manner to discuss experiences of engagement in the organisation. Reflecting the research on the role of
the line manager in engagement (Robinson and Hayday, 2009), the set-up of the focus groups attempts to provide further evidence of managers driving engagement. In each of the organisations, one focus group is formed by managers and the other by a group of non-managers to understand the desire and effect of different practices. The separation also attempts to overcome any discomfort of the non-managers when discussing the role of potentially their manager. The final stage of the data collection is designed to elicit the daily occurrence of engagement as discussed by Kahn (1990). As part of this stage, participants are asked to complete a reflective diary over a two- week period and attend a subsequent semi-structured interview to discuss the occurrences in the diary. The purpose of this method is to capture engagement as it is experienced on a daily basis.
Three EOCs are participating in this study. One of these will be a pilot for the data collection. These organisations were chosen because of the different characteristics that they presented. The first organisation is relatively new to employee ownership therefore its ownership, participatory, and involvement practices are continuing to develop. Employees are required to forgo £1,000 of their salary within the first year of employment as a contribution towards share ownership. The organisation is fully employee-owned in its UK operations and offers employees the opportunity to purchase additional shares. The second organisation is a large, worldwide, organisation that has a mature status of employee ownership having being employee- owned for some 40 years. At this organisation, all shares are held on behalf of employees in a trust therefore making everyone’s entitlement to ownership equal. The final organisation has been employee-owned for eight years but it has experienced some difficulties, which has prevented a pay-out of dividends. Similar to the first organisation, employees are required to make a minimum financial contribution, which is held by a trust. This organisation is based on one site and is an SME.
A total of 39 participants across the three organisations are involved in data collection. Each participant is involved in different stages of data collection. This is broken down into; three participants participating in the HR interview, 29 participants being involved in focus groups (13 managers and 16 non-managers), and seven participants completing the reflective diary exercise. The HR interviews vary in length from one hour to ninety minutes whereas the focus groups typically lasted an hour and a half. The reflective diary exercise was the most time consuming for participants as up to
half an hour was required for the pre-diary introduction, followed by the writing of the diary itself which required 5 entries over a two-week period, and finally the follow up interview which typically took between twenty minutes to three quarters of an hour to complete. All interviews and discussions have been recorded as well as fully transcribed with the consent of the participants. Findings are presented in a narrative approach from emergent dialogue resulting from the data collection process. Subsequently, these findings are analysed using a thematic approach in order to “provide a rich and detailed, yet complex, account of data” (Braun and Clarke, 2006:78). A discussion will be formed in relation to the existing bodies of literature to add to existing theory and highlight this thesis’s findings.
Thesis Structure
Having set out the rationale for this thesis and discussed the utility of the research questions as well as the thought process for the research design, the structure of the subsequent chapters will now be discussed.
Chapter 2 will explore the current literature on employee engagement. It will explore the variety of perspectives reflecting on the meaning of engagement and will discuss the components that contribute to engagement. The chapter will continue to explore a number of factors; occupational, organisational, and psychological; which are understood to shape employee engagement. Moving forward, a discussion will explore the present understanding of the outcomes of employee engagement. The chapter will be brought to a close by presenting a discussion on the findings of employee engagement in both academic and practitioner literature. In doing so, potential links between the engagement literature and the employee ownership literature will be identified.
A literature review of employee ownership is presented in Chapter 3. This chapter explores the existence of this type of business ownership. Starting by identifying the various different types of ownership models, the chapter will explore the rise of EOCs and discuss the changing nature of organisations. The discussion will explore the literature as to why organisations may look towards employee ownership as a viable business model. The chapter will consider ownership in practice by exploring aspects of ownership such as; psychological ownership, the role of managers, the power of
ownership, employee satisfaction models, culture, in addition to employee participation and involvement. The literature presented will be summarised to shape the forward discussion regarding the role that employee ownership has in employee engagement and vice-versa.
Chapter 4 will discuss the methodological philosophy pursued in this study. A review of the previous chapters will explore the research direction and present the research questions, which have been identified from the gaps in the existing literature. The strategy for the research will explore theoretical perspectives and identify an interpretive epistemology. Presenting the research methodology, the nature of the research will be considered. Furthermore, after identifying appropriate research methods, a review of these will be presented to as well as to establish how they will address the research questions. The chapter will also discuss the implementation of the research design in terms of; ethical considerations, organising and conducting data collection, audio recording and transcription, the use of qualitative analysis software, considerations for researcher bias, and the use of pilot research. The research organisations will be briefly introduced and reasons for choosing them will be illustrated. The approach for data analysis will be discussed and thought will be given to the limitations of the methodology. Finally, the chapter will conclude with a summary to recap the direction presented.
The three case studies shaping this thesis will be presented in Chapter 5 to 7. Each chapter will reflect upon an organisation as will begin by providing an overview of the organisation. Consideration will be given to the reflections of the researcher during the data collection process. The data findings will be presented by utilising a variety of narrative accounts to provide substance for each research question. A thematic analysis of the findings will identify factors and themes within the data in response to the research questions. Existing theory will be used to support such findings. Each case study will finish with a conclusion to re-emphasis the factors that contributed to successful employee engagement in the EOC explored.
An overall discussion will be presented in Chapter 8 to illustrate how employee engagement was identified in each case study explored. Using thematic analysis, the outline of employee engagement in the three EOCs examined will be presented. In addition, by using qualitative analysis software, a table will be used to provide an
overview of the factors and facets identified throughout the case studies. This table will also identify relationships between various factors and facets. An understanding of employee engagement in the EOCs explored will be presented to provide a forward discussion, which will reflect upon existing literature and highlight new knowledge.
Finally, this thesis will be drawn to a close in Chapter 9. This chapter will highlight the key findings of the study. These findings will be critiqued against the existing literature to identify new contributions. Practical implications of the study will be summarised to provide impact to the research. The limitations of the research will be discussed before presenting a final conclusion. Suggestions for future research will be identified by reflecting on what has been explored through this research study.
The findings of this research study will provide answers to the four research questions identified by the gaps presented from the existing two bodies of literatures. The study highlights that employee ownership is not able to achieve employee engagement independently as employee ownership is reliant upon management initiative to secure the interest of employee-owners. However, as suggested by the literature, ownership induces a right to information, control, and returns (Pierce et al., 1991). This study explores how these rights are delivered and establishes the role which employee engagement has in supporting these. The findings elude that by utilising strategies of employee engagement, ownership was found to ignite engagement in a manner that may be difficult for traditional shareholders or non-EOCs to obtain. It is identified that these EOCs need more than ownership to successfully operate within their ownership vision that they uniquely create. This something more has been identified in this study as employee engagement. However, it has been identified that in EOCs, ownership is one of eight facets of engagement which if satisfied on an individual level, engagement has the potential to prosper.
The participants in this study identified a variety of practices that they felt were effective in delivering high levels of employee engagement. The level of effectiveness of each is mediated by personal desires of employee-owners. To secure employee engagement, consideration should be given to social exchange theory. Organisations and management need to have a deep understanding of their employees and their psychological needs. Ultimately, this can be achieved by building strong line manager relationships to aid awareness of what drives their employees. The role of
organisational culture was identified to have a significant influence in EOCs and it was identified to shaping engagement. The findings suggest that having a clear vision and above all, a shared vision, employees are able to add value to the organisation’s success. Communication is continually discussed throughout the various data collection stages as being something that helps to actively encourage high engagement levels. It is identified in all three EOCs examined that communication needs to be transparent and frequent. To achieve this, cascading information (upwards and downwards) throughout the organisation and ensuring that there are opportunities to participate in shaping the organisation, is understood to be good practice for securing engagement. Furthermore, it is found that one of the most practical aspects of securing engagement is to ensure that a person-fit has been achieved. By addressing organisation values and employee-owner responsibilities throughout recruitment processes and restating these consistently, where this fit is obtained, participants reported a heightened level of engagement. Without employing the right people who share the organisation’s vision, it is acknowledged by the participants that this could have a detrimental effect on organisational success. Meaning in work was not just identified at the job role level, but the employee-owners felt they were able to engage at an organisational level. This was identified as participants expressed that work meant being an employee-owner and acting in a responsible manner. It is suggested that this identification could be beyond the scope of engagement that is experienced in non-EOCs due to the lack of ownership.
Obstacles to engagement are understood to occur as a result of individual’s psychological needs not being fulfilled. Participants identified on occasions that they felt that their colleagues were not fully contributing to what they felt was their organisation and they expressed that they felt some individuals had different agendas which did not compliment the shared vision of the organisation. It was identified that the behaviours of other individuals could hinder the engagement of others. In particular, such individuals were perceived to be underperformers, free-riders, and temporary staff. Participants presented possible solutions to address these obstacles as; ensuring a person-fit, having an effective performance management system to manage underperformers, and educating temporary staff. The study also identifies that on occasions the nature of the ownership model is understood to have the capability to hinder employees’ engagement because of perceived inflexibilities. However, the participants were unable to identify a solution to this as they felt changes
to the model could negatively affect upon the fundamental existence of employee ownership. It was found that unclear communications hindered engagement at times. Furthermore, lack of communication was identified to prevent the involvement of some individuals. Due to downfalls in communications, it was perceived that employee-owners were unable to engage intellectually on occasions. In particular, this appeared to occur at an organisational level therefore hindering their engagement. Further training and effective communication strategies have been expressed as potential solutions to overcoming such issues. Finally, it was found that a common frustration of employee-owners results from the existence of lengthy decision-making processes. Whilst the employee-owners accept this as being part of employee ownership as they want to be involved in decision-making, it is identified that such remains as an obstacle to their engagement nonetheless.
The findings show that employee ownership supports and sustains employee ownership by connecting with employees on a psychological level. Engagement invites employees to participate and be involved with their role and their organisation, for the benefits of themselves and the organisation. Through investing their self in the organisation and identifying the shared vision and values, employees can heighten their experience of work and the organisation can expect to have a committed and effective employee. In these EOCs examined, it is shown that engagement is able to support ownership vision, values, and culture. Through strategies and practices, it is understood that engagement mobilises a relationship between the organisation and the employee, facilitating an understanding that they are ‘in this together’. This is strengthened by the role that employee-owners have in shaping organisational success. Engagement is perceived to provide a pillar of support to employee ownership by upholding the values of ownership and providing a connection relating to social exchange theory (SET). Furthermore, it is presented that engagement fosters an ownership culture. Although organisations exist successfully without employee- ownership, ownership provides another opportunity for employees to engage. In these EOCs, the relationship between employee engagement and employee ownership is understood to be entwined as well as engrained in the organisation. It is identified that there is a strong belief of being able to add value to the organisation’s success in such organisations. This feeling is nurtured by engagement. It encapsulates how employee engagement can support and sustain employee ownership.
In summary, this research study provides an insight into the role of employee engagement in EOCs. By analysing if ownership alone is able to harness employee engagement, consideration will be given to the occurrence of employee engagement in this context. Current literature claims that employee-owners may engage differently compared to employees working in other types of organisations. However, the literature presents no evidence to suggest how engagement exists in EOCs, nor does it identify why they may engage differently. The existing research fails to address employee engagement in employee ownership explicitly and relies merely on suggestions of causality. With this in mind, this study provides empirical evidence that addresses the reality of the ownership construct in regards to how it contributes to employee engagement, as well as acknowledging how engagement also adds to the ownership experience. The inquisitive nature of the research design focuses on the existence of engagement by exploring organisational strategies and understanding how engagement is experienced on a daily occurrence. Through narrative analysis and the identification of themes, key concepts and connections are identified to understand how engagement is experienced, as well as perceived, in EOCs.
Employee engagement, if secured, is claimed to have positive outcomes for both employer and employee (Alfes et al., 2010). However, engagement has many meanings. Upon hearing the word engagement, it often coincides with much excitement, ecstatic joy, and a gleaming diamond ring; the significance of two people coming together with shared aspirations and love, with full intent of committing to building a future together. However, this is not the only interpretation of the word. Engagement has also been used to describe occurrences of conflict and war; something far from the notion of a romantic promise. Engagement can also perhaps have emotional neutrality, for instance whilst engaging in communication.
Engagement may be a common word but it is multifaceted. The verb “to engage” for example, according to Oxford Dictionaries (2010) is a term used to imply an action; two people conversing, different parties working together or against one another, to induce an action, to employee someone, or arrange to meet someone. The Old French translation of engage further informs us that it means to be involved in a pledge – en meaning in and gage translating to a pledge (Collins, 2010). It is acknowledged that engagement means different things when applied in differing contexts but as to how engagement feels could open up Pandora’s Box. Whilst these basic understandings of engagement can be established, when engagement is discussed in the context of employee engagement, the question of what is to be expected, what it means, and how it feels, is debatable.
The complexity concerning employee engagement is primarily two-fold. Firstly, there is a lack of clarity and consistency amongst the literature of what employee engagement means. However, the issue at present is that many academics and practitioners have varying opinions as to what employee engagement is. Although year upon year there are new articles discussing the concept, there is no universal agreement as to what it ultimately means. This has been a key criticism employee engagement as with no universal definition, there is no definitive method to measure employee engagement in action (Masson et al., 2008). Some literature describes employee engagement as a type of motivation exercise, a communication strategy, or
that of a psychological state. Fundamentally, it can be argued that what employee engagement is and how it feels, lies in the representation of those that are experiencing it. To explore employee engagement, the discussion needs to begin with understanding what engagement means. Secondly, it is unclear what the potential outcomes of employee engagement are. The popularity of the term employee engagement has given rise to a growing volume of literature exploring the concept behind the terminology. Definitions and discussions of what is understood by employee engagement vary substantially. As what constitutes as employee engagement is unclear, uncertainty has arisen as to whether it is an attitude, a behaviour, or perhaps indeed both (Macey and Schneider, 2008). As a result of this uncertainty, anticipated outcomes of engagement remain unclear.
My belief of employee engagement is that it is a positive relationship between at least two parties (employee/management/organisation, for example). I understand that employee engagement involves an onus on both parties that they will work together. Furthermore, I support the argument that engagement often involves compromise and sacrifice in order for mutual benefit to transpire (Robinson et al., 2004).
Components of employee engagement will be discussed in this chapter and the factors that shape engagement in occupational, organisational, and psychological contexts will be debated. The chapter will then move onto discussing potential outcomes of engagement. Critical perspectives will be evaluated to provide depth to the critiques. The chapter will end by exploring links between employee engagement and employee ownership.
Definitions of Employee Engagement
The literature discussing the concept of employee engagement is a growing field. However, along with this growth, the fundamental meaning of engagement has become saturated by other management terms. This has resulted in a blurred image of what the concept actually represents. The underlying issue appears to be that there is not a definitive definition of what employee engagement is understood to be. Numerous definitions from both academia and the professional services sector vary in context. The expanding body of research examines different aspects and theories of engagement, therefore presenting positive yet different views of what employee
engagement is. This has resulted in a tangled web of terminology with sometimes often-unfounded dimensions, providing just words and an image of what employee engagement is suggested to be. Employee engagement is portrayed as a human resource management tool (Gallup, 2008). However, there is a lack of agreement as to how and why it can contribute positively to organisational success.
Putting this argument into perspective, the CIPD (a professional body that HR practitioners typically look towards for guidance on employee issues) uses other managerial concepts such as “organisational citizenship” and “commitment” (CIPD, 2009a) to describe employee engagement. Similarly, IDeA (2009) further illustrate this issue and state that the misunderstanding of the meaning behind employee engagement arises from the term being used interchangeably for words such as “employee commitment, job satisfaction, employee happiness or internal communication”. In an attempt to provide further clarification, the CIPD (2009a) indicates that employee engagement is a practice that goes beyond the remit of the job role. The CIPD discuss that engagement is not simply motivation or job satisfaction but something that can be achieved in addition to these. However, later work by the CIPD with the Kingston Engagement Consortium concludes that employee engagement concerns “being positively present during the performance of work by willingly contributing intellectual effort, experiencing positive emotions and meaningful connections to other” (CIPD, 2013).
Before continuing further to examine the definitions available, it is important to note that employee engagement is often used interchangeably for worker engagement (such as by Attridge, 2009; Bakker et al., 2008; Schaufeli et al., 2006). Salanova et al. (2005) discuss worker engagement as being something that reflects employee motivation. It is understood that a worker is a broader term for an employee and could include contractors or agency staff. However, the literature and studies that discuss worker engagement do not identify such detail therefore implying that the word has been used interchangeably for employee.
Motivation is a continued themed in some employee engagement definitions. Castellano (2013) describes this motivational dynamic further, proposing that an engaged employee is someone who has achieved a “high internal motivational state” (p.94). Whilst other literatures do not dispute the existence of motivation in employee
engagement, these literatures also suggest that employee engagement is much more than just motivation. The literature debates that employee engagement concerns occupational, organisational, and psychological factors.
It can be understood that employee engagement mediates the happiness factor between the organisation and the employee. This is represented by suggestions in the literature that engagement involves a sense of satisfaction. Harter et al. (2002) suggest that employee engagement describes “the individual’s involvement and satisfaction with as well as enthusiasm for work” (p. 269). In contrast, Truss et al. (2006:xi) describe employee engagement as a “passion for work”. This suggests that to be engaged it requires more than actualising satisfaction. Truss et al. elaborate further to suggest that employee engagement is concerned with having a desire to work; a sense of wanting. This assumption is shared by Cook (2008) who identifies a similar perspective.
Cook (2008) suggests that employee engagement is a psychological context, and claims that engagement concerns something internal; having an inspired feeling from within. This suggests that employee engagement is concerned with how an employee positively thinks, feels, and what one does for the organisation. Cook describes that engagement exists when an employee shifts from having a desire to fulfil a personal duty (generally described as being motivation), to actualising a passion. This passion can be transferred into an energy that is utilised in an organisational context therefore becoming engaged. Through this understanding, MacLeod and Clarke’s (2009) claims are that organisations with engaged employees are more successful than organisations with disengaged employees, can be understood.
