Complementary or conflictual? Formal participation, informal participation, and organizational performance

• Author: Adrienne E. Eaton,Adam Seth Litwin
• DOI: http://doi.org/10.1002/hrm.21835
• Date: 01 January 2018
• Published date: 01 January 2018

HR SCIENCE FORUM

Complementary or conflictual? Formal participation, informal

participation, and organizational performance

Adam Seth Litwin

1

| Adrienne E. Eaton

2

1

ILR School, Cornell University, 363 Ives Hall

Ithaca, NY 14853–3901

2

School of Management and Labor Relations,

Rutgers, the State University of New Jersey,

NJ 08903

Correspondence

Adam Seth Litwin, Associate Professor of

Industrial & Labor Relations, ILR School,

Cornell University, 363 Ives Hall, Ithaca, NY

14853-3901, Ph: (607) 255-7326,

Email: aslitwin@cornell.edu

Most studies of worker participation examine either formal participatory structures or informal

participation. Yet, increasingly, works councils and other formal participatory bodies are operat-

ing in parallel with collective bargaining or are filling the void left by its decline. Moreover,

these bodies are sprouting in workplaces in which workers have long held a modicum of influ-

ence, authority, and production- or service-related information. This study leverages a case

from the health care sector to examine the interaction between formal and informal worker

participation. Seeking to determine whether or not these two forces—each independently

shown to benefit production or service delivery—complement or undermine one another, we

find evidence for the latter. In the case of the 27 primary care departments that we study, for-

mal structures appeared to help less-participatory departments improve their performance.

However, these same structures also appeared to impede those departments with previously

high levels of informal participation. While we remain cautious with respect to generalizability,

the case serves as a warning to those seeking to institute participation in an environment in

which some workers have long felt they had the requisite authority, influence, and information

necessary to perform their jobs effectively.

KEYWORDS

case study, employee involvement, employee participation, employment relations, formal

worker participation, frontline work, health care, industrial relations, informal worker

participation, institutional theory, labor relations, participative management, worker

involvement, worker participation

1|INTRODUCTION

Scholars of human resources and of the employment relationship have

long insisted that empowering, engaging, or involving frontline work-

ers enables managers and organizations to parlay workers' human cap-

ital, knowledge, and effort into improved operational performance

(e.g., Appelbaum, Bailey, Berg, & Kalleberg, 2000; Nichols, 1962; Rior-

dan, Vandenberg, & Richardson, 2005; Wilkinson & Fay, 2011).

Indeed, what emerged from seminal human relations research as a

response to early twentieth-century Taylorist ideals, cemented later in

the century by employers seeking to address the “blue collar blues”of

the 1970s and 1980s, was a genuine attempt to acknowledge workers'

social needs and interests in a way that more authoritarian systems

had not (Nissen, 1997; Special Task Force to the Secretary of Health,

Education, and Welfare, 1973). Add to this the eventual construction

of a solid theoretical foundation and its appeal as a “win-win solution

to a central organizational problem”(Strauss, 2006, p. 778), and one

can understand how frontline worker participation has emerged as a

“central strategy for heightening productivity”(Hodson, 2004, p. 432).

If that were not enough, intensified competition in product and service

markets (Scott, 2014) and three decades of managerial delayering

(McCaffrey, Faerman, & Hart, 1995; Useem, 1992) further secured its

place in the managerial toolkit.

Amidst this enthusiasm on the part of scholars and practitioners,

one might be surprised to learn of a central challenge to the empirical

testing of participation's performance effects: the lack of a shared

understanding of the term's precise meaning (Appelbaum & Batt,

1994; Marchington & Suter, 2013) on the part of researchers. In fact,

the literature has yet to even converge upon a single label for the

participation construct (Wilkinson & Dundon, 2010). As noted in

DOI: 10.1002/hrm.21835

Hum Resour Manage. 2018;57:307–325. wileyonlinelibrary.com/journal/hrm © 2017 Wiley Periodicals, Inc. 307

Litwin (2015, pp. 169–170), “Terms such as voice, involvement, and

empowerment, sometimes prepended with qualifiers like employee,

direct or indirect, or online or offline, can be defined any number of

ways and with varying degrees of specificity.”In particular, Wilkinson

and Dundon (2010, p. 168) note that researchers could be referring

to something as narrow as “formal, ongoing structures of direct

communication,”such as teams or team briefings, yet they might also

be referring to something as informal as “any form of delegation to or

consultation with employees.”

