Proceedings of 10th Annual London Business Research Conference
10 - 11 August 2015, Imperial College, London, UK
ISBN: 978-1-922069-81-8
Developing a Working Involvement Model for Indian
Corporates: A Confirmatory Factor Analysis Approach
Ritu Sehgal
Literature on employee involvement practices often focusses on a ‘bundle’
comprising a variety of Human Resource practices, including among others, the
sharing of information, knowledge, power and rewards with as many as possible
people in the organization. Using Edward Lawler and Susan Mohrman’s 1996
model of four interlocking principles, that help build a high-involvement workplace,
this paper investigates the the underlying dimensions of information sharing (Inf),
knowledge sharing (Kno), power sharing (Pow) and reward sharing (Rew) in Indian
companies. As these concepts are not directly observable, maximum likelihood
Confirmatory Factor Analysis is used to estimate and test measurement models
incorporating indicator variables for these latent constructs. Second order CFA is
then used to develop a working Employee Involvement model.
Key words: Involvement, Engagement, Information, Knowledge, Power, Rewards,
Participation, Empowerment
1. Introduction:
The concept of employee involvement is not new in Indian companies yet it is not
likely to be dated anytime soon. In an age when the average tenure of an employee
is no more than 2-3 years, it is increasingly important for employees to feel a sense
of involvement with their jobs and their companies. There is an increasing demand
for dedicated, enthusiastic and inspired employees (Kanungo, 1982) who need little
or no supervision to carry out their jobs effectively for the good of the organization. If
nothing else, the strong link between employee involvement and performance (Wolf
and Zwick, 2008; Jones et al, 2010) will continue to drive efforts of employers in that
direction and well as keeping researchers engrossed in debating, dissecting,
analysing and interpreting the finer nuances of it. Despite the growth of EI, empirical
evidence from countries like India is still thin on the ground (Reddy et al 2013; Joshi
and Sodhi, 2011). This paper attempts to fill that gap.
The 2008 financial meltdown has forced organizations to re-focus on the interests
and concerns of their employees (Roethig, 2008). Human capital, rather than
financial or physical capital, after all, seems to be the only key to securing
competitive advantage.
2. Literature Review:
While a great deal of research into high involvement practices relates to the four
aspects of information sharing, training, empowerment and remuneration (Lawler,
1992; Leana and Elorkowski,1992), later works have also identified other practices
______________________
Dr. Ritu Sehgal, Assistant Professor, Faculty of Business, University of Wollongong in Dubai,
Email: RituSehgal@uowdubai.ac.ae
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Proceedings of 10th Annual London Business Research Conference
10 - 11 August 2015, Imperial College, London, UK
ISBN: 978-1-922069-81-8
adding collective participation and decision making ( Arthur, 1994) as well as
appraisal systems and job security (Wood and Menezes, 1998). The literature on
involvement practices and performance stresses on the complementarity of the
“bundle” (Burns and Stalker, 1961) and the “interlocking effect and mutual
reinforcement” of different practices (Macduffie, 1995). In practice, evidence to
suggest these four are used together is weak (Wood and Menezes, 2011). Even
Lawler did not specify how the combined effect of these four HR practices could be a
source of competitive advantage; he did, however, assert that this synergy is
comparable to a multiplicative model so that, if one practice has been neglected,
high involvement will not exist (Lawler, 1996). Most authors on EI tend to agree that
implementing individual practices in isolation is unlikely to be effective (Guerrero and
Barraud-Didier, 2004). A company willing to involve employees will have to offer
simultaneously more information, knowledge, compensation and power (Guest,
2001; Marchington and Grugulis, 2000).
The Lawler and Mohrman (1996) model of four interlocking principles that build a
high-involvement workplace is used in this paper. True involvement takes more than
pushing any one, two or three of the key features- power, information, knowledge
and rewards- to all levels of the organization. All four of these features must be
pushed to the lowest levels of the organization. Only when this is done, can
individuals performing the work, see a relationship between their efforts and the
success or failure of the organization (Lawler, 1992; Lawler et al, 1998).
The purpose of this paper is to investigate the underlying dimensions of information
sharing (Inf), knowledge sharing (Kno), power sharing (Pow) and reward sharing
(Rew) in Indian companies. As these concepts are not directly observable, maximum
likelihood CFA is used to estimate and test measurement models incorporating
indicator variables for these latent constructs. Second order CFA is then used to
develop a working EI model. Finally, this second order model is tested to see if large
companies and SMEs differ in their use of these four interventions. CFA is commonly
used for the analysis of latent variables.