Exploring the work of MacLeod and Clarke (2009), they elaborate on Professor David Guest’s perspective of employee engagement to suggest that “employee engagement is a workplace approach designed to ensure that employees are committed to their organisation’s goals and values, motivated to contribute to organisational success, and are able at the same time to enhance their own sense of well-being” (p.9). They emphasise that employee engagement is a two-way relationship. In this relationship, it is understood that engagement is achieved through the organisation actively pursuing engagement of an employee. As engagement is discretionary, employees’ determine if, when, and how, they chose to engage (Macey and Schneider, 2008). Robinson et al. (2004) support the opinion that engagement involves both parties
contributing towards it. They define engagement as a “positive attitude held by the employee towards the organization and its values. An engaged employee is aware of the business context, works with colleagues to improve performance within the job for the benefit of the organization. The organization must develop and nurture engagement, which is a two-way relationship between employer and employee” (p.2). The literature clearly indicates that for engagement to be actualised, both the organisation and the employee need to actively participate.
Building on this further, Kahn (1990, 1992) present the idea that engagement concerns the organisation understanding the psychological needs of employees, which employees then respond to forming a psychological contract. This is understood to result in the act of engagement taking place. Kahn, who is widely accepted by academics as the pioneer of engagement studies, proposes that engagement involves “the simultaneous employment and expression of a person’s ‘preferred self’ in task behaviours that promote connections to work and to others, personal presence (physical, cognitive, and emotional) and active, full performances” (Kahn 1990:700). The preferred self signifies the level of engagement that the employee is facilitating by being psychologically present when undertaking, and contributing in an organisational role.
Engagement is often viewed as being multi-faceted as Kahn (1990, 1992) demonstrates. Emotional, physical, and intellectual dimensions also feature in other definitions of employee engagement. Ashforth and Humphrey (1995) succinctly suggest that engagement involves employees utilising their “hands, head, and heart” (p.110). As simple as these three words appear at face value, it is clear from other contributors in the field that engagement is multifaceted as it does not solely concern the employees’ involvement but also involves the employers.
Some academics suggest that engagement has underpinnings in other constructs. For example, it is claimed that engagement is the opposite of burnout (Leiter and Maslach, 1998; Schaufeli et al., 2002). Leiter and Maslach (1998) suggest that engagement is “an energetic experience of involvement with personally fulfilling activities that enhance a staff member's sense of professional efficacy” (p.351). This is understood to be opposite to burnout which is understood to be a result of a “prolonged response to chronic emotional and interpersonal stressors on the job, and is defined by three
dimensions; exhaustion, cynicism, and inefficacy” (Maslach et al., 2001:397). Schaufeli et al. (2002) elaborate to suggest that engagement is opposite to burnout because engagement concerns “a positive fulfilling, work-related state of mind that is characterized by vigour, dedication, and absorption” (p. 74). Furthermore, engagement is understood to require a high intensity of energy and ability to identify with work (Schaufeli and Salanova, 2007). Or alternatively presented by Maslach et al. (2001), engagement is a combination of efficacy, energy, and involvement. The literature suggests that when disengagement occurs, burnout is likely to exist.
Absorption and attention are understood to be crucial to engagement according to Rothbard (2001). Rothbard suggests that absorption “means being engrossed in a role and refers to the intensity of one’s focus on a role”, whereas attention refers to “cognitive availability and the amount of time one spends thinking about a role” (p.656). These antecedents to engagement are widely discussed in the literature as representing the psychological presence of an engaged employee (Kahn, 1990). Taking this position further, Saks (2006) describes that engagement “is the degree to which an individual is attentive to their work and absorbed in the performance of their role” (p.602). He addresses the point specifically that employee engagement is an individual occurrence. Robinson et al. (2004) propose that engagement features aspects of commitment and organisational citizenship behaviour as a result of the two-way relationship that they suggest engagement possesses. They go as far to say that engagement is the next step up from commitment, which suggests the employee engagement, is not a re-brand of existing constructs.
Emotional intelligence is discussed by Ditchburn (2009) who concludes that for employee engagement to be achieved, an employee must be emotionally attached to their work as well as the organisation. This perspective stresses that employees should understand the organisation’s aims and values, therefore by doing so they are aware of what they can do to help the organisation achieve success. Furthermore, Ditchburn also suggests that employee engagement also encompasses one having a desire to develop. He presents that employees should not only have an enthusiasm to work but also that they should also aspire to improve their performance for their own personal achievement, as well as wanting to perform better for their organisation. Essentially, Ditchburn stresses the view that employee engagement requires the individual to go beyond the remits of the job by utilising discretionary effort, energy, and intellectual
ability. However, this perspective also illustrates the potential benefit that organisations can have by securing engagement. The identification of such benefits could indicate that perhaps organisations have an ulterior motive for engagement, which could identify with the radical perspectives of employee relations.
Examining a different strand of employee engagement literature, May et al. (2004) propose that engagement is related to the constructs of job involvement and the holistic idea of flow. Job involvement is understood to concern action, whereas engagement involves emotion and behaviours (Kular et al., 2008). Flow focuses on a cognitive presence, which does not require goals or rewards to act as motivators. The literature suggests that when an individual is in an intense state of mind where enjoyment prevails, and they function in such a manner because they want to do it and nothing else matters (Mauno et al., 2007). This perspective of engagement contradicts Marx’s interpretation of the wage-labour relationship. Csikszentmihalyi (1975) describes flow as a “holistic sensation that people feel when they act with total involvement” (p.36). These perspectives demonstrate that flow is captured in an activity. However, engagement is perceived to exist over a longer timeframe than opposed to being captured in a moment.
As demonstrated by the variety of perspectives presented from the engagement literature, various terminology is used to describe engagement. However, there are some reoccurring themes that feature in a significant proportion of the definitions. These themes reside in what Kahn (1990, 1992) terms as engagement involves thinking, feeling, and doing. Despite the overall lack of clarity regarding defining employee engagement, it is a concept that has become increasingly attractive to organisations as it is portrayed that engaged employees improve bottom line results (Blessing White, 2008; Harter et al., 2002; Towers Perrin, 2008). Gallup (2006) claim that “engaged employees are more productive, profitable, safer, create stronger customer relationships, and stay longer with their company than less engaged employees”. As employee engagement is implied to be a positive, beneficial occurrence for organisations, it needs to be fully understood before it can be understood how organisations can benefit from it. To further understand the concept, components of employee engagement will now be evaluated.
Facets of Employee Engagement
Alfes et al. (2010) identify three aspects of employee engagement. Contributing to engagement, they suggest that engagement has elements of intellectual, affective, and social connections. Intellectual engagement is discussed as “thinking hard about the job and how to do it better”, affective engagement represents “feeling positively about doing a good job”, and social engagement is determined by “actively taking opportunities to discuss work-related improvements with others at work” (p.5). Furthermore, they also ascertain that these aspects occur at different strengths and frequencies relating to the psychological constructs of flow (Csikszentmihalyi, 1990) and burnout (Maslach et al., 2001).
An alternative position offered by Saks (2006) suggests that engagement comprises of organisational and job engagement. Saks suggests that these two aspects are related but separate constructs as one involves how employees concern themselves with the organisation, and the other relates to how they are engaged with the job role itself. The work of Robinson et al. (2004) explains job engagement further by arguing that that those in occupational roles are more concerned with their profession, therefore are more engaged with their job role over their organisation. Saks’s (2006) studies claims that individuals tend to be more engaged with their job rather than the organisation, which supports the study undertaken by Robinson et al. (2004). Furthermore, Saks (2006) suggests that the psychological conditions for job and organisational engagement are different. He comments that by exploring “significant and unique variance in job satisfaction, organizational commitment, intention to quit, and OCBO [organisational citizenship behaviour directed to the organisation]” (p.613) the psychological differences become apparent. It is understood that whereas job engagement is predicted by job characteristics, organisational engagement is influenced by procedural justice, which highlights a connection to social exchange theory.
A recent development in the engagement field is presented by Gourlay et al. (2012) who published a CIPD report which identifies the occurrence of employee engagement as a result of emotional and transactional engagement. The report describes that emotional engagement is “driven by a desire on the part of employees to do more for (and to receive more – a greater psychological contract – from) the organisation than is normally expected”, whereas transactional engagement is proposed as the “employees’ concern to earn a living, to meet minimal expectations of the employer
and their co-workers, and so on” (p.3). Their study expands to summarise that those who are emotionally engaged are less likely to achieve a state of burnout, that they could have higher task-related performance, and that they potentially display higher levels of OCB. Moreover, it is proposed that those who only engaged at a transactional level do not necessarily perform poorly, but those who engaged emotionally have the potential to perform better. Despite these aspects of engagement having clear differences, Gourlay et al. offer that an individual can experience both emotional and transactional engagement as one’s locus of engagement can come from different areas. For example, one can be emotionally engaged with the locus of the customer and the service role of a job, but then only engage on a transactional level with the organisation locus of the role. Furthermore, they add that this engagement can also be time specific. Again, this relates to Robinson’s et al. (2004) findings of how those in occupational roles are more engaged with their job role, as opposed to being engaged to the organisation.
These are just some examples of how engagement is understood to exist. Similar to the lack of clarity in what employee engagement means, there is also some confusion as to how it is conjured. However, where each study attributes different names to what engagement consists of, there is some continuity in terms of the role that the job and the organisation has in securing engagement.
Factors Shaping Employee Engagement
There are a variety of factors, as described, which are presented in the literature as potential mediators of engagement. To explore these mediating factors further, they will be discussed in terms of occupational, organisational, and psychological factors.
Occupational Factors
Robinson et al. (2004) found in their study of 14 NHS organisations involving 10,000 employees that there were differences in engagement according to an employee’s occupation. Furthermore, it was identified that engagement was mediated by length of service and age. The role of occupation was also found to have an impact on engagement as shown in Chaudhary et al. (2012) who found that individuals in
professional roles had a heightened level of dedication, compared to those in non- professional roles.
It is understood that an individual’s age can mediate their engagement. Robinson et al. (2004) found in their study that an individual’s level of engagement declines as they get older until they reached a tipping point of 60 years old. After this point, the findings of the study suggest that engagement levels then increased substantially. Furthermore, Robinson et al. indicate that as length of service increases, employees’ level of engagement decreases accordingly. The study also suggests evidence to support differences in regards to ethnic origin and engagement levels. It is understood from Robinson et al. (2004) that minority ethnic employees display a higher level of engagement in comparison to their colleagues. These findings illustrate the importance of exogenous factors to the occurrence of employee engagement.
An alternative understanding of how occupational factors influence engagement concerns the role of an individual’s personality. Langelaan et al. (2006) explore the relationship of burnout and engagement in relation to influential factors of personality and temperament. In their study they suggest; “burned-out and engaged employees can be distinguished from their counterparts on the basis of their personality and temperament. It appears that neuroticism is of prime importance for burnout, whereas for work engagement also levels of extraversion and mobility (the capacity to adapt to changing environments) matter” (p.530). Furthermore, they suggest that individuals are more likely to engage because of extraversion and mobility. This demonstrates the importance of person-fit in securing employee engagement, and suggests that that personality does matter if organisations wish to harness engagement.
Exploring wider literature, Arvey et al. (1989) identify that one’s genetics can contribute to job satisfaction. Job satisfaction is understood by the CIPD (2009a) to be a related construct of employee engagement. It is understood from Arvey et al.’s (1989) study that one’s genetics can influence perceptions regarding satisfaction. Arvey suggests that personality traits can be inherited which therefore can mediate perceived levels of satisfaction. Exploring job satisfaction on three levels (intrinsic, extrinsic, and general satisfaction with the role), their study explains that whilst extrinsic satisfaction is not accountable through genetic influence and general
satisfaction is only marginally derived from genetics, intrinsic satisfaction is significantly related. A subsequent study reaffirmed this and found that “genetic factors accounted for 27% of the variances of overall job satisfaction” (Arvey et al., 1994:31). If engagement is mediated to an extent by personality as described by Langelaan et al. (2006), then according to Avery et al.’s (1989, 1994) work which identified that personality is a result of genetics, this would indicate that engagement is also a result of individuals’ genetic make-up. These scientific implications concerning occupational factors go beyond the scope of the key studies on engagement such as Harter et al. (2002) and Schaufeli and Bakker (2004).
Occupational self-efficacy is linked to engagement by Pati and Kumar (2010). Self- efficacy concerns ones awareness of their capabilities. As described by Bandura (1995) it refers to “beliefs in one’s capabilities to organize and execute the courses of action required to manage prospective situations“ (p. 2). In Pati and Kumar’s (2010) study based on computer programmers, it is demonstrated that organisational support and supervisor support moderates the relationship of self-efficacy. As a result of this, differences in displayed engagement are understood to be accounted for. Chaudhary et al. (2012) study expands further regarding how occupational self-efficacy impacts upon engagement. They suggest that that to increase engagement through occupational self-efficacy, organisations should concentrate their efforts on improving confidence levels. It is claimed that this can be achieved by ensuring that managers are providing support that includes constructive feedback and appropriate training, to further develop an individual’s self-confidence.
By exploring this small number of factors that can influence upon engagement, it is understandable as why the literature on engagement is so diverse. Age, personality, whether an individual chooses an occupational/professional career, genetics, and self- efficacy, are all claimed to be accountable for actualising engagement. As Chaudhary et al. (2012) highlight, the supportive nature of the environment an individual works in can also help to secure engagement. This therefore suggests that organisations can do more to sustain this occurrence.
Organisational Factors
The majority of employee engagement literature identifies the role of the organisation in encouraging, harnessing, and shaping the engagement of their employees. It is understood that through a variety of practices and strategies that organisations can enhance an employee’s level of engagement. Although as Saks (2006) and Chaudhary et al. (2012) suggest, engagement is associated with individual role performance. However, it is understood that organisations can develop an individual’s interest by utilising a number of organisational factors to attempt to secure and drive their engagement.
The role of the organisation in employee engagement is expressed clearly by Robinson et al. (2004). They describe that “an engaged employee is aware of business context, and works with colleagues to improve performance within the job for the benefit of the organisation. The organisation must work to nurture, maintain and grow engagement, which requires a two-way relationship between employer and employee” (p.9). If the organisation is able to achieve this relationship with their employee, it is understood that the employee will typically have a positive mental attitude regarding their job and the organisation. Once this is achieved, Robinson et al. (2004) believe that the employee will then go on to demonstrate engaging behaviour, which could potentially result in enhanced performance. As will be explored in further detail, organisational factors are understood to be crucial to the existence of employee engagement, as engagement requires a two-way relationship.
Practitioner literature in particular suggests that organisational culture has a paramount influence on employee engagement. The CIPD (2012) argues that a values- based culture can help organisations created an environment for engagement to prosper. Organisational culture is understood to influence how individuals perform, behave, and feel at work (Lok and Crawford, 2004). According to Torrington et al. (2008) “the culture of an organisation affects the behaviours of people within it and develops norms that are hard to alter and which provide a pattern of conformity” (p.603). The culture of an organisation indicates custom and practices of which the majority of the employees adhere to. It is understood that culture is what is lived, and
it continually evolves as well as develops over time. For example, the more frequent tasks are undertaken in particular ways, the more likely that the method will be perceived and accepted by others as the norm. Therefore, through the identification of such norms, working practices can become engrained into working life and the organisation. Culture can be led by organisations through values and management action, but is can also be embedded by employees who share similar perspectives.
In the 1980’s organisational culture was identified as having a direct correlation to performance and commitment (Deal and Kennedy, 1982). It is now understood that organisational culture can also secure employee engagement (Denison, 2010). Furthermore, it is suggested that culture can influence engagement or disengagement (Kular et al., 2008). MacLeod and Clarke (2009) also stress in their work on employee engagement that organisational culture plays an integral role in securing employee engagement. They suggest that one of the four enablers to engagement is leadership that focuses on the organisation having a strategic narrative, which they define as “a strong, transparent and explicit organisational culture which gives employees a line of sight between their job and the vision and aims of the organisation” (p.31). MacLeod and Clarke hold management accountable for providing this narrative and for leading a culture that reflected this. They identify that “engaging managers are at the heart of this organisational culture – they facilitate and empower rather than control or restrict their staff; they treat their staff with appreciation and respect and show commitment to developing, increasing and rewarding the capabilities of those they manage” (p.75). If managers fail to be engaging as a result of poor leadership through a lack of strategic narrative, MacLeod and Clarke stresses that organisational culture becomes displaced and “as a result the organisational culture is unable to deliver engagement” (p.63).
MacLeod and Clarke emphasise that without a culture that aspires to shared values, encourages employee voice, and one that is lead with a strategic narrative by engaging managers who seek to empower their employees, they believe that organisations would struggle to harness employee engagement. As illustrated by Jackie Orme (Chief Executive of the CIPD) who contributed to MacLeod and Clarke’s research, HR has a role in developing this culture through providing learning and development: “HR can’t manufacture engagement, but we have a key role in helping companies develop the kind of organisational culture where engagement can thrive, and ensuring that managers have the skills to make engagement a reality” (MacLeod and Clarke,
2009:114). Managers need to have the necessary tools to create the required leadership in order to enhance organisational culture. Additionally, the development and sustaining of organisational culture should be a managerial objective, as they need to correct any workforce habits that contradicted the desired behaviour. However, as Torrington et al. (2008) describe, in order to maintain culture, the wider workforce need accept it and live it. It is understood from Alimo-Metcalfe and Bradley (2008), who completed a detailed study in the NHS exploring how culture could sustain employee engagement, that organisational performance was predicted by the existence of an engaging culture, more so than the existence of competence. These findings add strength in understanding culture’s role in securing employee engagement.
The line manager
The role of the line manager in employee engagement is also explored by Robinson et al. (2004). Using data from their study that explored 14 NHS organisations, they suggest that engagement is heavily influenced by organisational factors delivered by management. The analysis of the data indicates that employees felt that the strongest drivers of engagement concerns having a sense of involvement and feeling valued. These factors could be derived from a number of organisation-led factors. Fundamentally, at a local level, the study suggests that line managers who are fair and care about their employees, those who communicate with their team, and encourage them to perform as well as develop, created an amenable environment for engagement to be actualised. On an organisation-wide basis, Robinson et al. demonstrate that factors such as; open two-way communication, co-operations amongst the organisation, a pleasant work environment, dedication to development, commitment to well-being, fairness in regards to financial reward and benefits, and transparent HR policies which mitigate potential inequity; are understood to satisfy the employers’ role in the employee engagement relationship. In essence, the study shows that employee engagement needs to be on the agenda prior to hiring employees. It is argued that job roles need to be shaped with purpose. Furthermore, promises made in the psychological contract need to be fulfilled. Managers’ need to dedicate time to their employees to continue to develop them and provide an alluring work environment to secure engagement.