It is this latter distinction—between formal and informal forms of

frontline worker participation—on which this article will focus. To

date, the most careful empirical studies have shown that worker par-

ticipation, however labeled, when operationalized in a manner that

makes sense to the actors in the workplace context in which it is

being studied, benefits organizational performance (e.g., Ichniowski,

Shaw, & Prennushi, 1997; Litwin, 2011; MacDuffie, 1995). Nonethe-

less, received studies focus almost entirely on formal participatory

structures to the exclusion of informal ones (cf. Marchington & Suter,

2013). In fact, while there are studies that examine the way different

formal participative structures dovetail in the workplace

(e.g., Gumbrell-McCormick & Hyman, 2010) and of “dual systems”of

direct and indirect forms of worker participation (e.g., Purcell & Geor-

giadis, 2007), there are very few studies that examine the interplay of

formal and informal participation on performance.

Even in a global economy with decreasing levels of conventional

unionization, this proves problematic, as the “representation gap”

engendered by the decline in collective bargaining is increasingly

being filled by other formal participatory structures such as employee

involvement (e.g., problem-solving groups or what were once called

“quality circles”) in the United States, joint industrial councils (JICs) or

employee-management advisory committees (EMACs) in Canada,

joint consultative committees (JCCs) in the United Kingdom,

European works councils (EWCs), and other formal manifestations of

management- or policy-promoted forms of worker participation

(Freeman, Boxall, & Haynes, 2007; Kaufman & Taras, 2010).

This undoubtedly begs a question from managers: where employ-

ees already have a modicum of influence in everyday decision making,

does the establishment of formal problem-solving groups, for example,

deliver any marginal benefit to the organization? As we will show,

whether formal and informal participative structures complement or

undermine one another's effectiveness proves ambiguous from a the-

oretical perspective. Consequently, the question must be sorted out

empirically. Until it is, we believe this is the sort of research void that

leaves even the most progressive managers in the lurch.

The current study makes us early joiners in a conversation that is

thankfully under way but long overdue. Building on and responding

to Marchington and Suter's (2013, p. 285) analysis of the interplay of

“dilute and localized”formal and informal participation in the hospital-

ity sector, we take aim at the (otherwise) rhetorical question we pose

above by examining the performance implications of the introduction

of a more far-reaching, formal frontline worker participation program

in an organization in which some workers report high levels of influ-

ence, authority, and access to production-related information prior to

the formal program's creation. We triangulate between qualitative

and quantitative data sources, exploiting variation in informal

participation and examining changes in a context-relevant outcome

measured identically across multiple departments performing the

same kind of work within a single, regional operation of a large, inte-

grated, US-based health care provider. Though this embedded, single-

case design privileges internal over external validity, leaving us cau-

tious with respect to generalizability, we argue that many aspects of

the research design render this a “critical”case, and thus a conserva-

tive test of the emergent explanation for the ways that formal and

informal participation conflict with one another in organizations and

workplaces (Batt & Hermans, 2012; Yin, 2014).

We draw on research in employment relations and on organiza-

tions to offer competing arguments regarding the interaction of for-

mal and informal participative structures. On the one hand, formal

structures may provide much-needed institutional legitimacy to front-

line workers long seeking to apply their creative problem-solving and

tacit knowledge of the service delivery process to their everyday

work. On the other hand, formal participation could work to squelch,

suppress, or displace more effective, entrenched, and organic partici-

pative structures that exist only informally.

We weigh these compelling but competing arguments by compar-

ing outcomes for roughly 30,000 patients. Through interviews, site

visits, and archival research, we are able to identify a performance out-

come that is both of great interest to the organization and theoreti-

cally tractable. This same “shoe leather”research afforded us a

window into contextualized measures of formal and informal partici-

pation, which we constructed through the company's annual survey of

frontline workers and then linked to patient-provided performance

data. This allowed us to estimate the simultaneous impact of formal

and informal worker participation on performance across 27 primary

care departments over a two-year period. In this context, we find no

evidence of complementarity between formal and informal participa-

tion. Rather, our analysis of individual workers embedded in depart-

ments embedded in this larger, regional health care operation suggests

that while formal and informal participation are both positive drivers

of operational performance, they dampen one another's performance

benefits. In light of this finding, we offer an explanation for these

events founded in institutional theory, allowing us to consider the ana-

lytic generalizability of our findings. Thus, the case helps to illuminate

a workplace phenomenon that likely vexes a great many managers

and for which existing theory has yet to provide a satisfying answer.

2|THEORETICAL BACKGROUND

One would be hard-pressed to find a careful treatment of frontline

worker participation that does not begin by acknowledging the afore-

mentioned mélange of terms and their meanings (e.g., Barry, Wilkin-

son, Gollan, & Kalfa, 2014; Dietz, Wilkinson, & Redman, 2010;

Wilkinson & Fay, 2011) that researchers have come to apply haphaz-

ardly and interchangeably. This discussion is important because the

choice of one label over another—voice vs. involvement

vs. empowerment vs. engagement vs. participation, etc.—transcends

semantics to reflect both denotation and connotation. The upshot of

all of these discussions, however, is that researchers in this space

should declare which label they are going to use and what they mean

308 LITWIN AND EATON