Employee Involvement in Small Firms


Two-thirds of small firms in Britain (those with between 25 and 200 employees) have some form of employee involvement. Managers and governments often maintain that these employee relations practices improve firms' economic performance by encouraging employee commitment to managerial goals and the success of the enterprise. But does employee involvement improve performance?

This extensive review of research literature from the UK, the USA and elsewhere, indicates that certain types of employee involvement - notably various combinations of financial and non-financial employee involvement - can improve small firms' economic performance. However, some types of employee involvement appear to be of little value, and, in some circumstances, can prove detrimental to performance. Furthermore, what seems to work for some firms does not necessarily work for others. The review examines the conditions under which practices are adopted and the appropriateness of alternative employee involvement measures to firms in different circumstances in an attempt to uncover why the successful practices work.

The findings have practical implications for managers of small firms, as well as informing thinking in government and among social partners who, in Britain and other countries, are keen to promote employee involvement in small firms.