Taking the role of the line manager further, Macleod and Clarke (2009) suggest that; “engaging managers who offer clarity, appreciation of employees’ effort and contribution, who treat their people as individuals and who ensure that work is organised efficiently and effectively so that employees feel they are valued, and equipped and supported to do their job” (p.31). It is understood that managers can be enablers of engagement through empowerment and instilling meaning in work.
Alfes et al. (2010) also consider the role of the line manager in engagement. They stresses that employee engagement can be influenced by line management. It is claimed that “line managers act as the interface between the organisation and the employee, can do much to impact on engagement” (p.56). As a result of this potential implication, Alfes et al. highlight caution in regards to recruitment practices to ensure that the right person-fit is obtained for the organisation to ensure that they believe in the shared vision, and can develop an engaging environment.
Robinson et al. (2004), MacLeod and Clarke (2009), and Alfes et al. (2010) all agreed that the line manager has a pivotal role in securing employee engagement. However, to help aid line managers in this pursuit, achieving a person-fit with employees is understood to be advantageous to harnessing employee engagement and enhancing organisational culture (Woodruffe, 2006).
Woodruffe (2006), like Robinson et al. (2004), argues that engagement needs to begin at the recruitment stage. Furthermore, he maintains that recruiting the right individuals’ helps to make engagement a possibility. He clarifies; “it is important to distinguish clearly between the process of engaging employees by helping them to love their jobs, and the very different process of hiring employees in the first place following a recruitment drive” (Woodruffe, 2009:22). This suggest that having a thorough recruitment process which tests values and not just experience, helps to ensure that person and organisational fit is achieved. Such fit is important as person-fit is understood to be an influential factor of engagement.
Furthermore, whilst Woodruffe (ibid) holds the perspective that engagement has attributes of motivation, he also claims that there are a number of organisational
factors that can harness engagement. These are described as; providing opportunities for career development, awarding praise, providing opportunities to undertake challenges, and having opportunities to be able to work on significant projects. Furthermore, it is suggested that there needs to be senior management exposure across all levels, that the organisation itself is good and reliable with a civilised and pleasant working environment. Woodruffe continues to suggest that managers needs to ensure that they provide support to their employees, that they trust, demonstrate commitment to them, and that they respect employees work-life balance. Ultimately, organisations need to a lead a culture where managers can conduct themselves in this manner to unlock the potential of engagement. As demonstrated, there are a variety of ways for engagement to emerge but importantly the individual aspect of engagement pertains that these factors may facilitate engagement at varying extents with different individuals because these employees may have different needs. The identification of person-fit plays an important role as organisations may offer a variety of these factors. However, if an individual does not desires this from an organisation, it could be argued that this misalignment could potentially affect engagement (Alfes et al., 2010).
Despite recruitment efforts to ensure that the right people are employed in organisations, MacLeod and Clarke (2009) maintain that “people join organisations but leave managers” (p.80). This suggests that there are many facets to engagement and organisations need to consider a much wider scope to if they wish to have engaged employees. Once individuals join organisations, and have an engaging manager, the literature suggests that organisational values help maintain to engagement (MacLeod and Clarke, 2009; Alfes et al., 2010).
Organisation values and support
Engagement invokes reliance on other managerial concepts in order for it to be achieved at a high level according to Rich et al. (2010). They propose that “engagement mediates relationships between value congruence, perceived organisational support, core self-evaluations and two job performance dimensions – task performance dimensions: task performance and organizational citizenship behaviour” (p.617). Furthermore, they present that job involvement, job satisfaction, and intrinsic
motivation, are only related to engagement through these factors and not concerned with engagement directly.
Exploring Rich et al.’s study based on 245 fire fighters participating, the findings suggested that not only did the fire fighters meet the remits of their job role but that they also actively went above this by becoming involved in organisational matters and demonstrating a desire to help others away from the call of duty. This proposes an understanding that prior to engagement, there is not necessarily a consideration of physical, emotional, and cognitive energies before becoming engaged. More so it is understood that there is a realisation of activities which could contribute to effectiveness overall. Where employees enlist the support of the organisation to harness engagement, employees can also support the organisation further to achieve the same effect. This perspective is founded in the evidence that indicates that whilst at work the fire fighters fully emerge themselves, as they did not see their role as one which is only active in response to emergences. This finding contradicts that of Robinson et al. (2004) who found in their study conducted in the NHS, that employees in occupational role are more engaged with their job as opposed to the organisation. However, the argument of Rich et al. (2010) identifies that the fire fighters did not limit their role in the organisation to their exact occupation.
Nahrgang et al. (2011) explored engagement in relation to job demands, resources, burnout, and safety outcomes. Their work found that a supportive environment defined as being social, having clear leadership, and a safety conscious climate, was positively related to employee engagement. Additionally, other key findings notes that heightened job demands can result in a negative response to engagement. This raises the question that if appropriate support is provided in connection to job demands, can engagement be harnessed. Addressing job demands and support further, as presented by Robinson’s et al. (2004) in their study, employees displayed higher levels of engagement if they had received a personal development plan and performance appraisal in the twelve months previous compared to those who had not. A supportive work environment, “where employees can see that they have support from others to help them do their job, there is a sense of teamwork and they can safely express themselves” is claimed to drive higher levels of employee engagement (Alfes et al., 2010:56).
Support, whether it is received through; management, shared values, learning and development, or employees supporting the organisation by going above and beyond the remits of the job role; is understood to contribute to actualising employee engagement. As described by MacLeod and Clarke (2009), “engaged organisations have strong and authentic values, with clear evidence of trust and fairness based on mutual respect, where two way promises and commitments – between employers and staff – are understood, and are fulfilled” (p.9). This perspective is further elaborated by MacLeod and Clarke, who in their study suggest that a key aspect of securing employee engagement is having a strong strategic narrative that includes a culture of support and purpose. Furthermore, it is understood from their work that lived values creates integrity, which in turn builds trust amongst the workforce, which also drives engagement forward. Organisations can do much to support their employees and further to Nahrgang et al.’s (2011) study that illustrated the role of organisational support, the availability of job resources also help secure employee engagement.
Job resources
As identified, organisational factors of engagement also concern the availability of job resources. Harter et al. (2002) show in their study that job resources are a mediating factor in achieving engagement. Furthermore, a study completed by Nahrgang et al. (2011) highlights that job resources (for example knowledge, autonomy, and a supportive and motivational environment) can have a positive influence an individual’s level of engagement.
A study by Bakker et al. (2007) which explores engagement amongst Finnish teachers provides further evidence for the need for organisation’s to provide appropriate job resources. In particular they claim that; appreciation, supervisor support, organisational climate, and innovativeness; can mediate engagement. Their model shows that availability of job resources can appease the impact of negative, external factors that are beyond the organisation’s scope (such as disgruntled parents). Such external factors have the potential to affect engagement. However, by providing appropriate resources, it is suggested that vigour, dedication, and absorption can also be influenced.
MacLeod and Clarke (2009) suggest that if an individual’s work is poorly designed, it is difficult to sustain engagement over a long period due to the frustrations of the job resources and demands presented to them. Their study highlights that where employees have a lack of, or inappropriate job resources available, this acts as a barrier to achieving employee engagement. Mauno et al. (2006) also explored the impact that job resources had on employees engagement and found that job resources mediated engagement by heightening vigour and dedication. In particular, they found that job control was felt to have the most influence in terms of job resources in facilitating engagement, as opposed to organisational-based self-esteem and management quality. Exploring job resources in a different perspective, reflecting on autonomy, coaching, and team climate, Xanthopoulou et al. (2009) focused on how these job resources predicted financial returns as well as engagement. They found that job resources influenced engagement on a daily basis and this directly predicted financial returns. Furthermore, they identified that if an employee had received coaching, this had a direct positive relationship with their engagement and financial returns for that day as well as the subsequent day. From this research, it is understandable that securing employee engagement has the potential to be financially rewarding for organisations. Another notable piece of research in regards to the role of job resources in harnessing engagement has been conducted by Schaufeli and Bakker (2004). Their study claims that burnout is mediated by job demands and lack of job resources. They suggest that engagement is mediated as a result of available job resources.
The variety of studies presented in literature, which have been completed in various types of organisations from schools to fast-food restaurants, suggest that the availability of job resources influences the occurrence of employee engagement. Job resources are not limited to physical assets but include training, coaching, managerial support, and organisational climate. It is understood that these factors all have the ability to mediate employee engagement.
Participation and voice
Participation and employee voice has gained increasing attention amongst the practitioner engagement literature. In a discussion paper written for ACAS by Purcell and Hall (2012) it is discussed that due to changes in organisations such as the demise of trade unions, increasingly employees are seeking avenues to voice their opinions.
Whether voice is heard and listened to through one-to-one communications or collective forums, the ability for opinions to be expressed and acknowledged, needs to form part of the organisational make-up to warrant employee engagement. Often such vocal expression is referred to as engaging in organisational citizenship behaviour (Organ, 1988).
The power of employee participation and voice is identified by MacLeod and Clarke (2009). They argue that participation is an enabler of employee engagement. MacLeod and Clarke suggest that providing opportunities for employee participation is critical to securing employee engagement. They describe employee voice as being:
“An effective and empowered employee voice – employees’ views are sought out; they are listened to and see that their opinions count and make a difference. They speak out and challenge when appropriate. A strong sense of listening and of responsiveness permeates the organisation, enabled by effective communication” (p.75).
Furthermore, MacLeod and Clarke’s study identifies that employees do not solely require a mechanism for collective voice, which trade unions commonly provide, but that they also desire individual outlets for voice, which falls in line with the pluralist perspective. It is understood that when an opportunity for employee voice is present, employees acknowledge this with engagement. However, employee voice is not just concerned with the bigger picture of the organisation, but it is also involves the inter- personal relationship employees have with their manager relating back to the role of the line manager (Robinson et al., 2004; Alfes et al., 2010). It is also understood that employee voice concerns the presence of a supportive work environment (Alfes et al., 2010).
Alfes et al. (2010) justify the importance of employee voice in employee engagement. They describe effective employee voice as “opportunities for employees to input into decisions affecting their work and their organisations, and to be properly consulted and communicated with over workplace issues that affect them” (p.34). Reflecting on the work of Robinson et al. (2004) who suggest that a sense of being valued and being involved is an important driver of employee engagement, Alfes et al. (2010) suggests from the findings of their study that only 34% of employees were able to exercise voice and participation at a satisfactory level to them. Exploring the findings of this study,
there are indications to suggest that these employees displayed the highest levels of engagement. This suggests that there is evidence to link the role of employee voice and participation to being influential organisational factors in establishing employee engagement. However, employee voice should not be considered in its own entity as being solely attributable to employee engagement (Purcell and Hall, 2012). Therefore, employee voice should be considered as one factor that helps to achieve engagement as shown by Alfes et al. (2010).
Engagement at a business-unit level
Research conducted by Harter et al. (2002) focuses on exploring employee engagement at a business-unit level. This research suggests that within an organisation that has several units, engagement is promoted and mediated differently. Harter et al. (2002) describe engagement as being an “individual’s involvement and satisfaction with as well as enthusiasm for work” (p.417). Their work explores the relationship of engagement with core business outcomes that are identified as “customer satisfaction, productivity, profit, employee retention, and employee safety” (p.269). From exploring some 8,000 business-units across 36 organisations with a total of 198,500 participants, the research presents that there are strong correlations between employee engagement and job satisfaction against productivity and profitability. It also found that there are some correlation concerning employee engagement with employee turnover, customer satisfaction-loyalty, and safety. However, the strength of these correlations only bears slight significance.
In essence, line management and the existence of a supportive work environment mediate engagement (Alfes et al., 2010). It is accepted that employee engagement can vary between departments and sites as a result of factors that are primarily actionable by supervisors/managers (Harter et al., 2002). Such factors include job resources, culture, and security which not only contribute to engagement, but as found by Harter et al. (2004), they also are linked to key performance outcomes as engagement is suggested to contribute to overall employee satisfaction.
Salanova et al. (2005) explored what they described as service-units in restaurants and hotels to examine the mediators of the service climate. The study explored 114 service- units comprising of hotel front desks and restaurants, as well as focussing on 1,140
customer reports. They showed that organisational resources in addition to engagement predicted the service climate. Furthermore, it was identified that this translated to the end user as employee performance was found to contribute to customer loyalty. Findings of the research concluded that perceptions of organisational resource availability such as training, technology, and autonomy, at a unit level create work engagement, which in turn drives the service climate. Furthermore, they presented that working in a service climate environment entices collective engagement due to the customer element. This customer locus was understood to lead the employees of the service-unit feeling “more vigorous and persistent, dedicated and absorbed in their tasks” (p.1224). It is concluded from the study that to maintain the service climate, unit managers and supervisors need to create an atmosphere for engagement to transpire collectively to award customer loyalty.
Engagement at a business-unit level is understood to be mediated by a variety of factors that can be controlled by management. Achieving employee engagement in this environment produced different results for business-units against key performance indicator (Harter et al., 2004). Furthermore, it is understood that engagement can influence service-levels experienced by customers (Salanova et al., 2005). An element of securing employee engagement at a business-unit level could also be dependent upon employees perceptions of fairness and equality endured in relations to other business-units within the organisation, as perceived fairness is an influencing factor to securing employee engagement (Saks, 2006).
Psychological Factors
What is suggested by Kahn (1990), Cook (2008), Ditchburn (2009), and Maslach et al. (2001) is that if employee engagement concerns’ having a passion – an emotional, psychological connection – then something lies deeper at the centre of engagement than just an understanding of if you exert effort, you will receive the related reward. The majority of literature describes employee engagement as being concerned with psychology in some form, whether it lies at the heart of it, or if antecedents and consequences have connections to it. Therefore, it may be fair to propose that the science of psychology lies at the foundation of employee engagement.
If employee engagement involves the mind and the heart, this suggests that psychology is a factor of engagement. Organisations are complex entities formed with different people each with their own opinions, expectations, and perspectives. People are have a natural hesitant tendency concerning being a part of a group, somewhat due to fear of acceptance (Goffman, 1961). Kahn (1990) describes this, what he terms as personal engagement, as “behaviours by which people bring in or leave out their personal selves during work role performances” (p.694). The work of Kahn is understood to be highly influential to the employee engagement literature.
The work of William Kahn
According to Shuck and Wollard (2009), William Kahn was the first academic who explored the subject of employee engagement. Kahn (1990) discusses in his paper, Psychological Conditions of Personal Engagement and Disengagement at Work, that engagement involves a person bringing their own identify and self into the remit of work. This is understood to involve physical, cognitive, and emotional performances. Throughout Kahn’s study, engagement is referred to in terms of personal engagement, never specifically as employee engagement despite the workplace contextualisation and other authors such as Shuck and Wollard (2009) claiming that the article describes it as such. Nonetheless, Kahn’s influential work explores engagement in a work environment with an emphasis on how one engages him or herself, and understanding how one interprets the world that they exist in.
Kahn’s (1990) appreciation for social psychologists, in particular Goffman (1961) who Kahn reflects his work upon, in additional to motivational theorists such as Maslow (1970) and Alderfer (1972) in particular, are understood to have inspired Kahn’s way of thinking as to how one unleashes their true self at work. It is understood that the presence of one’s personal self and their expressed self are different not only in a work environment, but in a variety of other situations. Kahn (1990) suggests that one behaves differently and projects different self-imagery depending on the environment that they are in. This adds strength to the perspective that engagement is a psychological state of mind because to perform it is understood that one needs to have a reason to act in a particular manner whether it be emotionally, cognitively, or physically. Kahn indicates that this rationale as to why one coordinates themselves in such a way, results from a combination of three psychological characteristics;
meaningfulness, safety and availability. Describing these characteristics further, Kahn proposes that meaningfulness concerns having a personal sense of return on effort/investment; safety is understood to be a feeling that one’s self (status, image, and career) would not encounter negative consequences from applying their ability; and availability is understood in the sense of being mentally, physically, and emotionally available. When these characteristics are present, it is then required from the employee to self-employ and self-express themselves. When this occurs, Kahn suggests that engagement is present.
The study that Kahn (1990) reflects upon in his seminal paper explores two different organisations; a summer camp and an architecture firm. The basis of the research primarily focuses on interviewing employees regarding their experiences that they have encountered whilst working with their organisation. Interviewees were asked questions such as likes and dislikes of their job, their awareness of their role in the organisation, as well as being asked to reflect on their involvement in the workplace. Responses were categorised to test the assumption that engagement was influenced by psychological characteristics (meaningfulness, availability, and safety). The qualitative research suggests that employees want to bring their self into work; therefore, if they do not see themselves in the role that they are fulfilling, they feel less inclined to engage their self with it. Kahn’s study also found that if the organisation’s structure resembles a family culture, engagement was likely to be heightened because the family nature is perceived as comfort, which satisfies the safety psychological characteristic.
Kahn’s perspective of engagement encompasses a variety of psychological areas. In summary, Kahn suggests that engagement concerns understanding the psychological needs of employees and employers must respond to these needs appropriately. By doing so, it is claimed to enable employees to participate in a psychological contract, resulting in the act of engagement taking place. Like many motivational theories, one’s needs have to be satisfied before an exchange of willingness can occur. It could be argued that this psychological similarity could potentially be the cause of frequent misrepresentation of employee engagement being just another term for employee motivation.
In a later paper, Kahn (1992) discusses the self at work further by specifically exploring the concept of psychological availability. Psychological presence in the workplace is determined by several mechanisms that can have a negative or positive impact on the degree of self that one chooses to utilise in the workplace. These mechanisms as Kahn describes are; the nature of the job itself, what is required of by the role, the structure of the organisation/how the role relates to others, organisational norms, and group/intergroup dynamics. According to Kahn, when an organisation imposes these mechanisms (also referred to as systematic mechanisms), there are four factors that influence psychological presence from the individual concerned; awareness/understanding of how to be in the role, how secure they feel about their self and bringing in their self into the organisation, how much courage they have, and their extent of adulthood development. Essentially, this brings together occupational, organisational, psychological, and situational factors of engagement.
