The outcomes of works councils: the role of trust, justice and industrial relations climate

• Author: Konstantina Kougiannou,Graham Dietz,Tom Redman
• DOI: http://doi.org/10.1111/1748-8583.12075
• Date: 01 November 2015
• Published date: 01 November 2015

The outcomes of works councils: the role of trust,

justice and industrial relations climate

Konstantina Kougiannou, Human Resource Management Division, Nottingham

Business School, Nottingham Trent University

Tom Redman and Graham Dietz, Durham University Business School, Durham

University

Human Resource Management Journal, Vol 25, no 4, 2015, pages 458–477

This article investigates trust and organisational justice as antecedents of works council (WC)

effectiveness perceptions and the moderating role of industrial relations climate on this relationship. A

2-year longitudinal study of WC participants in two UK organisations (a housing association and a

professional services firm) was undertaken. Results show positive significant relationships between both

trust and organisational justice, and WC outcomes of WC performance, WC usefulness and outcome

satisfaction. Industrial relations climate is found to moderate the relationship between justice and WC

performance, WC usefulness, and outcome satisfaction.

Contact: Dr Konstantina Kougiannou, Human Resource Management Division, Nottingham

Business School, Nottingham Trent University, Newton 7th Floor, Burton Street, Nottingham

NG1 4BU, UK. Email: konstantina.kougiannou@ntu.ac.uk

Keywords: works councils; trust; organisational justice; industrial relations climate; WC

outcomes

INTRODUCTION

Works councils (WCs) are among the most common forms of representative

participation in the workplace (Rogers and Streeck, 1995; Van Wanrooy et al., 2013).

WC representatives in non-union organisations provide the main form of employee

representation in such firms (Charlwood and Terry, 2007). Interest in WCs in the UK has

recently been boosted by the introduction of further legal regulation via the Information and

Consultation of Employees (ICE) Regulations 2004 based on the EU’s 2002 Directive. The

Regulations have been phased in with organisations with more than 150 employees having

to comply from April 2005 and for those with more than 50 employees from April 2008. The

ICE Regulations represented a considerable development in a hitherto largely voluntarist

framework for joint consultation in the UK. They provide further statutory rights for employees

to be informed and consulted about matters in the business for which they work. The early

research on the impact of the ICE Regulations suggests that consultation practice is still

‘evolving’ (Hall et al., 2013), but senior managers are engaging seriously with the regulations,

and interest in WCs has been enhanced. The impact of the ICE Regulations in non-union

organisations in supporting systems of employee involvement appears to have been rather less

effective (Cullinane et al., 2014) and ‘shallow’ (Dundon et al., 2014).

Despite a relatively long-standing and well-developed literature on joint consultation, we

know rather less about what makes a WC effective, in part because little attention has been paid

to the key processes that make such bodies more or less successful. WCs have long been seen

as being capable of making an efficiency contribution to the performance of advanced industrial

economies by improving productivity and the efficacy of firm regulation (Rogers and Streeck,

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doi: 10.1111/1748-8583.12075

HUMAN RESOURCE MANAGEMENT JOURNAL, VOL 25 NO 4, 2015458

© 2015 John Wiley & Sons Ltd.

Please cite this article in press as: Kougiannou, K., Redman, T. and Dietz, G. (2015) ‘The outcomes of works councils: the role of trust, justice and

industrial relations climate’. Human Resource Management Journal 25: 4, 458–477.

1995: 4), but evidence on WC effectiveness is still scarce and in some areas contentious. For

example, there is a considerable debate about the employment and wage impact of WCs, with

some (Addison and Teixeira, 2006) finding a negative impact on employment growth and a

positive impact on wages (Addison et al., 2010) while others (Jirjahn, 2010) reporting a positive

growth effect of WCs.

In this article, we seek to address the role of trust, justice and industrial relations climate (IR

climate) in helping explain the effectiveness of WCs. In doing so, we seek to address some of

the as yet unanswered questions from the WC literature. For example, we address the research

agenda-setting questions posed by Kessler and Purcell (1996: 680), namely ‘What makes some

joint bodies successful while others are less so?’ and Fenton-O’Creevy’s (1998: 68) question

‘What makes the difference between effective employee involvement programmes and those

that fail to achieve their objectives?’

Drawing on a 2-year longitudinal study of the participants of WCs in two UK organisations

that introduced WCs as a result of the ICE Regulations (a housing association and a multinational

professional services firm), we contribute to the literature on WCs in three ways in this article.

First, we examine important WC outcomes, such as the participants of WCs satisfaction with WC

outcomes, their perceptions about the usefulness of the WC and their perceptions of the

performance of the WC, all of which have been rather neglected in the literature. Second,

although there are now well-developed literatures on the impact of both trust (Colquitt et al.,

2007) and justice (Greenberg, 1988) on organisational performance in a wide range of work and

other contexts, in comparison there are only a few studies in a WC/employee involvement

context on trust (Timming, 2006, 2007, 2009, 2012). In this series of papers, Timmingdraws mainly

from interviews with employee representatives and union delegates (2006, 2009) and a secondary

analysis of Workplace Employment Relations Study (WERS) data (2012). We go beyond these

studies by drawing on primary data from both managerial and employee representatives on WCs

and that this is the first study we can find to examine the consequences of organisational justice

in a WC context. Third, in order to provide a more complete understanding of the role of trust

and justice on WC outcomes, we address a need for work on the boundary conditions of the

trust/justice →WC outcomes relationship. Here we examine under what conditions trust and

justice have their greatest impacts on WC outcomes by examining how the IR climate moderates

the trust/justice →WC outcomes relationship.

The article begins with a brief review of the literature on WCs and in particular focuses on

those studies that consider the effectiveness of WCs. Second, we develop the theoretical

framework and hypotheses for the study by reviewing the trust, justice and IR climate

literatures. Third, we report the case contexts and methodology employed. Fourth, we report

the findings and conclude by discussing the implications for theory development and WC

practice.

WC EFFECTIVENESS AND OUTCOMES

Several attempts have been made in the literature to assess the effectiveness of joint

consultation. Hyman (1997) argues that for employee voice to be effective, it must have efficacy,

legitimacy and autonomy. However, these are very broad and general terms and all are difficult

to operationalise in a quantitative empirical study. Our interest in this article is with efficacy

and involves identifying and assessing important WC outcomes. As such, although there is an

extensive literature on WCs, there is no widely accepted criteria of what constitutes their

effectiveness; what the important WC outcomes are; and what factors, and in what way,

influence those outcomes. This section will highlight a relative gap in the joint consultation

Konstantina Kougiannou, Tom Redman and Graham Dietz

HUMAN RESOURCE MANAGEMENT JOURNAL, VOL 25 NO 4, 2015 459

© 2015 John Wiley & Sons Ltd.