Britain’s has a productivity problem. Its relative standing in the international league tables has been in decline since the 1870s when it was in pole position. But the big change was in the 1970s when most Western European countries overtook us.
The current concern is more about the way our productivity fell in 2007, as it tends to in recessions, but has not yet rebounded back to pre-2008 levels. There was a slight recovery in 2010 and early 2011 but productivity as measured by output per hour has been declined again and has plateaued since 2013. This is historically unprecedented.
Many factors lie behind this, including the government’s austerity programme, but what is also a concern is that there seems a genuine uncertainty – if not bewilderment – about what can be done about it. However, insufficient attention is paid to the human factor.
Successive governments have targeted skills acquisition and the quality of the workforce may have increased; Conservative governments’ employment relations legislation has weakened trade union power beyond all recognition. Yet there remains a problem, which must lie elsewhere.
Let’s look at work organisation and management. A rich body of knowledge is being neglected that shows employee involvement is good for productivity and other related measures such as product and service quality. And much of this evidence is British and based on a national survey which is the envy of the world: the government-led Workplace Employment Relations Survey series, also known as WERS.
My recent work on the most recent two surveys, in 2004 and 2011, particularly shows that employee involvement has positive effects on productivity across the whole economy: private and public; manufacturing and services. An element of this is explained simply by employees being more satisfied. But job satisfaction does not just spring from the air.
There are two types of employee involvement strategy. Job or role involvement management, often known as empowerment or enriched job design, creates high-quality jobs that allow employees an element of discretion and flexibility over the execution and management of their primary tasks. Organisational involvement management gets workers to participate in decision-making, beyond the narrow confines of the job, in the wider organisation or the business as a whole.
Organisational involvement management aims to encourage greater pro-activity, flexibility and collaboration amongst workers. That might be directly – through idea-capturing schemes, teamwork and flexible job descriptions – or indirectly, through the disclosure of financial information, specific training for involvement, or feedback systems. Organisational involvement is thus concerned with the development of broader horizons among all workers so that they can think of better ways of doing their jobs, connect what they do with what others do and react effectively to novel problems.
Together, the two approaches are known as “high-involvement management” and are recommended to run in tandem, as they are mutually reinforcing. However, in practice, the two types may not co-exist. The WERS studies even show that they are not significantly correlated and may have different, though overlapping, antecedents and effects. You might expect this. Much of the experimentation in organisational involvement has been in mass production settings – think Japanese manufacturing – where role involvement is traditionally low and work is highly routine.
The lack of correlation also means that we can assess their effects independently, which is what I did in my analysis of WERS. I found that both types had significant effects on the productivity, quality and financial performance of organisations. But only role involvement management increased job satisfaction and in turn this partly explained the better performance. The explanation for the performance effect of organisational involvement did not lie in job satisfaction or enhanced employee well-being. Nor did it seemingly lie in workers simply showing more initiative.
Because organisational involvement is concerned with the people thinking of better ways of doing their jobs, relating to each other better and reacting to problems better, then we need to look beyond simple changes in employees’ individual satisfaction and behaviour to explain its effects. Organisational performance is about achieving things as a collective through coordinated individual actions.
We can speculate that the most telling aspect of organisational-involvement management is perhaps that it transforms the ability of us all to relate to each other as both colleagues and implicitly internal customers. It might, for example, enhance our appreciation of each other’s roles. This expansion of people’s horizons and shared understandings through greater contact and integration increases the individual and collective human and social capital of the organisation, be it a firm or in the public sector.
For the daily lives of employees it also ought to reduce what stress theorists call hindrance stressors. This might be employees having inadequate information and uncooperative colleagues. On the other hand we might see an increase in the challenge stressors, such as involving them in problem solving, enhancing team working and growing employees’ roles – which is likely to have positive effects on employees' motivation and well-being.
An interesting aspect of the WERS research is that I get the same results in 2004 and 2011. In other words, there is no change over the recessionary period. Moreover, I was able to measure the use of wage and employment freezes, redundancies and restructurings. I found the involvement performance results were not fundamentally different in those workplaces that used a lot of these recessionary actions.
This challenges a commonplace criticism of high-involvement management that it is not sustainable. The argument goes that crises will bring cost-cuts and these will undermine the positive effects of involvement on employees and their trust in management. This in turn will dilute the performance effects of involvement management and precipitate a withering of genuine involvement.
Yet the evidence of WERS is that the use of involvement practices remained stable through the recession even if they were confined to a minority of workplaces – typically around a third for the most popular methods. The only practice to increase substantially over the period was formal appraisal which is now almost ubiquitous. But it is all too often not done well.
Feedback is an important ingredient of involvement and information dissemination, but appraisals done badly can fail to produce positive psychological effects. The flaws in this are a warning to human resource managers and CEOs to keep a close watch on how much involvement they are really achieving, even with their practices designed to achieve it. All too often the focus is on processes – was an appraisal done on time, was information sent out properly? – rather than on the content in the delivery.
Overall the lesson is clear: if the oft-reported economic recovery is to have real substance, we will need to start seeing an increase in productivity – and the best way to achieve that is to intensively involve and listen to the workforce.