Unlike the first paper, Kahn’s second seminal paper explores deeper into employee engagement as it describes how one is asked to reveal their self to actualise engagement. Kahn suggests that by having systematic mechanisms, the mask of performativity is dropped, revealing the inner self and creating social exchange. To put this idea into an organisational context, Kahn draws upon an example where a Draftsperson is struggling to fulfil the job in hand of creating a design from a limited design specification. He describes how their manager is able to relate with the employee by describes how she herself has been in a similar situation, yet whilst she reminding herself that they are on a strict deadline and the work needs to be completed. Her approach to the situation is both autocratic and compassionate. She lets her managerial mask fall to become a person in order to help the employee by placing trust in them and reassuring them that the task is achievable. In doing so, the manager is aware of her own feelings; she places herself in his shoes, and responds to this in her approach. She is psychologically present because she feels, understands, and is aware of herself. Being connected to one’s self in such a way provides harnessing for engagement to form in Kahn’s opinion. Cook (2008) presents a similar perspectives and describes that engagement involves having a desire and personal duty. Kahn’s (1992) work illustrates this through the experience of the manager who felt she had a personal duty to behave in the way that she did.
Kahn’s three psychological conditions relate to the core of these mechanisms and individual differences. With the added dynamic of psychological presence, Kahn suggests that together these factors lead one’s behaviour to “create performance outcomes and experiences that engender various types of feedback, rewards, and punishment which then influence future experiences and behaviours” (1992:341). Furthermore, typical related outcomes that organisations are likely to experience are suggested to be; greater work quality, productivity, and growth as well as an understanding and appreciation for the undertaking of the job role. By measuring such outputs and from this feedback platform, whether it is spoken or changes observed through statistical analysis, it is suggested that a cycle occurs by which the organisation adapts to its employees needs and the employees’ respond to this accordingly.
A deeper level of meaningfulness
Exploring the meaningfulness trait of engagement more deeply, Seeman (1972) suggests that in a situation where one believes work to be meaningless then they become detached from their role. However, in doing so it is also understood that they become estranged from their self as they become disconnected with enjoyment, interests and passions of everyday life. This coincides with Kahn’s (1990) work and makes the connection that if one is not content in what they are doing, then their full potential (intrinsically as well as performed) is not being actualised. To put this psychological interpretation of employee engagement into perspective, what has being suggested by Kahn (1990, 1992), May et al. (2004), Goffman (1961), and Seeman (1972) etc., is that work needs to have a purpose. It is suggested that it needs to provide motivation and personal fulfilment for work to become meaningful (May et al., 2004). Through the presence of a secure environment, it is understood that this can help one to exert themselves in a manner to make themselves available physically, emotionally and cognitively to work. In doing so one will be motivated to work and aspire to develop further (Spreitzer et al., 1997). Essentially the argument is that employee engagement “is about getting the absolute best effort from your employees by making them feel good about the work they do” (Finney, 2008:14). Meaningfulness of work is not limited to influencing employee engagement, but is also connected to an individual’s perceptions of their working life overall (Alfes et al., 2010). Having meaningful work is the most influential factor to harnessing employee engagement regardless of occupation/profession according to Alfes et al. (2010) and Robinson et
al. (2004). Such meaningfulness of work is also understood to be articulated by an organisation having strategic narrative (MacLeod and Clarke, 2009).
A re-examination in the new millennium
An empirical test of Kahn’s (1990) model of engagement has been undertaken by May et al. (2004). Theses academics explored Kahn’s theory of psychological engagement characteristics in an attempt to test how they actually occur in the workplace. The hypothesis was to explore meaningfulness in the terms of job enrichment, worker-role fit, and co-worker relations; safety by focusing on supervisor relations, co-worker relations, and co-worker norms; and finally availability in the terms of resources available, role security and external commitments/activities. Unlike Kahn’s work, May et al. (2004) researched to explore what characteristic and particular attributes of such, can vary levels of exercised engagement. The ultimate aim of the study was to measure the respondents’ “perceptions about themselves, their jobs, supervisors and co-workers” (May et al., 2004:20). Studying an administration department in a large insurance company in America, employees across the hierarchy were invited to take part in a survey in an attempt to verify the hypothesis. The questionnaire survey consisted of several statement hypothesised as being an antecedent to the psychological characteristics as specified by Kahn. Respondent were asked to rate agreement/disagreement on a 1-5 Likert scale.
May et al. (2004) found that there were enhanced complimentary fits to psychological characteristics and engagement when the antecedents were related differently. Their model was revised to reflect that meaningfulness had antecedents of job enrichment and work-role fit; safety was found to relate to co-worker relations, supervisor relations, co-worker norms and self-consciousness; whereas availability identified closely with resources and outside activities. The major changes to the model showed that co-worker relations and self-consciousness were not strongly related to meaningfulness and availability respectively, but instead were truer antecedents of safety. Furthermore, self-consciousness and resources were found to have a direct independent relationship with engagement.
In respect of the safety psychological characteristics, the original three items (co- worker relations, supervisor relations, and co-worker norms) were identified to have
significant correlations with supervisor relations having the strongest. This supports the findings of studies by Deci et al. (1989) and Edmondson (1990) who also illustrated the effect that supportive behaviour can have on individual. In particular, co-worker norms contributed the least to safety. In response, Barker (1993) suggests that because co-worker norms present desired attributes and behaviours, it can hinder the expression of the self therefore reducing the level of safety. However, it is understood that if co-worker norms fell within the remit of one’s true self the relationship that this antecedent could have with safety has potential to be stronger.
The overall results for the psychological characteristics in the study showed that meaningfulness had the most significant impact on engagement, followed by availability and safety respectively at significantly lower levels of correlation. These results coincide with the conclusions of Brief and Nord (1990) who essentially claim that when an individual has the opportunity to express themselves, by doing so the task in hand becomes meaningful.
Emotional labour
As has been identified, emotion is understood to play a role in employee engagement. In particular, Kahn (1990) suggested that employee engagement concerns emotional labour. Kahn identified that should one not feel safe in utilising their true self in role performance, engagement cannot be actualised. As Kahn explained, in a group environment one may feel compelled to perform similarly to others out of fear of reprimand created by the socio-culture environment. However, importantly it is only a performance. It is understood that consciously the employee could not be engaging although the physical display may suggest otherwise. The work of Arlie Hochschild (1983) concerning emotional labour is important to the employee engagement literature because it shows that one may appear to be engaged at a surface level and through the measurement of business outcomes, but at heart one can be actively disengaged. Hochschild showed in her research conducted on Flight Attendants that one can perform to meet the desired behaviour in the role by putting on an act instead of displaying natural tendencies. The psychology of emotional labour explains how managers may be unaware of disengagement in the workplace as employees could be merely conforming to societal expectations of their job role and expected culture in
the organisation, as opposed to displaying true emotions and traits of how they may truly, actually feel.
An alternative psychological perspective is offered by Macey and Schneider (2008) who suggest that employee engagement can be a state of mind, a trait or a displayed behaviour. Linking back to the argument of the role of emotional labour, this suggests that employee engagement can be something that is merely just presented. Macey and Schneider’s paper explicitly reminds us that the level of engagement that one expresses, reflects upon how they view the situation and interpret “the world from a particular vantage point” (Macey and Schneider, 2008:4). The notion that individuals have different perceptions based on how they see and experience work suggests that employee engagement in practice needs to be understood on a localised operational- level as opposed to a generalised level (Harter et al., 2004). This demonstrates a need for management to move away from a unitarist perspective to a pluralist one. Employees should be understood as individuals and not as a collective cohort with shared beliefs as well as objectives. This argument is particularly strengthened by the understanding of Macey and Schneider (2008) that engagement is discretionary; therefore, it is a condition that organisations can only aspire to achieve if an appropriate environment is created.
Social exchange theory
Social exchange theory (SET) is understood to be important to the concept of employee engagement because it attempts to provide a rationale for the two-way relationship of engagement. The work of Saks (2006) is particularly significant because he argues that there is a stronger theory behind the occurrence of employee engagement. SET is described as a relationship between one or more persons involving “a series of interactions that generate obligations” (Cropanzano and Mitchell, 2005:874). SET relationships evolve over time and are mediated by trust, loyalty, and mutual commitments. Saks (2006) argued that when an organisation provides returns to an individual, the employee should replicate this exchange with engagement. Therefore, depending on the level of exchange that the organisation presents, an individual will determine the perceived value of this and respond with a variable degree of engagement. The principles of SET in terms of the existence of a two-way relationship are highlighted by Robinson et al.’s (2004) perspective of engagement,
and Kahn’s (1990) notion of engagement as vigour, dedication, and absorption present ways for employees to return engagement in an exchange for what an organisation is providing.
Outcomes of Employee Engagement
Employee engagement is understood to have positive outcomes for both the organisation and the individual concerned. Harter et al. (2002) identify in their business-unit analysis of engagement, that engagement is linked to heightened business key performance indicators. Theses performance indicators include; increased profit, customer satisfaction, productivity, reduced labour turnover, as well as reporting a lower number of accidents in the workplace where employees demonstrate high levels of engagement as opposed to those who do not. Harter et al. emphasise the importance of engagement to be secured at an individual level in order for these positives outcomes to be achieved. Of a similar disposition, Kahn (1992) reports from his study exploring the psychology of engagement, that high levels of engagement return positive outcomes at not only an organisational level but also at an individual level. These outcomes are understood to be quality and experience of work at the individual level, and at an organisational level, high engagement is suggested to increase productivity and growth. Kahn acknowledges that employees can benefit from employee engagement as opposed to Harter et al.’s focus on organisational benefits.
Levinson (2007, in Robertson-Smith and Markwick, 2009) suggest that happier workers lead to happier customers which identifies a link between employee engagement and customer engagement. Illustrating these outcomes further, Harter et al. (2004), on behalf of the Gallup organisation, have completed a subsequent study which demonstrates that high levels of employee engagement in addition to customer engagement, positively enhance financial performance. Similar correlations between engagement levels and profit are also recorded by Macey and Schneider (2008), Czarnowsky (2008), and Robinson et al. (2007). Towers Perrin (2008) furthermore contribute from their study, that organisations with the highest levels of employee engagement are capable of making year-on-year increases of potentially 19% more operating income and 28% more earnings per share, than compared to those organisations at the lower end of the employee engaged spectrum. Exploring this link
regarding earnings per share, Ott (2007) explored Harter et al.’s (2004) study further to show that engagement is linked to earnings per share in public trading organisations. These findings demonstrate that securing employee engagement produces positive organisational outcomes.
Alfes et al. (2010) conclude; “we consider three important outcomes of engagement: performance, innovative work behaviours – or the extent to which people innovate in their jobs – and intent to quit” (p.42). Unlike some of the other studies discussing outcomes of engagement, Alfes et al. identify innovativeness as key. They also suggest that on an individual level, employee engagement mediates well-being. This argument strengthens the perspective that engagement is the opposite of burnout as identified by Bakker et al. (2008) and Schaufeli et al. (2008). Furthermore, when an employee becomes engaged and maintains this engagement, it is understand that engagement can improve their personal well-being (Alfes et al., 2010; Kahn, 1990) and health (Schaufeli et al., 2008). These studies identify that engagement has benefical outcomes for both the employer and employee.
Employee engagement is understood to have a significant correlation to business as well as individual outcomes. The findings of the effect which employee engagement can potential have in regards to share returns are particularly interesting for EOCs. The literature does not acknowledge any negative outcomes of employee engagement implying that its existence can only have a positive influence in organisations and to individuals. However, it is understood that employee engagement has opposite outcomes to that of burnout (Langelaan et al., 2006; Maslach et al., 2001; Schaufeli et al., 2002) and workaholism (Schaufeli et al., 2008). Only when organisations fail to secure employee engagement is it established that there are negative outcomes and consequences. For employees who feel disengaged, it is understood that they also report that their physical and psychological health is negatively impacted as a direct result of their work (Crabtree, 2005). For organisations, a disengaged workforce is likely to have high sickness levels, high employee turnover, and low levels of advocacy for the organisation (MacLeod and Clarke, 2009). This indicates that a disengaged workforce could have further implications on the organisation, as well as effecting the individual.
Critical Perspectives of Employee Engagement
Whilst management strive for organisational success, it is understood that they are often faced with a dilemma. For organisations to survive they need to maximise profit typically through cost saving, whilst securing commitment and encouraging innovation of the workforce in this plight (Herroit, 1998). Management need to stimulate their workforce to further efficiency (Bradley and Gelb, 1983) and take “a more proactive approach to industrial relations to ensure that it supports and is integrated with the achievement of business objectives” (Salamon, 1998:24). Through employee engagement, it is identified that management proactively seek the cooperation of their employees to increase efficiency (Macleod and Clarke, 2009), innovation (Alfes et al., 2010), and performance (Harter et al., 2004; Kruse and Blasi, 1995). Whilst engagement attempts to address this managerial dilemma, it is important to acknowledge the conflicts and contradictions within the employment relationship. Engagement strategies merely invite employees to engage and their commitment to such cannot be enforced.
The employment relationship is described by Gospel and Palmer (1993, in Rose, 2008:7) as “an economic, social and political relationship in which employees provide manual and mental labour in exchange for rewards allotted by employers”. However, rewards are not defined solely as financial. It is understood that there is an expectation of reward as perceived through not only a written contract, but a psychological contract (Gourlay et al., 2012; Kahn, 1990). However, the employment relationship must remain fluid to aid organisational success. As a result of this, the employment relationship is characterised by “repeated challenges by employers to as they try to redefine and realign workers interests with corporate goals” (Kelly, 1998, in Rose, 2008:7). The employment relationship is to an extent controlled by the employer. The nature of employment is as such that it is an unequal balance of authority. Employees trade their labour in return for a reward; they are contracted for duties, which if they do not fulfil, their employment could cease (Rose, 2008). By engaging in this contract, it is implied that employees will follow reasonable management instruction and if they do not, employees understand that there may be repercussions for their refusal. However, when employees present collectively and organise themselves through trade unions for example, collective bargaining can hold strong against management actions. Collectively, employees can influence management decisions to a greater extent. Although such reactive involvement opposes Salamon’s (1998) position, that management needs to proactive in managing the employment relationship.
There are several perspectives that need to be considered when evaluating the employment relationship and understanding the role which employee engagement has. Perspectives reflecting upon managerial theories of pluralism and unitarism, as well as individualism and collectivism, will be discusses to identify critical perspectives of employee engagement.
Pluralist and Unitarist Perspectives
Literatures theorises two key organisational approaches to employee relations. Fox (1966, in Williams and Adam-Smith, 2010) suggests that the unitarist and pluralist perspectives are “ideologies of management” (p.12). The unitary perspective suggests the organisations consist of a group of people who are integrated by sharing common objectives and values. It is understood that they operate by acknowledging that management have the prerogative to make decisions which the workforce accept and do not challenge (Rose, 2008). It is suggested that this acceptance occurs amongst the workforce, as they are perceived to share the same agenda as management and believe that such will deliver positive outcomes for the organisation. Furthermore, Williams and Adam-Smith (2010) describe that unitarism is “a perspective on employment relations that emphasizes the harmony of interest that exists between employers and employees” (p.383). Unitarism assumes that employees and management share mutual interests (Arrowsmith and Parker, 2013). The literature on employee engagement identifies that a key driver of employee engagement is having a strategic narrative (MacLeod and Clarke, 2009) and senior management communicating a shared vision which all should aspire to achieve (Alfes et al., 2010). The unitarist view would acknowledge employee engagement as a method for which managers could use to seek employee behaviour and performance in the manner that the organisation desires. Employee engagement concerns management seeking the best from their employees by making the feel positively about their contribution (Finney, 2008). Through engagement, employees align themselves with the organisation’s values, which have been created by management. Therefore, from a unitarist perspective, employee engagement is only concerned with how employees can function in the best interests of the organisation and not themselves.
The contrasting perspective of unitarism is pluralism. Pluralism acknowledges employee voice and perceives that management have different objectives to that of
the workforce (Rose, 2008). As explained by Rose (2008) pluralism is “a perspective on employment relations that recognizes that employers and employees may have conflicting interests, but that these can be resolved to the mutual benefit of both by means of formal procedures, bargaining relationships with trade unions in particular” (p.382). This suggests that compromises are often made by both parties, as management do not have ultimate power over the workforce. The pluralist perspective suggests that in organisations there is a focus on procedures and systems for joint regulation (Hyman, 1989). Unitarism expects loyalty from its workforce and in contrast, pluralism understands that loyalty may not be secured but it is encourage by giving the workforce opportunities to voice their opinions. The CIPD (2009b) identifies employee engagement with the pluralist perspective as it acknowledges that both the employer and employee need to contribute to the relationship to make it productive for both parties. The pluralist perspective identifies that engagement can be a benefit to both the organisation and the employee. Employee engagement is argued by Robinson et al. (2004) to be a mutual relationship between the employee and the employer, which involves sacrifice and compromise for the mutual benefit of both parties. By acknowledging that employees can also shape and influence an organisation, the pluralist perspective acknowledges that this can be advantageous to both the employer and employees. The pluralist perspective also identifies that within organisations, employees have different needs and objectives, whether this is a result of location or role type for example (Foot and Hook, 2011). The engagement literature acknowledges this and seeks to harness engagement at an individual level (Saks, 2006). However, employee engagement also identifies with the pluralist perspective through the meaningfulness of work and the identification with a shared vision. This demonstrates that there may be some overlap with the pluralist and unitarist perspectives in regards to employee engagement.
When management are unable to identify with their workforce through either pluralism or unitarism, Fox (1974) suggest that this could be a result of the radicalism. Williams and Adam-Smith (2010) describe that the radical perspective on employee relations is one “that recognizes that employers and employees have potentially conflicting interests, which are so deep-rooted that when disputes arise they are incapable of being resolved to the mutual satisfaction of both parties” (p.383). Essentially, radicalism identifies that there are fundamental divisions in society therefore a conflict exists between employees and organisations due to these
divisions. Radicalism suggests that such conflicts cannot be overcome because of the inherent societal differences, which are not derived from organisations. As employee engagement concerns the relationship between the employer and employee (Robinson et al. 2004), it could be understood that employee engagement could not be secured if management identified with the radical perspective of employee relations. The radical perspective would suggests that employee engagement is merely a ploy to convince employees that they share the same interests as their organisation. The employee engagement literature does not identify itself with this perspective.