2.1 Information sharing (Inf)
Most organizations collect and generate substantial amounts of data, in the form of
market intelligence, customer information, or in the form of operational information
generated in-house, such as costs, sales volumes, operational efficiencies and other
key performance metrics. This information can be used by leaders to find new
markets, generate more revenues, streamline operations and develop business
relationships. The idea of information sharing has two components: information
disclosure and open communication.
Integral to employee involvement is the sharing of information about the business.
To get employees to participate in business decisions meaningfully, this information
must be shared with employees. With effective information gathering, sharing and
analysis, people can participate in planning, strategy formulation and act in an
informed manner, helping the company gain a strategic advantage. Employees who
have up-to-date and reliable information can make better decisions; effective
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Proceedings of 10th Annual London Business Research Conference
10 - 11 August 2015, Imperial College, London, UK
ISBN: 978-1-922069-81-8
decision making aligned with corporate strategies can lead to improved business
performance.
In this study, respondents were asked how many employees were routinely shared
information with regarding six key attributes:
 Information about the company’s overall operating results
 Information about their unit’s operating results
 Information about how much fellow employees are paid
 Advance information on new technologies that may affect them
 Information on business plans/ goals
 Information on competitors’ relative performance
2.2 Knowledge Sharing (Kno)
Training is considered by many transformational leaders to be the life-blood of an
organization. Up-to-date training ensures that employees are able to complete their
tasks efficiently, resulting in improved productivity and higher customer satisfaction.
Besides, it allows people to develop their skills, making them feel more valued by
their organization as the employer is investing in them.
For the purpose of this research, respondents were asked about the kinds of training
provided to employees. The number of employees to whom the following six kinds of
training programmes were investigated:
 Group Decision making/Problem solving skills
 Leadership skills
 Skills in understanding the business (Accounting, Finance)
 Quality/Statistical analysis Skills
 Team Building Skills
 Job Skills Training
2.3 Power Sharing (Pow)
Employee empowerment came to prominence in the 1990’s as a management
response to an increasingly complex and competitive external environment. It
emanated from the realization that traditional hierarchical “command and control”
organisations were struggling to meet the growing demands for flexibility and quality;
and from the premises that an organisation’s only sustainable competitive advantage
is its people, that organisational effectiveness derives from judicious utilization of
human resources and that all members need to be engaged and active for a
company to be successful (Siegall and Gardner, 2000). TQM has been major spur to
the popularity of employee empowerment.
Moving power downwards in organisations often requires special activities and
structural changes. Managers may use a variety of approaches in moving decisionmaking to lower levels. There are two types of approaches used to redistribute
power:

Parallel organisation structures involving special meetings or informationdissemination activities separate from normal day-to-day work processes,
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Proceedings of 10th Annual London Business Research Conference
10 - 11 August 2015, Imperial College, London, UK
ISBN: 978-1-922069-81-8
also known as supplemental initiatives in the literature (Van-Aken and
Monetta, 1994), and

Others that involve a substantial change in the basic structure by moving
important decision-making into the hands of individuals and teams performing
the work. These are also referred to as replacement or institutionalized
initiatives (Van-Aken and Monetta, 1994).
Among parallel organisation structures, the best known is the use of quality circles.
Quality circles can be defined as a group of individuals with related interests that
meet at regular intervals to consider problems or other matters related to the quality
of outputs of a process and to the correction of problems or to the improvement of
quality. Quality Circle is one of the employee participation methods. It implies the
development of skills, capabilities, confidence and creativity of the people through
cumulative process of education, training, work experience and participation. It also
implies the creation of facilitative conditions and environment of work, which creates
and sustains their motivation and commitment towards work excellence. Quality
Circles have emerged as a mechanism to develop and utilize the tremendous
potential of people for improvement in product quality and productivity. Although
these do move power downward, they are limited in their impact (Ledford et al.,
1988). Typically, employees only provide input and recommendations; they do not
make substantial decisions.
The second approach to moving power downwards may employ job enrichment, selfmanaging work teams, mini-enterprise units, etc. Job enrichment is a type of job
redesign intended to reverse the effects of tasks that are repetitive requiring little
autonomy. Some of these effects are boredom, lack of flexibility and employee
dissatisfaction (Leach and Wall, 2004). The underlying principle is to expand the
scope of the job with a greater variety of tasks, vertical in nature, that require selfsufficiency. In today’s increasingly changing world both employers and employees
are trying to find ways to make jobs more meaningful and satisfying. One of the ways
to do this is to redesign jobs to better meet new requirements. Enrichment and
employee empowerment belong together. Enrichment means making jobs more
satisfying by increasing the skill variety, task identity, significance of the task,
autonomy and feedback from the work itself and so forth.
