The impact of the global financial crisis on employee participation – two German case studies

Abstract

Purpose The article aims to explore the link between corporate crises and decisions about employee participation in the context of the global financial crisis (GFC). Design/methodology/approach The authors complement Weick's sensemaking perspective with some distinctions taken from social systems theory. The paper examines the influence of a communicated corporate crisis on decisions regarding employee participation in two German companies over a two‐year period immediately following the outbreak of the GFC. Findings The meaning of a communicated and enacted corporate crisis sets a company in a state of alert and provokes some distinctive reactions. These include an accentuation of a traditional hierarchical style of decision making and an authoritarian leadership style, some distinctive key personnel changes, and a strong orientation towards senior management. Any reforms of immaterial employee participation are rejected and the institutions that represent employees engage in a passive co‐management. Practical implications The authors’ findings highlight the importance for companies of introducing a formal crisis management system before a crisis occurs, which provides the chance to safeguard a balance of centralization and decentralization in the decision‐making process during crises. Originality/value The study offers some novel insights about the meaning of crisis and of employee participation as well as about how these meanings affect decision‐making processes.

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