Budd (2004) suggests that “human resource management follows the unitarist belief that effect management policies can align the interests of employees and employers and thereby remove conflicts of interest” (p.6). This perspective is also shared by Legge (1995) who stresses that human resources adopts a unitarist position. She suggests that organisations can achieve success through mutual policies that encourage commitment and employees to work flexibly to achieve objectives, therefore harnessing their engagement. Arguably, employee engagement typically follows the unitarist perspective as it attempts to remove conflict through participation and involvement of employees. Furthermore, engagement requires employees to share the organisations visions and values (Alfes et al., 2010; MacLeod and Clarke, 2009). Employees conform to these by identifying them with which results in becoming engaged, and ultimately following the desired behaviour as prescribed by management.
However, Ramsey (1977) would argue that employee involvement and voice are influenced by economic pressures as opposed to organisations truly desiring involvement. As described by Harley et al. (2005) according to Ramsey’s cycle of control thesis, management would increase participation “at times when labour sought to challenge managerial authority, and the initiatives declined because of the declining power of labour and/or economic pressures to cut costs and maximise profit” (p.2). Organisations perceive union activities to increase therefore instead of being reactive to this; they proactively involve them, which demonstrates a degree of control. Therefore, when union interest starts to decrease, management would make decisions without employee consultation. Ramsey (1977) would suggest that such reaction reflects economic climate, therefore his argument on employee engagement would be that employee participation and voice is not a new idea. Furthermore,
questions would be raised as to if organisations really mean that they value such participation and involvement as the history of employee relations would suggest that management act in such a way to only further organisational success (Ramsey, 1977). However, Ramey’s theory fails to identify why employee engagement has become popular at a time when union activities are particular weak.
Individualism and Collectivism
Whilst Ramsey’s cyclical perspective may have been reasonable prior to the Winter of Discontent (Rose, 2008), Marchington (2005) suggests that organisations have used employee involvement and participation more recently for other reasons regardless of the demise of trade unions. Evidence from the 2004 Workplace Employee Relations Survey supports the decline of trade union involvement despite the increasing economic downturn. Kersley et al. (2006, in Sisson and Purcell, 2010) report that during the 1980’s 90% of private sector organisations had some form of collective bargaining in place, whereas in 2004 this had decreased to 16%. Due to the decrease of collective bargaining, management determine pay in approximately three out of four private sector organisations. As a result of this control performance, management has gained momentum therefore requiring management to acknowledge that the workforce comprises of individuals (Sisson and Purcell, 2010). The employee engagement literature acknowledges that engagement is an individual occurrence and requires organisations to identify with individuals as opposed to a collective workforce for engagement to be harnessed (Saks, 2006). Engagement concerns how one is involved, satisfied, and enthused with their work (Harter et al., 2002). It reflects an employee’s state of mind (Macey and Schneider, 2008) and can only be secured when an individual’s psychological needs are fulfilled (Kahn, 1990; 1992).
Sisson and Purcell (2010) describe that there has been a shift in employee relationship from collectivism where trade unions were frequently involved in management decisions, to a position which reflects individualism where management recognises that employees are not a single collective with mutual objectives, but as individuals with different objectives. They describe that contemporary employee relations requires management “in part the logic is to manage, or manipulate, the psychological contract and seek to improve the sense of commitment felt by the individual to his or her employer, what is often nowadays called ‘engagement’” (p.87). This focus on the
individual as opposed to a collective workforce emphasises that whilst management acknowledges individual differences thereby adopting the pluralist perspective, management has increased its control and authority in the employment relations due to the demise of collective voice. Arguably, through engagement organisations invite individuals to conform to the organisation’s culture, values, and processes through a shared vision. This vision is understood to be shaped and nurtured by management (Alfes et al., 2010; MacLeod and Clarke, 2009), therefore enabling them to gain an element of control.
Purcell (1987) describes that individualism “refers to the extent to which the firm gives credence to the feelings and sentiments of each employee and seeks to develop and encourage each employee's capacity and role at work” (p.536). Within this perspective, management view employees as a resources therefore organisations have policies and strategies that address employees are being the most valuable resource that the organisation has (Purcell, 1987). Opposite to individualism, Purcell defines collectivism as a perspective that “concerns the extent to which the organization recognizes the right of employees to have a say in those aspects of management decision-making which concern them” (p.538). In the engagement literature, Alfes et al., (2010) agrees with the perspective that employees should be involved in decisions that affect them as such employee voice can harness employee engagement. As opposed to having policies and strategies that reflect individual voice, the collective perspective is demonstrated by organisations having clear democratic structures that function to represent the workforce. When making decisions, management utilise the collective interests of their employees (Purcell, 1987). The engagement literature suggests that participation and involvement are crucial to its success as this leads to meaningfulness in work (Brief and Nord., 1990). However, whilst a collective voice can be useful and participatory practices may be defined by democratic structures in organisations, engagement is an individual occurrence (Saks, 2006) which utilises an individual’s relationship with their line manager and relies upon individual outlets for their voice to be heard (MacLeod and Clarke, 2009).
Bacon and Storey (1993) suggest that collectivism and individualism perspectives are not solely influential to employee relations, but that human resources and work organisation are also mediators. As a result of the changes in the nature of work since the 1980’s, Bacon and Storey argue that there has been a shift towards organisations
adopting an individualism management perspective, which has created positive engagement.
Whilst organisations should acknowledge that there is a collective element to the employee relations such as through sharing a vision (CIPD, 2008), the nature of employee engagement requires an individual to invest their self in the organisation (Kahn, 1990). This thereby demands an individualist management approach. The literature concerning employee engagement primarily identifies with the individualistic conception as it recognises that employees have an individual voice. To harness employee engagement, managers should build individual relationships with their employees (MacLeod and Clarke, 2009), work with them to understand their training needs (Robinson et al., 2004), and ensure that they have the necessary skills and equipment to complete their role (Harter et al., 2002). If this is achieved, it is understood that through engagement, employees’ will aspire to further achieve (Spreitzer et al., 1997). Employee engagement potentially undermines the collective conception of employee relations as it invites employee involvement through any means and not just through recognised democratic structures that represent employees collectively. Furthermore, employee engagement, to an extent is central to high performance (CIPD, 2009b). Therefore, this can only be managed by individual performance management (Sisson and Purcell, 2010) and acknowledging individual needs which if met, can harness engagement (Woodruffe, 2009; Kahn, 1990). This furthermore suggests that employee engagement is reflective of the individualistic conception of employee relations.
Links between Employee Engagement and Employee Ownership
The current literature presents employee engagement and employee ownership as two distinct separate concepts. Employee engagement is frequently discussed and researched in the context of ‘traditional’ organisations but there are only claims as to how employee engagement functions in EOCs. Furthermore, the issue with the employee engagement literature is that “much of what has been written about employee engagement comes from the practitioner literature and consulting firms. There is a surprising dearth of research on employee engagement in the academic literature” as argued by Saks (2006:600). The problem that this creates is that
employee engagement has the characteristics of becoming a glossy feature in a business portfolio or strategic plan.
From initial discussions with EOCs, it is believed that something happens in such type of organisation that is less evident in non-EOCs. The current practitioner literature features a very limited number of EOCs participating in nationwide engagement surveys such as the Sunday Times Best Companies, and three EOCs case studies are presented in MacLeod and Clarke (2009) study. However, these examples fail to specifically explore engagement in relation to how the dynamic of employee ownership can mediate this. Furthermore, a report presented by the executive director of the EOA in 2006, explores the experiences of employee-owners in EOCs but does not makes connections to employee engagement (Burns, 2006). The report discussion formed around some of the antecedents and consequences of engagement, but there is no direct identification to these as being a result of employee engagement.
What employee engagement exactly is in EOCs and whether or not employee ownership is a mediating factor to engagement is unclear at present. Furthermore, how engagement can be secured in EOCs, and potentially transferred into practice in other organisations, needs to be understood and evaluated to provide clarity to the employee ownership debate. Without rigorous, unbiased investigation, and evaluation through academic research, the true potential of employee engagement in EOCs remains unknown.
As presented in this literature review, employee engagement is understood to essentially involves the “hands, head, and heart” (Ashforth and Humphrey, 1995:110). It has been established that it concerns forming and enhancing a positive, constructive, working relationship. Employee ownership takes a unitarist perspective as it suggests that organisations and their workforce are unite in their vision, and encourages employees to involve themselves with the organisation. An alternative perspective of employee ownership would suggest that it identifies with the collectivism conception of employee relations as some EOCs have clear democratic structures for representation through the use of employee benefits trust’s and employee boards. However, employee engagement warrants organisations to acknowledge individualism. Bradley and Gelb (1983) suggest that nothing good is likely to come out of an organisation that has sought employee ownership as a solution to its problems.
Nonetheless, the engagement literature would argue that through meaning in work and a shared vision supported by engaging line managers, employee engagement could support organisational success (MacLeod and Clarke, 2009; Alfes et al., 2010; Harter et al., 2004; Cook, 2008).
Closing Discussion
The literature presented has provided a range of definitions for employee engagement giving further weight to the understanding of what employee engagement is ultimately envisaged to be. Employee engagement is characterised by emotion, cognitive processes (Kahn, 1990; Saks, 2006), and an actual display whether it be physical (Kahn, 1990) or behavioural (Saks, 2006). Additionally, employee engagement comprises many traits and facets, some of which can be very apparent, others which are not. An employee could well have different levels of engagement for their job and their organisation following the theory of Saks (2006). However, as suggested by Robinson et al. (2004) in order for employee engagement to be maximised, that the employee and the employer should work in conjunction with one another.
An understanding of social exchange theory illustrates the give and take relationship of employee engagement. An employee is employed to complete a job role; they receive monetary benefits from the organisation for the completion of this duty. However, often an employer can provide more than this such as training, enhanced holidays, and job security for example, therefore potentially expecting more in return from the employee. This more could be identified as a higher level of engagement. To warrant this, it is understood that organisations need to provide good management, transparent communication (including policies), mutual respect, and development opportunities, to make clear advances in facilitating employee engagement (Attridge, 2009; Cook, 2008; Harter et al., 2002; Robinson et al., 2004). Organisations need to concern themselves with employees as being individuals and utilise an individualist managerial perspective.
Regardless of the provisions and opportunities, organisations can put in place to help facilitate employee engagement; employees can only be provided with the opportunity to engage. Engaging cannot be forced but it can be encouraged. An employee will engage when they perceive that the benefits outweigh the costs
(Czarnowsky, 2008; Kahn, 1992). Employee engagement relies on one’s ability to perform as well as manage their job role (Schaufeli et al., 2008). Additionally, they need to be psychologically available to participate in an engagement relationship, identifying that it is meaningful and secure to do so (Kahn, 1990). Engagement is a feeling, an attitude, which is individual to each person (Colbert et al., 2004; Cook, 2008; Truss et al., 2006). Perception and how one understands the environment that they are in, results in some employees engaging at different levels compared to others (Macey and Schneider, 2008). Therefore, measurement is vital if organisations wish to maintain and maximise employee engagement levels.
The use of survey questionnaires has been explored to determine how employee engagement levels can be assessed and tracked. It is crucial more so to analyse responses on a continuing basis to determine how changes impact employees’ relationships with the organisation (Macleod and Clarke, 2009). It is also important to compare engagement to key performance indicators (KPI’s) to establish if the investment made in conducting engagement is worthwhile. Harter et al. (2004) has provided evidence as to how beneficial employee engagement is to organisations in terms of notably increasing production and profitability. The literature suggests that by securing employee engagement, it is anticipated that burnout can be avoided (Maslach et al., 2001).
An interpretation of the evidence would suggest that employee engagement occurs when an employee and an organisation form an active relationship built on communication, respect and ambition (Robinson et al., 2004). An engaged employee will be enthusiastic regarding their job and their organisation. It is a positive mental attitude held by him or her presented by numerous behaviours that work to aid the success of themselves and their organisation (Schaufeli et al., 2002).
It has been learnt through this chapter as to what employee engagement could possibly be, as well as learning what it is believed not to be. It has been discussed how engagement can potentially be assessed in an organisational context. Despite the lack of clarity in the employee engagement literature as to what it ultimately is, Gallup (2008) is now looking ahead to a new type of employee engagement. What they have described as HumanSigma, suggests that employee engagement can be further advanced by customer engagement. The study that they have compiled shows how
this can have a positive effect on engagement. Potentially, customer engagement could be understood as a progression from Saks’s (2006) proposal that engagement comprises of job and organisational engagement. The additional link to customers also proves viable not just through advantages by connecting closer to customer desires, but also by providing a meaningful relationship between customer-employee so that the employee is further engaged in the role they are fulfilling.
Reflecting on what has been discussed; further channels for research have been identified. Clear links have been made between employee engagement with commitment, participation, organisational citizenship behaviour, the psychological contract, profitability, shareholder returns, burnout, emotional labour, motivation, and job satisfaction. Future research will no doubt unveil more areas to explore. In this chapter, the role of employee engagement in organisations has been discussed in relation to the various factors that contribute to it and what potential engagement has to offer for organisations as well as individuals. The next chapter will explore EOCs, which will provide a context for this research study. As summarised by Harter at al. (2004) “by definition, engagement includes the "involvement and enthusiasm" of employees and the "emotional attachment" of customers. Employees can become "involved and enthusiastic" in their workplaces when they have their basic needs met, have an opportunity to contribute, a sense of belonging, and chances to learn and grow”. EOCs are understood to typically provide a culture of involvement and participation due to the nature of their ownership. With this in mind, work practices will be explored to provide some connection between the separate literatures.
At a basic level, being an employee-owner is understood in the literature to represent an employee who has shares, directly or indirectly, in the organisation. Simple definitions suggest that employees own the majority share of the organisation (Postlethwaite et al., 2005). To have ownership of something, it commonly dictates that one has a financial investment, authority to control, and a right to sale. However, ownership itself in EOCs is not that straightforward. As illustrated by Rosen et al. (1986:14), employee ownership is described as “a plan in which most of a company’s employees own at least some stock in the company, even if they cannot vote it, and even if they cannot sell it until they leave or retire”. As will be explored in this chapter, there is not a unified model of how ownership should operate aside from a degree of financial ownership. There are a variety of approaches that EOCs can use which could be described as having the potential to facilitate employee engagement.
This chapter will explore the meaning of employee ownership and elaborate upon the three forms; worker co-operatives, minority share ownership, and employee ownership/co-ownership. The literature review will explore the rise of employee ownership, discussing the changing nature of organisations and employees expectations of work, before evaluating why organisations choose to pursue employee ownership. The chapter will discuss how ownership influences management, the perceived power of ownership, and employee satisfaction. Culture, employee participation, and involvement, will be explored to present further theory and research as to how EOCs are able to utilise these to their advantage. The chapter will draw to a close by linking employee ownership to employee engagement, and presenting a summary of the material presented.
The Nature of Employee Ownership
There are some inconsistencies in the literature as to what is be described as employee ownership. The Baxendale Partnership, an organisation which helps organisations to pursue employee ownership, is clear that there is just not one model of EOCs. It is understood that different elements characterise EOCs and this is not solely limited to
having employee shareholders. They acknowledge that in many organisations, employee share options exist, but this is not always necessarily what is meant by employee ownership. Baxendale Ownership (2013) describe on their website that;
“for an organisation to be considered employee owned in a meaningful way by the UK’s Employee Ownership Association, it must cross a threshold which is based on an informed calculation that measures the percentage of employees benefiting from ownership and the percentage of the business owned by those employees”.
Oliver (1990) describes four key types of EOCs as; one where all or the majority of the shares are owned by employees, wholly share owned by employees, worker cooperatives, and ESOPs (Employee Stock Ownership Plans). Pendleton (2009) alternatively proposes that there are just three types of worker ownership. These are described as worker co-operatives, minority share plans, and employee ownership/co- ownership. Different to Oliver (1990), Pendleton (2009) groups together employee ownership to include wholly-owned employee organisations and majority share ownership. Pendleton further claims the difference between the models of ownership resides in the percentage of the organisation being employee-owned, the rationale for ownership, the governance frameworks that operate within the organisation, and how ownership is distributed between employees.
Extending the discussion to explore worker co-operatives further, the equity stake of ownership held by employees is 100% in this type of EOC. A worker co-operative as defined by Co-Operatives UK website (2013) is “a business owned  and democratically controlled by the people who work in it”. Co-operatives form part of a wider consortium. Although they do not have a specific form of legality, there is a Worker Co-Operative Code of Governance detailing basic principles that co-operatives adhere to. The International Organisation of Industrial, Artisanal and Service Producers’ Cooperatives (CICOPA, 2005) states that such organisations are characterised by creating and maintaining sustainable employment. Additionally, revenues dignify work in terms of the quality of life that it offers to its members and the wider community. Furthermore, the CICOPA define that members join the co- operative voluntarily with no financial outlay, and that they should operate in a wholly democratic manner. The work of the co-operative is proposed to be undertaken by its members, where possible.
When an employee joins a worker co-operative, they are free to become a member. In return, they have an individual voting right. All members have an equal stake of ownership (Pendleton, 2009). When an employee leaves the organisation, they lose their voting right. Debates concerning worker co-operatives suggest that the organisations’ can be somewhat less productive as a result of the time taken to make decisions (Carnforth, 1989). Additionally, the triangulation between ownership, management, and control, is perceived to be incoherent due to the voting system, and the somewhat irrelevant hierarchy that is controlled by an employee-elected board (Pendleton et al., 2001). A different employee ownership model to worker co- operatives is an organisation that operates an ESOP. In ESOPs, the shareholders are required to purchase shares to gain voting rights. Employees are able to purchase varying amounts of shares, which create voting inequalities as the more shares you purchase, the more votes you can cast. The ESOP model is distinctly difference to the ethos of worker co-operatives as the right of control can only be brought in this type of organisation.