Self-Managing Work Teams (SMWT’s) are a highly trained group of multi-skilled
workers with technical, operational, administrative, interpersonal and problemsolving skills. In place of first-level supervisors and a set of employees with narrowly
defined jobs, is a set of ‘associates’ with broad responsibilities, including the
responsibility to manage themselves. They are completely responsible with the
authority and the resources to do what it takes. In the absence of a supervisor,
SMWT’s often handle budgeting, scheduling, setting goals and ordering supplies.
Some teams also evaluate one another’s performance and hire replacements for
departing team members (Dean and Evans, 1994). Such teams turn out a welldefined segment of work, that is, the final product, an intermediate product or a
service. These are often used in quality management and they usually replace,
rather than complement, the traditional organisation of work.
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Proceedings of 10th Annual London Business Research Conference
10 - 11 August 2015, Imperial College, London, UK
ISBN: 978-1-922069-81-8
The various programmes that have been listed in the questionnaire are as follows:




Quality circles
Employee participation groups other than quality circles
Job enrichment or redesign, and
Self-managing work teams
2.4 Reward Sharing (Rew)
Basing rewards on organisational performance is one way to ensure that employees
are involved in and care about the performance of the organisation. It also helps
ensure that they share in the gains that result from any performance improvement.
Effectively tailored, rewards are the key ingredient in EI programs as they help
ensure that employees use information, training and power to benefit the
organization (Konrad, 2006).
Participants were asked to share information on the following sub -attributes of EI
variable “Rewards/Recognitions”
 All- salaried pay systems
 Knowledge/ skill based pay
 Profit-sharing
 Individual incentives
 Work-group or team incentives
 Non-monetary recognition awards for performance
 Employee stock options
All-salaried pay systems and knowledge/ skill based pay are frequently considered to
be supportive of employee involvement. All-salaried pay reduces the distinctions
between classifications of employees, thus promoting a situation, in which the pay
system is congruent with the notion that information, knowledge and power are
shared.
When pay is based on skill and knowledge, it rewards individuals for their capability
and flexibility in contributing to the organisation. As a person learns more and can
contribute more to the organisation, pay is increased (Ledford, 1991). This fosters
and rewards cross-training and makes possible the flexible deployment of people. It
can also be supportive of encouraging individuals to learn the skills they need to be
involved in the business. Finally, it promotes a broader understanding of how the
business operates, a skill that can be useful in addressing complex problems.
Profit sharing and employee stock options are approaches that link employees more
closely to the success of the business and reward them for it. These systems are
often cited as reward approaches supportive of employee involvement (Blinder,
1990).
Overall, moving performance based rewards throughout an organisation may be
difficult but critical to the success of EI. Monetary incentives that reward individual
performance play an essential role in fostering entrepreneurial behaviour (Chiles and
Choi, 2000).
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Proceedings of 10th Annual London Business Research Conference
10 - 11 August 2015, Imperial College, London, UK
ISBN: 978-1-922069-81-8
The following hypotheses are formulated for testing in this paper:
H1: Indian companies are using a variety of interventions under the ambit of sharing
information, knowledge, power and rewards with employees
H2: EI is a bundle of interventions that fall under Information Sharing, Knowledge
Sharing, Power Sharing and Reward Sharing
3. Methodology
This paper uses a questionnaire developed and piloted to investigate the latent
constructs of information, knowledge, power and reward sharing practices of Indian
organizations, both large scale as well as SMEs. This questionnaire is based on
Lawler and Mohrman’s (1996) study. The modified questionnaire was sent to
companies listed in the database of Confederation of Indian Industry (CII), with the
assurance that confidentiality would be maintained. They were also reassured that
their answers would be combined with those of other respondents and presented
only in summary form in the report.
The questionnaire contained 23 items that respondents had to answer based on a 7point Likert scale. The responses ranged from 1 corresponding to 0-20% of
employees to 7 corresponding to all of the employees. The questions are intended to
determine how many employees are routinely involved by the responding companies
in the interventions, based on the four concepts of information sharing, knowledge,
power and reward sharing practices.
3.1 Sample
Six hundred questionnaires were handed out to the members of the Confederation of
Indian Industry, of which 239 were returned, with a response rate of 40%. Of the 239
respondents, 108 organizations are SMEs and the other 121 are large organizations.
The responding organisations employ more than two hundred thousand full-time
employees. The sample is large enough to allow for some interesting comparisons
among the different types of companies represented in the sample.
4. Results and Discussion
In the previous section, Inf, Kno, Pow and Rew are specified as a priori factors of EI
practices implementation. In the first-order model, Inf, Kno, Pow and Rew are
correlated measurement factors for EI. Fig 1 shows the Confirmatory Factor Analysis
of Information Sharing, Knowledge, Power and Reward Sharing. This measurement
model was adopted with some modifications discussed below.