Exploring ESOP companies further, they are slightly more complex in their structure compared to co-operatives due to the restrictive legislation surrounding share plans. In ESOP companies, an employee trust (ESOT) buys (either in cash or as stock in return) a proportion of the organisation. The organisation then contributes to the trust a comparative sum of its profits, which are distributed to individual employee accounts according to their salary. This sum is held by the trust on the employees’ behalf until they either retire, at which point the full amount will be received, or until they resign at which point a proportion of the sum accumulated will be paid (Oliver, 1990). As suggested by the Commission of the European Communities (1996, in Pendleton, 2001), ESOPs typically incorporate profit sharing and employee share ownership. Profit sharing can be cash (either an actual payment or in the terms of shares), or deferred where the payment is received sometime after.
There are a number of different types of ESOPs in operation to encourage long-term commitment (deferred profit sharing) or to encourage productivity (cash profit sharing), thereby aligning organisational and employee interests. Pendleton et al. (2001) describe these different forms as being Approved Profit Sharing, Save as You Earn Share Option Scheme, Company Share Option Plan, Enterprise Management Incentive Plan, and All-Employee Share Plan. Each has a differing legal framework
relating to the volume of stock an employee can hold, when equity can be received, as well as different tax saving initiatives. Regardless of the different forms of minority ownership, the organisations are governed in a conventional manner. In the US, ESOPs work slightly differently. A legal firm organises and oversees the arrangement as opposed to a trust in the UK (Logue and Yates, 2001; Rosen, 1988) and they are predominately used as retirement packages, i.e. deferred profit sharing.
Employee ownership occurs when an organisation is either wholly owned or majority owned by its employees, whereas co-ownership has a wider scope which reflects where employees “have a large or significant, but minority, stake in the company” (Postlethwaite et al., 2005:3). The rationale for such type of organisation is that they are driven by values that replicate the significant role that the employees have in the success of the organisation. Employee ownership represents a fairer society for its employees as wealth is disputed equally to those that have contributed to organisation success (Lampel et al., 2012). Ownership can occur indirectly, directly, or a combination of these. Furthermore, depending on the ownership model, employees can have an equal or unequal number of shares (Pendleton, 2009). The governance of the organisations varies but often features an employee-led council to ensure that the organisation continues to deliver upon the values that it is built upon.
Indirect ownership occurs when shares are held collectively in a trust; often referred to as an employee benefits trust (EBT) (ACAS, 2013). This trust represents the views of employee-owners collectively by having an elected board of trustees and representatives. When employees hold shares indirectly, typically voting rights are distributed in terms of the number of shares held by individuals (Oliver, 1990). Shares do not necessarily have to be purchased as such, as they can also be given freely and furthermore, in some situations, not all shares have voting rights. The nature of indirect ownership can vary between organisations. For example, one may be 100% owned by an EBT on behalf of its employees, whereas another could have 25% of its employees’ shares held collectively in trust with the remaining shares held by individuals and additional stakeholders.
Direct ownership is a result of employees holding shares individually such as through a share plan (ACAS, 2013). Through direct ownership, there is greater flexibility for the employee-owner in terms of being able to maximise or minimise their shareholding.
Direct ownership also offers tax incentives for both the organisation and the employees, in addition to holding voting rights and being able to maintain the shares after employment has ceased (BIS, 2013). Employees have voting rights equal to that of other shareholders. This type of ownership enables employees to be flexible with their ownership stake and financial returns are received through share dividends.
Often there is a combination of direct and indirect ownership to allow individuals to purchase additional shares in the organisation (EOA, 2010). The advantage of having a combined method of ownership such as this is that by having shares held collectively for employee-owners, it potentially provides a stronger and louder employee voice, in addition allowing flexibility for those employees who wish to invest further in the company.
This research is primarily focused around employee ownership/co-ownership, where employees have a majority share in the organisation and where the rationale for the ownership is built upon sharing the success of the firm with those who have contributed it. The reasoning behind this primary focus is that it allows this form of ownership to be explored in depth. This will enable comparisons to be made between similar ownership models by exploring case study examples.
The Rise of Employee-Owned Companies
Once forming a small part of the UK economy, the employee ownership sector now accounts for more than 2% of the UK’s GDP with a combined annual turnover in excess of £25 billion (EOA, 2010). The sector is very diverse and represents almost all types of businesses including but not inclusive to; design consultants, hospitals, nurseries, retail, manufacturing, seafood farming, and insurance services. The organisations range from having less than a dozen employees to over 65,000 employees around the world. The scope and possibilities for employee ownership are wide and far reaching.
Employee ownership has become a hot topic on the Government’s agenda. A recent Royal Mail enquiry into the potential of employee ownership led to the announcement that at least 10% of the company will become employee-owned (EOA, 2011). Cynics may suggest that Governments’ interest in employee ownership may be somewhat of a way to increase cash flow by introducing options for additional share purchase.
However, former Prime Minster Gordon Brown stated in his speech to the Institute of Fiscal Studies (Brown, 1999) with confidence that “there is clear evidence that giving people a genuine stake in their company’s future delivers real improvements in performance and productivity”. This clear evidence is demonstrated in Rosen and Quarrey’s (1987) study, which compared 45 EOC with 238 non-EOCs in similar industries, found that EOC had enhanced sales as well as growth in employment. Awarding employees with shares of up to £2,000 for their commitment to the organisation, the aim of Royal Mail’s move is to help improve the service by creating an environment of involvement and engagement (Silvera, 2013). The discussion on employee ownership is growing. With the spotlight on, ownership is gaining a wide variety of interest and respect for its viability as a business model.
The success of EOCs is commonly triumphed by one company in particular. When discussing employee ownership, peoples’ response tends to be – “like John Lewis you mean?”. Pre-recession, the John Lewis Partnership issued their employees owners with a record breaking partnership bonus equating to 20% of their annual salary (John Lewis Partnership, 2011). Even during the prime of the recession when the likes of Woolworths closed its doors a century after opening them, John Lewis was still making an admirable profit. Amidst the recovery of the recession in 2011, John Lewis Partnership could still reward their partners with an 18% bonus (ibid).
Reaching deeper into the nature of these types of organisations and examining how they achieve success, something is strikingly different. A strong desire for egalitarian values runs through the core of the vast majority of these organisations. For instance leading fair trade chocolatier, Divine, is 45% owned by its farmers who harvest cocoa beans for its products to ensure that farmers get a fair deal for their produce (Divine Chocolate, 2001). Employee ownership concerns working together for the benefit of all involved. As described by Postlethwaite et al. (2005:5):
“employee owned companies are now arguably setting the pace on at least one of the most prized yardsticks for competitiveness: the ability to harness the true commitment and creativity of their employees. Employee ownership, not surprisingly, is good for employee engagement”.
Research reflecting on the advantages of employee ownership suggests a reoccurring theme that ownership enables EOCs to harness heightened employee commitment (Burns, 2006). Burns’ (2006) study, which reflects on opinions of 96 EOCs, also notes that over 80% of respondents agree that they thought that they had better employee relations as a result of ownership, they felt that they worked more socially responsible, and that ownership encourages employees to take on more responsibility. Approximately a third of EOCs also report that they perceive their employees to be more creative and that “innovation happens more effectively” (ibid:4), in addition to over half of respondents reporting that they felt quality, products, and service are improved as a result of ownership. Interestingly, less than half of the EOCs who participated in the study felt that employee ownership was accountable for increased profits. Commonly cited disadvantages of employee ownership include; slow decision making and implementation, avoidance of making unpopular decisions, issues with raising capital, and “freeing managers to manage” (ibid:5). There are some clear advantages to employee ownership, which demonstrate in accordance with Postlethwaite et al. (2005), that ownership can enhance employee commitment and creativity.
The previous chapter discussed in detail what employee engagement is and suggested what aspects may be particularly prevalent for EOCs. From the description provided by Postlethwaite et al., it can be seen what potential relationship employee engagement has to employee ownership. In bringing together these two concepts, both need to be fully understood.
Changing Organisations
The ideology associated with organisations being employee-owned typically follows an egalitarian perspective founded on the belief that people should be equal. Progressively in the mid-20th Century, some entrepreneurs begun to believe in this ideology so they introduced ownership into their company providing employees with a degree of control and equity in the organisation. The success of the John Lewis Partnership that was set up in the 1950 has paved the way for the possibilities of such. The organisation embraced egalitarian qualities; John Spendan Lewis, as quoted in Cohen (2006:59), asserted that “the supreme purpose of the John Lewis Partnership is simply the happiness of its members”. During the hippy movement in the 1960’s this
philosophy of “non-authoritarian ways of working...to produce for need and not for profit” stimulated business-owners and increased the number of EOCs, in particular worker co-operatives (Carnforth, 1989:41). Alternatively, the rise in capitalism is a different perspective to take as to why EOCs emerged. Carnforth (1989) suggests that worker co-operatives in particular rose to combat the undesirable affects that capitalism has on an organisation, socially and economically. For instance, recession periods lead to scarce bank lending so alternative methods of finance need to be found. Government has attempted to encourage the growth of EOCs through providing tax benefits for both the organisation and the shareholder with varying success to establish employee ownership as a rewarding, and viable business model (Mason, 2010). It is acknowledged that the introduction of more tax efficient schemes could further promote employee ownership (HM Treasury, 2013).
These two different perspectives somewhat reflect the opposing theories suggested regarding organisational change. Pendleton et al. (2001) comment on Poole’s (1989) evolutionary perspective that suggests technological and societal developments have urged organisations to evolve. In comparison to this, Pendleton et al. discuss Ramsay’s (1977) cyclical approach to organisational change which suggests that changes in the economy influence organisational change. A third theory is introduced, Poole’s favourable conjecture thesis, which simply suggests that organisational change can occur at any time for a variety of reasons. Furthermore, as Carnforth (1989) explores, economic and social factors dramatically affect the setup of EOC. The organisation is greatly dependent upon the right conditions for it to become successful, and these conditions may well be different for different EOCs due to industry and their reliance on share sales. For instance when an EOC is dependent on employees buying shares for its cash flow, in the time of a recession the organisation is not just going to be hit by trade but may also experience a loss in cash flow as employees may struggle to buy shares and favour to sell them. Despite external factors, Mason (1992, in Pendleton et al., 2001) discussed internal, organisational specific, reasons as to why some companies become employee-owned. Such reasons include employee buyout to avoid a private sale and philanthropic donations as exit strategies for shareholders. This evidence supports Poole’s favourable conjecture thesis and as a number of EOC case studies suggest that becoming employee-owned proved to be the best option at the time in the interest of the organisation.
The growth of EOCs as explored has and can, occur for a variety of reasons. The benefits of becoming employee-owned are interpreted in terms of increasing participation, thereby potentially benefiting performance. A variety of literature suggests, as will be explored next, that participation holds the key to employee ownership success.
Smith and Thompson (1998) explored developments in regards to the labour process debate involving discussion on how divisions of labour, management of culture, and control structures in organisation had changed. They claim that work has become increasingly intensified, and it is often the case that capitalist notions of thought suggest that management initiatives are only concerned with financial returns. Ramsay (1977) suggested that worker participation was not a result of capitalism, but that participation occurs cyclically due economic pressures which encourage management to seek employee participation. Defining participation as “a means of attempting to secure labour’s compliance” (p.481), Ramsay argues that participation schemes have only arisen on occasion due to the authority of management coming under threat. Cooper (1999) on the other hand, argues that work has been intrinsically insecure with a decreasing level of loyalty to the organisation. Employee ownership is not understood to identify with radical perspectives of management because of the participatory mechanism that it induced.
Ownership has unitarist aims as it aspires for the workforce to share goals and aspiration. Equally, employee ownership acknowledges a pluralist framework as it invites participation through recognised communication channels in what is their organisation (Davies, 2009). However, it should be noted that the reason an organisation pursues ownership will reflect the management perspective followed. As a result of the motives for ownership, it is understood that the ownership model will be shaped to influence the required employee attitudes (Klein and Hall, 1988). Arguably, despite ownership, management can continue to retain power over employees-owners through organisational decision-making (Hammer and Stern, 1980). Taking this further, perceptions of management’s commitment to employee ownership, legitimacy of ownership, and expectations delivered through management will affect employee attitudes and behaviours (Pierce et al., 1991, Klein, 1987). Employee perceptions of ownership and their perceived role as an employee-owner contribute to what is suggested to be “psychological ownership” (Pierce et al., 1991;
Pendleton et al, 1998). It is understood that psychological ownership can influence employee behaviours performance (Pierce and Rodgers, 2004).
Choosing Employee Ownership
Taking a micro, internalised perspective, the most frequent benefit associated from becoming employee-owned is the belief that it will lead to greater productivity and profitability. It is claimed that this increased namely from heightened motivation (Conte and Svejnar, 1990; Levine and Tyson, 1990; Cohen, 2006). The idea is that if employees become owners, it is understood that they will be more determined to make the organisation profitable. Through this determination, it is claimed that they will be more committed, driven to produce, and become more economical (Kruse and Blasi, 1995). However, as Oliver (1990) questions, is it the fact that they are committed that drove them to be shareholders in the first instance. An alternative view is suggested by Conte and Svejnar (1990) who claim that high performers will be drawn to ownership schemes that offer performance-related reward. These comments open a need for a separate debate as to why employees become owners.
Employees may find themselves as being employee-owners for several reasons. Logue and Yates (2001) carried out a survey on ESOPs finding the most common reasons cited for an organisation to become an ESOP. The key reason was found to be to enable an exit strategy for the former owner(s). By turning to employee ownership instead of seeking a new private owner, there is less financial risk as well as ensuring that the business that was built cannot be easily changed. Secondly, they concluded that organisations also used ESOPs to help the business grow. By turning to employee ownership, organisations can also benefit from several advantages from inviting their employees to become owners. Notably, the cultural change that ownership brings asks employees to be more conscientious workers as they are also owners of the business. Employee-owners are influenced by social-psychological and behavioural effects creating a culture for organisational citizenship as well as working efficiently and effectively (Long, 1978a). An increased level of knowledge sharing enhanced by having a shared purpose as well as interest in the organisation is a particular advantage for EOCs. Levine and Tyson (1990) propose that if an employee has a stake in the organisation, they will be more willing to share ideas that could lead to increased efficiency and effectiveness, which in turn would increase profitability. Again, this
relies on commitment from the employee-owners, motivation, and participation, in order to help make the organisation a greater success.
Some research is contradictory to the advantages outlined and suggests that employee ownership does not solely hold the key to success. Kruse (1984) explored how becoming employee-owned did not always necessarily lead to advantageous consequences. In his study of ESOPs, he found that neither employee motivation nor job satisfaction, were increased because of the existence of employee ownership. Reflecting on this finding, it is suggested that employees may have expected more from being “owners” than the actual experience delivered (Oliver, 1990). This is where the different rationales and governance of employee ownership comes into force because in a co-ownership environment, this expectation of having more responsibility and involvement as an employee-owner comes into play.
Furthermore, a drawback to be aware of in employee ownership is the existence of “free riders” (Conte and Svejnar, 1990). In EOCs where profit is shared equally irrelevant of salary or grade, it is suggested that some individuals choose to perform at a lower effort level than they are capable of because they will receive the same reward as those exert a higher level of effort (Kruse et al., 2003).
In different EOCs, “ownership” will have different meanings. According to Ben-Ner and Jones (1995), if someone is an “owner” they should have a degree of control and receive the associated benefits of having a stake in the organisation, namely profits. However, different types of EOCs have different participatory practices as well as different employee ownership rights; therefore, the experience of “ownership” can be vastly different.
As argued, it is clear to see that commitment and satisfaction do not necessarily go hand-in-hand with employee ownership (Oliver, 1990). To reap the full potentials of employee ownership it needs to be encompassed in a framework of participatory practices (Conte and Svejnar, 1990; Logue and Yates, 2001; Levine and Tyson, 1990). Further, Conte and Svejnar (1990) indicate that caution needs to be taken when selecting participatory practices as they can have differing impacts on motivation. As they advocate, participation group such as employee-led steering/involvement groups
have a greater positive effect on performance compared to share voting or having an employee voted to sit on the board.
In summary, Blasi (2003, in Conte and Svejnar, 1990:177) comments, “many surveys and field studies of ESOPs show that employee ownership increases the employee’s identification with the company” regardless of how productive or satisfied they actually are. Organisations need to be aware of their owners’ needs and connect with them as close as possible to ensure that participatory practices as well as compensatory measures are successful for both the employee-owner, and the organisation as a whole to maximise the relationship (Levine and Tyson, 1990). If employee ownership is modelled appropriately for an organisation, research indicates that they can perform better than non-EOCs in a similar situation (GAO, 1987, in Levine and Tyson, 1990).
Ownership in Practice
The literature suggests that employee ownership offers a different experience of work through high participation and involvement in addition to psychological ownership becoming an ownership reality.
Psychological Ownership
Baer and Brown (2012) suggest that psychological ownership is “a state wherein people feel as though an object, or part of it, is theirs” (p.60). Similarly, Van Dyne and Pierce (2004) describe it as “the possessive feeling that some object is ‘MINE’ or ‘OURS’” (p.439). For psychological ownership to occur there does not have to be a legal right or entity of ownership as it is a feeling from within that makes one feel possession over something.
Research completed by Pierce et al. (2001) explores psychological ownership in the context of employee ownership and suggest that organisational as well as individual outcomes are influenced by it. They suggest that ownership creates a bond and integration between the employee and the organisation, which represented the occurrence of psychological ownership. Their study identified three conditions which lead to socio-psychological and behaviour effects, in turn creating psychological
ownership; “(1) the right to possession of some share of the owned object’s physical being and/or financial value, (2) the right to exercise influence (control) over the owned object, and (3) the right to information about the status of that which is owned” (p.125). With these conditions present, it is believed that employees enlist a mind-set and behaviour accordingly. The employees are said to have a level of knowledge about an organisational factor, they feel that they have an element of control, and a desire to invest their self in the organisation, leading to psychological ownership. Whilst Pierce et al. (2001) confirm that there does not have to be any legal entitlement to ownership for this to occur, they indicate that these rights could also be used to describe legal ownership.
The literature on psychological ownership indicated that when in existence, it can increase employees’ commitment and effort (O'Driscoll et al., 2006). It is also suggested that employees can become defensive if organisational targets become under attack which heightens commitment and possessiveness (Brown et al., 2005). Baer and Brown (2012) add to this aspect of psychological ownership that such responses could be engrained in the organisational culture and suggests that “psychological ownership may also cause people to feel a need to ‘protect’ their opinions, thoughts, or ideas and, as a consequence, to reject attempts by others to shape them” (p.60). Psychological ownership can be advantageous as well as disadvantageous for organisations, and legal ownership can stimulate an individual’s psychological perspective. Regardless of the type of ownership, when formal ownership reflects “meaningful equity, informational, and influence components” (Pierce et al., 1991:140), psychological ownership will be present which will integrate the employee-owner into the organisation and the experience of being an employee- owner.
Living Ownership
David Silverman in his Harvard Business Review blog, questioned whether or not “should all employees feel like owners” (2009). He concluded that it would be somewhat inappropriate for all employees to behave like owners because the organisation may struggle to progress as everyone would try to take responsibility for strategic decision-making. Organisations have leaders and management to make these decisions, where they bear in mind the best interests of their stakeholders but more
explicitly, the potential success or failure of the firm. However, employees do have a role in acting conscientiously and being responsible for the duties that they fulfil. Although it is unclear as to what happens when employees are also owners. The structure and processes of the organisation differ from traditional forms resulting in a different type of employee; one that may have a financial stake in the firm, someone who potentially has voting rights, and a person who is keen to participate. As already established by Postlewaithe et al. (2005), this is not always the case. The question is therefore raised; what does it mean and feel like to be an employee-owner?
The method of acquisition of employee shares influenced by the ownership model adopted is understood to have an effect on what is construed as an employee-owner in terms of their rights, responsibilities, and expectations (Pierce et al., 1991). However, ownership can also have a different meaning in each organisation; not only does the ownership structure attribute to this, but as does the perceived culture. The role of an employee-owner is greater than a non-owner because ownership generates a need for participation and involvement (Conte and Tannenbaum 1978). Scholars Ben-Ner and Jones (1995) suggest that owners should have a degree of control and an entitlement to related benefits of ownership such as profits. Although they argue that, it is unjust to invest in ownership and not reap the associated acknowledgements. Looking at this argument from a different perspective, if employees become owners through gifted shares, the question is asked as to whether they should expect further rewards, and moreover it questions what the organisation can expect in return for these ‘gifts’. A study conducted in a New Zealand financial institute found that when employees purchased shares they had an increased level of commitment compared to non-employee owners (Keef, 1994). The opposite argument to this would therefore suggest that when employees are gifted shares, it is likely that the organisation would experience a reduced level of commitment from employees as they may not fully consider and appreciate the responsibilities of being an employee-owner (Kaarsemaker et al., 2009). However, the literature would suggest that this is not the case due to psychological ownership (Pierce et al., 2001; Van Dyne and Pierce, 2004).
Management Alignment
Employee ownership studies have concluded that in the presence of financial participation, there is a positive relationship to financial performance (McNabb and
Whitfield, 1998). However, the nature of employee ownership suggests that participatory and involvement practices are more likely to be introduced, or “at the very least it creates an expectation of achieving a genuine balance in the interests of the company and employees” (Michie et al., 2002:4). Evidence suggests that to work best, employee ownership requires further management initiatives to have an effect on individuals and the organisation (Cleverly and Goyder, 2001).
As described by Pendleton et al. (2001:5); “financial participation works best when it is integrated with other participative, information and consultation arrangements, for example, in supporting ‘high performance’ work organisations”. Support of this can be found in a Work Foundation report by Michie et al. (2002). Their study explored 10 UK EOCs through a mixture of focus groups and interviews, and concluded that managers as well as employees had the strong belief that employee ownership only makes organisations more productive when it is combined with participatory practices. Participation and involvement was understood to be integral to enhancing commitment and motivation, which in turn lead to enhanced performance and productivity.
Fuelling this further, the Inland Revenue (1999) recommend that when share schemes are used in conjunction with “modern management practices which promote active engagement” (p.2), it results in productivity gains. Again, in Cleverly and Goyder’s (2001) examination of 40 EOCs, performance proved to have a strong relationship with employee ownership when a high degree of employee participation was also present. Although these management methods may work in some organisations, it is not necessarily a one-for-all best-fit model. Furthermore, Goddard (2001:80) questions that “what may be viewed as “best” practice for employers may not be best practice for workers… If so, attempts to promote the high-performance model as a means of “enhancing” as well as “efficiency” may be misguided… For those genuinely concerned with quality of employment issues, advocacy of more broad-based institutional reforms may be called for”. As Michie et al. (2002) evidenced in their study, 82% of the organisations involved felt that their “attempts to involve employees appear genuine because of employee ownership” (p.18). In one case study, it was described that the large employee ownership stake gave a sense of ‘pro-employee’ therefore; they believed that management practices were underpinned on this belief. In essence, what Goddard (2001) is suggesting is that if organisations choose to move to employee
ownership, they need to be clear on their means for it and reflect it affectively into their management policies.
The Power of Ownership
Catherine Webb (1912), a writer in industrial cooperation over a century ago claimed that “by making [an employee] a shareholder in the business employing him... it stimulates his zeal and careful working“ (p.138), providing an insight into the preconceptions of what employee-owners feel. Bearing in mind Conte and Tannenbaum’s (1978) conclusive research study, there is a belief that when employees are owners they feel more motivated therefore become more productive (Cohen, 2006; Conte and Svejnar, 1990; Levine and Tyson, 1990). In particular Levine and Tyson (1990) suggest that willingness to share ideas to improve the organisation is related to employee ownership. Employee-owners will reap rewards from a profitable company therefore it is understood that they will be more committed, productive and efficient (Kruse and Blasi, 1995). However, Rosen and Quarrey’s (1987) study of 45 EOCs highlighted that 27% of the organisations explored did not experience heightened organisational performance within a decade of adopting employee ownership. Other research supports this argument to indicate that there is not a significant link between employee ownership and increased financial performance (Bloom, 1986). Although, the substantial literature in support of performance enhancements as a result of ownership emphasises the potential power that employee ownership has (Buchko, 1993).
A study based on ESOPs concluded that being an employee-owner did not necessarily induce feelings of motivation or job satisfaction (Kruse, 1984). Oliver (1990) explained that this miscorrelation could have resulted from anticipated greater expectations of the experience of being an employee-owner. This finding suggests that EOCs need to be clear in terms of what an employee-owners role is to ensure that expectations are aligned. Oliver’s study further proved that commitment and satisfaction does not always follow employee ownership.
Management perceptions of employee-owners indicate that they believe that being employee-owned is attributable to better work attitudes (Conte and Tannenbaum 1978). However, further research takes the perspective that ownership in its own
entity does not necessarily dictate positive work experiences. Instead, it is claimed that attributes of ownership such as management’s commitment to ownership and how this is delivered through operational measures, are influential to employee satisfaction (Pierce et al., 1991). In essence, the culture, governance, responsibility, and reward that employee ownership encourages, enhances the ownership experience in turn generating cooperative behaviours reflecting on performance. Pierce et al. describe employee ownership as being something that is psychological. They propose that “psychological ownership will lead to the integration of the employee-owner into the organization and the ownership experience” (1991:140). Furthermore, through this process, behavioural and social-psychological antecedents, for example “motivational, attitudinal, and behavioural” (ibid:104) will emerge increasing the experience of ownership for both the employee-owner and the organisation as a whole.
In a study of 98 US and Canadian EOCs, evidence indicated that the percentage stake of ownership has the most significant relationship with profitability as opposed to employee attitudes, motivation and feeling (Conte and Tannenbaum, 1978). This finding is contradictory to research by Klein (1987) who based her research on 37 ESOPs. However, the different forms of ownership explored in these studies should be noted. Additionally, the level of ownership stake is also not directly associated to employee satisfaction (French and Rosenstein, 1984; Kruse and Blasi, 1995). Instead, it has been shown that ownership stake relates to organisation commitment (Hammer et al., 1982; Keef, 1994). Not surprisingly, if being an employee-owner is a financial rewarding, commitment is increased (Klein, 1987). Comparing non-EOCs to EOCs, commitment is greater in EOCs for the reasons described above (Rhodes and Steers, 1981; Russell et al., 1979).
Employee Satisfaction
Research into employee satisfaction in employee ownership presents a number of theoretical perspectives; extrinsic, intrinsic, and instrumental models of satisfaction. Tannenbaum (1983) reflected on employee satisfaction as being either a result directly or indirectly from employee ownership. He suggested that either satisfaction is taken from the nature of ownership itself, or from the practices that it induces. Klein’s (1987) study explored the all three models of satisfaction and found no evidence to support the intrinsic model. However, it was found that a mediator of ownership satisfaction
was the amount of annual contribution the organisation made to the ESOP trust. Ultimately, Klein’s evaluation of the models of satisfaction explored “the assumption that if employees are satisfied with the employee ownership plan, they will feel committed to the company and motivated to keep working there” (1987:320). Several studies have been undertaken to establish the plausibility of each model of satisfaction. However, the evidence is provides support for the instrumental and extrinsic models of satisfaction (Klein, 1987; Buchko, 1992).
The extrinsic satisfaction model suggests that satisfaction and organisational commitment is increased when being an employee-owner is financially rewarding (Klein, 1987). Klein’s (1987) study found strong evidence to support this model that financial returns are key to satisfaction and commitment. How much money the EOC contributes to the ESOP trust is correlated to satisfaction and commitment. Furthermore, it was identified that an individual’s relative size of return (percentage in comparison to salary), mattered more to employee-owners than the actual size of their personal return. Buchko (1992) supports Klein’s (1987) findings as he found evidence to suggest that if employee ownership is perceived to be financially rewarding, it can be expected that employee satisfaction, commitment, and involvement, will also be heightened.
The instrumental model of satisfaction suggests that satisfaction is related to how being an employee-owner can influence decision making which thereby positively influences an employee’s commitment to the organisation (Klein, 1987). This model identifies that employee ownership has an indirect effect on employee-owner satisfaction (Tannenbaum, 1983). The findings of Klein’s (1987) study highlight validity for this model of satisfaction by demonstrating that employee outcomes are mediated by management’s philosophical commitment to employee ownership which is reflected through employee influence and subsequent satisfaction. However, management’s commitment to ownership is arguably determined by an individual’s perceptions. Reflecting on this perception and presenting further evidence to support the instrumental satisfaction model, Buchko’s (1992) study found that “employees’ commitment to the organization – both attitudinal and behavioural – and involvement and satisfaction with their current job within the organization were most influenced by the perception that ownership had increased their influence and control” (p.74). Klein (1987) also reported that communications regarding employee ownership
related to employee satisfaction with the ownership model and that these communications, if informative in their nature to increase understanding of the ownership model, also influence employee attitudes as well as reinforcing management’s perceived commitment to employee ownership. Furthermore, Klein found that employee-owners perceived that voting had little influence on the organisation therefore was not related to employee outcomes, which contradicts the overall findings for the instrumental model of satisfaction. This therefore could suggest that a collective voice, as opposed to individual voting, may be related to employee satisfaction.
As argued by Tannenbaum, “ownership is attractive for most people … Being and employee owner is ego enhancing” (1983:251). The intrinsic model of satisfaction suggests that employee ownership in its own entity increases satisfaction and commitment (Klein, 1987). Long (1978a, 1978b) also supports this model and he found from his research that employee ownership increased employees’ identification with the organisation as ownership created a shared purpose amongst the workforce. However, Klein (1987) reported that the level of stock held by the ESOP trust does not mediate employee satisfaction or outcomes, suggesting that employees need more than just ownership to influence satisfaction. Her study concluded that there is no significant evidence to suggest that the simple fact of being an employee-owner increases satisfaction and commitment, therefore showing a lack of support for the intrinsic model. Buchko (1992) also supports the finding that “employee ownership is not intrinsically rewarding” (Klein, 1987:329).
In a subsequent study conducted by Klein with her colleague, it was identified that financial returns mediated satisfaction with the ownership model (Klein and Hall, 1988). Klein and Hall (1988) suggest that employee-owners are satisfied with the ownership model if it was established as a result of a commitment to the philosophy of employee ownership as opposed to being introduced to raise capital or for tax savings. Employee-owner expectations of ownership (such as contribution and communication) are also understood to mediate individuals’ satisfaction with employee ownership. However, it was also noted that employee-owners might be dissatisfied with the ownership model if they are fearful of the responsibility that ownership may bring.
Bartkus (1996) presents a model exploring the relationship between ESOPs and organisational performance, in which she suggest that culture is one of four factors which influence organisational effectiveness and prompt organisational change. Bartkus’s work shows that there is a need for culture to reflect openness and flexibility. Furthermore of interest, the other factors she identified were attributable to organisational success were the origins for the move to ownership, both employee and management perceptions of ownership, and the level of decision-making participation. Through these four factors, Bartkus claims that employee ownership can become more effective.
Exploring culture further, Postlethwaite et al. (2005) suggest that the success of employee ownership plans are determined by financial participation, participative mechanisms, and ownership culture. Culture is understood to encompass collective voice. Torrington et al. (2008) describe culture as “an attempt to grasp the realities of collective life in a department or organisation that cannot easily been seen and identified … organisational culture refers to the beliefs, conventions and general patterns of behaviour that characterise a particular organisation” (p.860). Ownership culture is understood to be different from organisational culture as it also reflects how an employee feels that they have a personal stake in the organisation and its performance, as well as understanding how they can contribute to the bottom line (Oliver Wyman, n.d.). Furthermore, Postlethwaite et al. (2005) describe that “a culture of ownership cannot be fostered where there is cynicism about the motives for offering employee share ownership plans, or a lack of visible change to management practices after the transition” (p.15). They suggest that ownership culture is derived from employee ownership where employees are consulted and listened to which lead to a collective voice representative of ownership culture. Pierce et al. (1991) demonstrate that management’s commitment to employee ownership is influential to organisational culture as this commitment reflects participative mechanisms. Collective voice, manifested through ownership culture, can be heard through participative mechanisms (Postlethwaite et al., 2005).
Pierce et al. (1991) describe that “cultural norms often shape people’s expectations about the way things are supposed to be” (p.127). Ownership culture is one that is
based on values as opposed to rules (Oliver Wyman, n.d.). In their discussion paper, Pierce et al. (1991) suggest that culture exists in EOCs through management’s philosophical commitment. They present that “the degree to which employee ownership is both a central part of management’s philosophy and its human resource strategy is integral to the organization’s culture and identity” (p.129). Arguably, employee outcomes such as commitment and satisfaction are also mediated by management’s philosophical commitment to employee ownership (Klein, 1987). Furthermore, Caramelli and Briole (2007) express from the research they have undertaken that ownership culture at local, national, and international levels vary because of localised managerially differences and employee expectations. These variances also contribute to differences in employee attitudes.
Another perspective on ownership culture is presented by Kruse et al. (2003). They suggest that; “understanding of how and when employee ownership works successfully requires a three-pronged analysis of: 1) the incentives that ownership gives; 2) the participative mechanisms available to workers to act on those incentives; and 3) the corporate culture which battles against tendencies to free ride” (p.1). Culture supports norms and expectations of ownership, resulting in motivation derived from peer pressure to conform to expected behaviours (Long, 1978 a). Unlike Bartkus (1996) and Long (1978a), Kruse et al. (2003) do not concern themselves with the motives for employee ownership but suggests that culture helps to combat potential free riders in addition to creating a culture for participation. Long’s (1978a) argument is that peer pressure demonstrated through ownership culture works to combat individuals who do not share employee ownership vision and values.
A culture of ownership is perceived to be influential to innovation (Stack and Burlingham, 2002). However, Stack and Burlingham (2002) acknowledge that to create and sustain ownership culture, management must commit and deliver on promises made. They suggest that employee-owners go beyond their job role as a result of their sense of responsibility to the organisation. Furthermore, it is presented that as a result of ownership and the associated culture in action, employee-owners are creative and innovative leaders, which enables them to contribute and be accountable to organisational success.
Rosen et al. (2005) suggest that ownership culture is mediated by four factors. These factors are understood to be; that there is a significant percentage of ownership, that ownership can increase employees’ financial returns, that management’s commitment to ownership is delivered through policies and practices, and that employees feel they are owners. If these factors are presented, Rosen et al. (2005) propose that a culture of ownership is present. As a result of this, it is understood that “the result is a workforce that is loyal, cooperative and willing to go above and beyond to help make the organization successful” (p.124). Establishing an ownership culture is good for employee ownership.
Exploring how ownership culture can be enhanced, Silcox (2012) suggests that this can be achieved through communications that reinforce the vision and values of the organisation. Management, in particular line managers, can have an influential role in shaping a culture of ownership by communicating and relaying the ethos of ownership in their management practices. At an organisational level, Silcox suggests that by promoting ownership, celebrating success, and making ownership physical (such as through share certificates and AGMs), ownership culture can be enhanced. Reflecting on organisational outcomes, Silcox suggests from her study of 25 EOCs that by emphasising to customers the advantages of working with an EOC (understood in this study to be enhanced quality and productivity), these are reinstated as normative of the culture therefore further influencing their existence. Therefore, the existence of ownership culture could arguably contribute to organisational performance because of the behaviours and attitudes it manifests.
Much of the employee ownership literature describes involvement and participation as central to delivering the values of ownership and demonstrating management’s commitment to ownership.
Employee Participation and Involvement
Hyman and Mason (1995) describe employee involvement as typically following the unitarist perspective of management and employee participation as characteristically following the pluralist perspective. Employee involvement is seen to take four possible forms: “downward communication to individual employees; downward communication to groups of employees; upward communication for individual
employees; and upward communication for groups of employees” (Hyman and Mason, 1995 as cited in Rose, 2008:379). This is understood to be different from employee participation is understood to be actualised through formal, collective arrangements such representative boards and trade unions.
Employee participation through ownership, will inevitably change the balance of power in organisations (Steger and Hartz, 2008). However, the form of employee ownership will mediate the extent of this. Ownership can occur directly by individuals holding shares (Conte and Tannenbaun, 1978) or indirectly when employee-owners are represented (Cotton et al., 1988) such as by an employee trusts which holds shares on their behalf. These different types of employee ownership have potential to induce differing feelings and attitudes of ownership due to their related involvement, namely through participation practices such as voting rights (Russell, 1985; Toscano, 1983), which may contribute to a sense of employee-owner satisfaction (Klein and Hall, 1988). For instance, Conte and Tannenbaum (1978) showed in their study of EOCs that direct ownership had a greater positive correlation with profit than indirect ownership. Therefore, from an organisational perspective, this suggests that direct ownership is more favourable because it is more likely to create heightened motivation thus creating enhanced financial returns for the employee and the organisation as a whole. However, Pendleton et al. (1998) argue that employee-owners are more concerned with participating in decision-making as opposed to ownership itself generating a feeling of being an owner.
The employee ownership literature describes perceived influence and involvement as having a positive effect on satisfaction (Buchko, 1993; French and Rosenstein, 1984) therefore suggesting that the feeling of empowerment is important to employee owners. For instance, Derrick and Phipps (1969) and Vanek (1975) both describe how employee ownership can help overcome worker alienation and issues of effectiveness, because they are keen to promote ideas of efficiency in terms of having a knowledge community (Levine and Tyson, 1990). In contrast, non-employee-owners are described to have reduced levels of integration with their job and in their work environment due to a decreased perceived level of influence, involvement, and a lack of psychological ownership present (Long, 1978b).
Job satisfaction and psychological ownership can be influenced by organisational identity (Pierce et al., 1987), therefore making organisational identification arguably critical to experiences of employee ownership (Long, 1978b). Blasi (1988) insists from years of studies in the field that, although “ownership does create an identity of interest, but without actual close involvement between labor (sic) and management, a true community of interest does not develop” (p.220). In other words, organisational identification is a characteristic of ownership that can attribute to psychological ownership but to induce positive behavioural outcomes, it needs to be supported by action. Pierce et al. (1991) draw upon an employee ownership model to summarise the role of feeling in employee ownership. They explain how that if the conditions of formal ownership are right (i.e. the ownership conditions fulfil employee expectations), psychological ownership can be achieved. This “bonding” (p.131) utilises emotion and generates social-psychological and behavioural outcomes such as commitment and perceived influence. Therefore, by becoming involved in the experience of ownership, employee-owners consequently exhibit social-psychological and behavioural outcomes.
Links between Employee Ownership and Employee Engagement
What has been learnt about employee ownership is that it exists either directly or indirectly (ACAS, 2012; Oliver, 1990; EOA, 2010) and that it can provide employee- owners typically with financial returns, an enhanced sense of involvement, and occasionally a degree of control (Pierce et al., 2001). Different employee ownership models reflect variations of these characteristics. Despite common perceptions, being an employee-owner in understood not to necessarily dictate increased employee satisfaction or commitment (Klein, 1987), nor does it necessarily influence greater profits (Burns, 2006). The literature discussing the consequences of employee ownership often describes how such companies outperform their competitors (Rosen and Quarrey, 1987; Postlethwaite et al., 2005; Burns, 2006). However, the role of employee engagement in EOCs is not empirically tested in the academic literature. Instead, a collection of studies on employee ownership and employee satisfaction can be found. Practitioner literature occasionally mentions employee engagement in the context EOCs (such as in Silcox, 2012), but fails to identify the role of engagement in ownership and vice versa.
As previously highlighted, job satisfaction and employee engagement may have some slight overlap; i.e. employee satisfaction is an element of employee engagement; but they are different concepts featuring different antecedent, consequences, and scope for impact. This is an issue for EOCs because they pride themselves on their consideration for employees through employee participation and involvement (Buchko, 1993; Blasi, 1988; French and Rosenstein, 1984) due to management’s commitment to being employee-owned (Klein, 1987; Pierce et al., 2001; Rosen et al., 2005). Therefore, the potential of employee engagement may not be truly acknowledged as an opportunity to optimise this relationship to benefit all those concerned. Rigorous research needs to be undertaken in this area to give strength to the employee ownership models that are increasingly becoming a popular feature of UK business, making explicit if the employee aspect of the ownership holds the key for a successful organisation.
The literature concerning culture in EOCs attempts to address what the engagement literature proposes as meaningful work, a supportive work environment, and a top down drive of a clear vision as described by Alfes et al. (2010). It is understood that in EOCs employees have a shared purpose and meaning in work (Levine and Tyson, 1990; Pierce et al., 1991; Long, 1987a; Bartkus, 1996), that there are clear defined channels for communication (Davies, 1990; Klein, 1987), and a managerial commitment to ownership which shapes organisational culture to present a vision (Pierce et al., 1991; Bartkus, 1996; Stack and Burlingham, 2002; Rosen et al., 2005).
What has been acknowledged is that employee engagement is largely undefined. There is much debated of its occurrence in practitioners’ literature, although there has only been a handful academic studies each exploring different aspects (Saks, 2006). This has provided some explanation as to why employee engagement does not have a uniform definition. It can be summarised that employee engagement essentially involves the “hands, head, and heart” (Ashforth and Humphrey, 1995:110) and that it concerns forming and enhancing a positive, constructive, working relationship. Employee ownership, through its construct, attempts to provide this to employees. Ownership engages employees to be concerned their performance, how it contributes to the overall success of the organisation, and asks them to seek improvements to further organisational performance (Oliver Wyman, n.d.).
In regards to employee ownership, the practitioner literature suggests that the core of EOCs is different to that of other organisations as the employees, those that facilitate the everyday running of the organisation, have an element of control in regards to the organisation as well as possessing personal motives to ensure that the organisation succeeds. Meanwhile academics suggest that employee ownership only has the capacity to add value when combined with other participatory practices (Michie et al., 2002). Management policies play an important role and motives for employee ownership are significant (Godard, 2001). Direct and indirect models of employee ownership present different challenges and dictate different expectations of control, financial return, and involvement to employee-owners.
Closing Discussion
Employee ownership is understood to comprise a variety of models (worker co- operatives, ESOPs, and employee ownership/co-ownership) (Oliver, 1990; Pendleton et al., 2001). However, this study is most concerned with employee ownership/co- ownership where employees have a significant or majority stake in the organisation. Within this model of ownership, employee ownership can occur directly, indirectly, or could be a combination of these (ACAS, 2013; Oliver, 1990; BIS, 2013). Keef (1994) suggests that if employees are required to purchase shares, or wish to purchase extra shares, their commitment to the organisation is increased. Whereas if shares are gifted, it is acknowledged that employees may not fully appreciated the role of being an employee-owner (Kaarsemaker et al., 2009). Regardless of how employees acquired their stake in ownership, Conte and Tannenbaum (1978) suggest that as a result of direct share ownership, an EOC can expect to experience an increase in profit. Furthermore, it is understood that there is a stronger correlation between profitability and the percentage of the organisation which is employee-owned than which is found in regards to attitudes, motivation, and ownership feelings (Conte and Tannenbaum, 1978). However, this is not supported by Klein (1987).
The rise of employee ownership is understood to reflect the changing nature of organisations. Poole (1989) argues that organisations evolve because of societal and technological changes, or for a variety of other reasons that they deem appropriate. Employee ownership represents fairness of equity (Lampel et al., 2012), and it balances the interests between management and employees (Michie et al., 2002). Employee
ownership typically occurs due to existing owners requiring an exit strategy, or it is introduced to help the organisation grow (Logue and Yates, 2001). The reason for choosing employee ownership is influential to the management style that follows which mediates to an extent employee behaviours and attitudes (Klein and Hall, 1988; Pierce et al., 1991). Despite employee ownership reflecting rights of possession, control, and information (ibid), and sense of equality amongst the workforce (Michie et al., 2002), management in EOCs continue to have the majority of control regarding decision-making (Hammer and Stern, 1980).
The literature has presented perspectives and empirical studies reflecting upon the three models of satisfaction in EOCs. Evidence supports the extrinsic and instrumental models (Klein, 1987; Buchko, 1992). However, whereas Long (1978a) suggested that the intrinsic model was valid, Klein (1987) and Buchko (1992) did not find evidence in their studies to support this.
There is strong evidence to suggest that EOCs perform better as a result of employee ownership. Employee ownership is understood to increase profits (Klein and Hall, 1988; Burns, 2006; Conte and Svejnar, 1990; Kruse and Blasi, 1995), as well as increased performance and productivity due to enhanced motivation, which in turn heightens quality and service (Cohen, 2006; Conte and Svejnar, 1990; Levine and Tyson, 1990). Furthermore, as a result of employee ownership, employees are suggested to work more effectively and efficiently (Long 1978a). As a result of employee ownership, employees are driven to maximise organisation profit. This drive is claimed to influence attitudes and behaviours associated to commitment, productivity, and efficiency (Kruse and Blasi, 1995). This is understood to happen not just to maximise their own financial returns but also to ensure that their organisation succeeds (Rosen et al., 2005).
Employee ownership creates a need for workforce involvement and participation. Ben- Ner and Jones (1995) argue that this need is a result of employee-owners having a right to control. Pendleton et al., (1998) argue that participation and involvement is more important to employees than feeling like an owner. It is claimed that feelings of employee ownership transpire through psychological ownership (Pierce et al., 1991). The presence of psychological ownership is understood to enhance organisational performance (Pierce and Rodgers, 2004), in addition to enhancing employee effort
(O’Driscoll et al., 2006). Organisational performance is also mediated by participatory mechanisms in EOCs (Cleverly and Goyder, 2001).
Ownership culture attempts to mediate behaviours and attitudes in the workplace. Culture can influence employees to feel like owners (Rosen et al., 2005), as well as being a mechanism to represent collective voice (Postlethwaite et al., 2005), particularly through participation (Pierce et al., 1991). Ownership culture is shaped by management through how they involve the workforce, invite participation, and legitimise ownership (Silcox, 20012; Postlethwaite et al., 2005; Stack and Burlingham, 2002). Management’s commitment to employee ownership mediates employee attitudes and behaviours (Pierce et al., 1991; Klein, 1998; Goddard, 2001).
Despite the positive volume of literature concerning employee ownership, ownership is not always advantageous for organisations. A number of studies support this perspective. Kruse (1984) and Oliver (1990) found that motivation and satisfaction are not increased as a result of employee ownership. Furthermore, Bloom (1986) suggests that employee ownership is not related to financial performance, whereas Rosen and Quarrey (1987) report from their study that only one in four EOCs explored reported an increased in performance. Negative experiences in EOCs are understood to result from the existence of free riders (Conte and Svejnar, 1990; Kruse et al., 2003), frustrations with lengthy decision making processes which are a result of employee ownership (Burns, 2006; Carnforth, 1989), and a reluctance from management to make unpopular decisions (Burns, 2006).
Essentially the literature presents that the feeling of ownership is a result of perceived influence and involvement in the organisation (French and Rosenstein 1984; Buchko 1993). However, this can only be achieved once the conditions of ownership are acceptable to individuals. Factors of ownership such as participation, responsibility, and share returns, can lead to enhanced employee satisfaction, although ownership in its own right does not directly influence this (Pierce et al., 1991). The type of employee ownership, such direct or indirect, will encourage these factors (Toscano, 1983). Employee-owner attitudes in particular such as commitment, can be increased with greater ownership stakes (Hammer et al., 1982; Keef, 1994), or if employee ownership is financially rewarding (Klein, 1987). Organisational identity and ownership culture is
important to psychological ownership and these needs to be supported by perceived influence (Long, 1978b; Blasi, 1988).
Both the employee ownership literature and the employee engagement literature identify similar factors as being influential to organisational success. Comparisons between the literatures are found in discussions regarding; management’s role, style, and support; involvement, participation, employee voice, and communications; organisational purpose and meaningfulness of work; and culture, integrity, and a supportive work environment. Whilst person-fit is only described in the engagement literature, some references are made in the ownership literature by Oliver (1990). Oliver suggests that individuals who are attracted to EOCs typically identify with their values.
Having reviewed the literature there is a need to examine employee engagement in the context of EOCs. This is driven from the understanding that there are some comparison between the two literatures, which at present is not explicit. Engagement aspires for work to be meaningful, that work environments are supportive with a top- driven vision. Furthermore, engagement requires a person-fit, engaging line managers, and participation (Alfes et al., 2010). Employee ownership can offer involvement, meaning, and participation (Pierce et al., 2010) in addition to management driven philosophies, with shared vision arising from clear motives for employee ownership (Bartkus, 1996). Cleverly and Goyder (2001) insist that employee ownership needs management initiatives to work effectively. Furthermore, Pendleton et al. (2001) describe that financial participation is optimised when it involves other organisational practices such as involvement and participation. Reflecting upon these central understandings, there is a suggestion that employee engagement supports employee ownership and vice versa. With this in mind, the following research questions are proposed to address this gap in the current literature:
1. Is ownership alone sufficient to secure employee engagement or do organisations need to do something more?
2. Which company practices are most effective in securing high levels of employee engagement? What is good practice? Which measures are most practical?
3. Are there any obstacles to securing employee engagement, and how might they be overcome?
4. How does employee engagement support and sustain ownership?
There is an empirical need to understand how employee ownership functions in the eyes of the employee-owner. By bringing the two literatures together, it is hoped that engagement good practice will emerge as well as identifying further issues beyond those in the engagement literature that specifically represent obstacles to engagement in the context of EOCs. Furthermore, it is hope to provide substantial research to the practitioner claims that EOCs have higher levels of employee engagement than compared to their non-EOC competitive. This thesis will seek to understand what drives employee-owners to work in this capacity.
This research aims to examine how employee engagement manifests itself in employee owned organisations. The literature review presented in Chapters 2 and 3 shows that employee engagement and employee ownership are two distinctly separate bodies of academic literature. Both topics have received great attention in recent years and gained Government interest. The prospect that employee ownership can drive and potentially secure a higher level of engagement has been introduced by practitioners, although no research can be found to establish this.
This study evaluates the factors that contribute to successful employee engagement in the context of EOCs. Taking an interpretivist perspective, employee-owners’ experiences and perceptions will be examined through the epistemology of social constructivism. A narrative analysis will address the key research questions as presented in the subsequent sections of this chapter.
This chapter will be shaped around the evolution of the research methodology. Drawing from the existing literature, the key research questions, overall research objectives and direction will be presented to bridge the gap in the literature. Key research questions will be proposed which align from the research objectives and addresses gaps in present knowledge. A research strategy will be discussed illustrating a methodological philosophy that will be pursued. A line of enquiry will be presented alongside a discussion of the research instruments that will be used. Practicalities of undertaking research will be addressed by exploring ethics, organising data collection, conducting data collection, recording and transcription, the use of computer software, the possible occurrence of researcher bias, and research pilots. The research organisations will be briefly introduced before examining how data will be analysed. The chapter will end by commenting upon methodological limitations and finally presenting a summary of the research methodology.
Research Questions & Objectives
From exploring the literature on employee ownership and employee engagement, research gaps have been identified which require exploration to provide clarity for professionals and academics alike. The reoccurring issue is that the current literature does not provide substantial or credible evidence as to the role that employee engagement fulfils in EOCs. To address this gap in knowledge, it is proposed to investigate the occurrence of employee engagement in the context of EOCs.
The key questions, which have emerged from the literature, have been identified as follows;
1. Is ownership alone sufficient to secure engagement employee or do organisations need to do something more?
2. Which company practices are most effective in securing high levels of employee engagement? What is good practice? Which measures are most practical?
3. Are there any obstacles to securing employee engagement, and how might they be overcome?
4. How does employee engagement support and sustain ownership?
These questions have been developed and adapted from the proposed research questions as identified by Professor Pendleton’s consultations with the Employee Ownership Association during the application for this studentship. Having completed two comprehensive literature reviews, there is a clear knowledge gap that can be addressed from seeking answers to these questions. These key research questions will address the gaps in the literature and by generating substantive data, strong evidence will provide an enhanced understand of employee engagement and how it is applicable to EOCs.
Addressing Question One, the researcher aims to understand if ownership in its own right was sufficiently influential to harness employee engagement, or if indeed employee ownership needs to be married with other strategies to secure employee engagement. As declared in the employee ownership literature, without the mention of employee engagement, EOCs are described as competitive organisations (Postlethwaite et al., 2005) with driven and committed employees (Kruse and Blasi, 1995). Question Two primarily aims to provide an understanding as to what engages employee-owners. It provided exploration into the practices that the organisations use
to secure engagement and what was understood to be not only most effective in terms of securing engagement, but also what was understood to be good practice. The literature provided a variety of antecedents to engagement, therefore this question sought clarification as to what can secure high levels of employee engagement in EOCs. Research Question Three is designed to question how employees sometimes became disengaged or felt that they were not fully engaging due to obstacles. Furthermore, by identifying these potential issues and encouraging participates to reflect on potential solutions to resolve these issues, it creates a positive situation as opposed to a continuing negative undertone. Aside from the literature on burnout (Schaufeli et al., 2002; Leiter and Maslach, 1998), the position between disengagement and high engagement is not widely discussed in the literature. By uncovering obstacles, an attempt can be made to identify how these can be overcome. Finally, Question Four attempts to establish if there is a relationship, if at all, between employee engagement and employee ownership. The question addresses the topical debate which revolves around EOCs performing successfully because of the integral role its employees have (Brown, 1999). This research question aims to understand if employee engagement can uphold and maintain employee ownership.
The overall question that needs to be addressed is fundamentally how does employee engagement manifest and transpire in EOCs if at all, and fundamentally what role does employee ownership have? It is understood that employee engagement encourages several behaviours and attitudes such as loyalty and customer focus (Gallup, 2006). The research to date on employee engagement suggests that the concept is useful in providing a platform for a sense of belonging at work. However, the present research does not specifically address employee engagement in the context of EOCs nor does it provide evidence for the existence, and ultimately the need for employee engagement. It may well prove that employee engagement is perceived to be part of the “package” when the employee is also an employee-owner. Perhaps employee engagement does not exist in this context because it is characterised as something else, potentially a different concept entirely which may centralise around the ownership aspect, or is what is happening just “old wine in new bottles”? Until it is understood what employee engagement means in these organisations; how it exists, how it is interpreted to be, how it is encouraged, how it is measured, and how it feels; it cannot be understood as to how influential the power of employee engagement can be to the success of EOCs.

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