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Proceedings of 10th Annual London Business Research Conference
10 - 11 August 2015, Imperial College, London, UK
ISBN: 978-1-922069-81-8
Table 1: Standardized Regression Weights- First Order Model
(No Modifications)
Factor Loadings
Item description
Estimate Significant
INF Inf 1
Information about the
company’s overall operating
results
Information about their unit’s
operating results
Information about how much
fellow employees are paid
Advance information on new
technologies that may affect
them
Information on business plans/
goals
Information on competitors’
relative performance
Group Decision
making/Problem solving skills
Leadership skills
Skills in understanding the
business (Accounting, Finance)
Quality/Statistical analysis
Skills
Team Building Skills
Job Skills Training
Quality circles
Employee participation groups
other than quality circles
Job enrichment or redesign
Self-managing work teams
All- salaried pay systems
Knowledge/ skill based pay
Profit-sharing
Individual incentives
Work-group or team incentives
Non-monetary recognition
awards for performance
Employee stock options
.190
No
Removed
. 607
Yes
Retained
.416
Yes
Removed
.590
Yes
Retained
.237
No
Removed
.817
Yes
Retained
.724
Yes
Removed
.791
.306
Yes
Yes
Retained
Removed
.378
Yes
Removed
.860
.822
.428
.351
Yes
Yes
Yes
Yes
Retained
Retained
Retained
Removed
.478
.766
-.370
.521
.565
.679
.751
.723
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Retained
Retained
Removed
Retained
Retained
Retained
Retained
Retained
.572
Yes
Retained
INF Inf2
INF Inf3
INF Inf4
INF Inf5
INF Inf6
KNO Tr1
KNO Tr2
KNO Tr3
KNO Tr4
KNO Tr5
KNO Tr6
POW Pow1
POW Pow2
POW Pow3
POW Pow4
REW Rew1
REW Rew2
REW Rew3
REW Rew4
REW Rew5
REW Rew6
REW Rew7
Removed or
Retained
The first order model used the 23 items in the questionnaire. In the first
modification, items with a factor loading less than 0.30 were dropped.
Generally, in CFA, factor loadings below 0.30 are not interpreted
(Harrington, 2009). This is based on factor analyses, where factor
loadings are correlations between the variable and factor, so squaring
the loadings yields a variance accounted for. In the second modification,
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Proceedings of 10th Annual London Business Research Conference
10 - 11 August 2015, Imperial College, London, UK
ISBN: 978-1-922069-81-8
some items that were creating model fit issues were dropped, in line with
theory. Each item retained has a standardised factor loading greater
than 0.32 and is significant at p=0.05.
The model was also run as a one-factor (EI), two-factor and three-factor
model. Each one of these had a significantly poorer fit and was not
acceptable. The four-factor Lawler (1998) model appears to have found
acceptance in Indian companies.
The goodness of fit indices of the first order model are within commonly
accepted limits. The 2 is 2.018, CFI is 0.928 and TLI is 0.908. With an
RMSEA of 0.65, the model appears plausible.
Pairwise correlations between the constructs (Table 2) show that all four
constructs are independent, but correlated.
Table 2: Correlations- First-order Model
INF
REW
INF
REW
KNO
REW
<-->
<-->
<-->
<-->
<-->
<-->
KNO
INF
POW
KNO
POW
POW
Estimate
.533
.553
.589
.579
.608
.588
H1: Indian companies are using a variety of interventions under the
ambit of sharing information, knowledge, power and rewards with
employees
H1 is supported. It is apparent that Indian organizations are using a
variety of interventions in a bid to get employees increasingly involved.
However, looking at Table 1, some items removed are somewhat
surprising.
Information about the company’s overall operating results and
information on business plans/ goals is integral to the success of the
organization. Without the requisite information, employees are reduced
to simply carrying out allocated tasks, in a relatively automatic, robotic
way. In the section on knowledge/training Group Decision
making/Problem solving skills and skills in understanding the business
(Accounting, Finance) are not factors. In the name of empowerment,
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Proceedings of 10th Annual London Business Research Conference
10 - 11 August 2015, Imperial College, London, UK
ISBN: 978-1-922069-81-8
employee participation groups other than quality circles do not seem to
be much used.
Figure- 1
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Proceedings of 10th Annual London Business Research Conference
10 - 11 August 2015, Imperial College, London, UK
ISBN: 978-1-922069-81-8
In the second-order model, the four factors are governed by a higherorder factor, i.e. EI. To examine if there is internal fit between among the
EI practices, a CFA using the second-order latent factor, Employee
Involvement, is conducted.
Standardised regression weights relevant to Fig. 2 are in Table 3.
Table 3
INF
KNO
POW
REW
Inf6
Inf4
Inf2
Kno6
Kno5
Kno2
Pow4
Pow3
Pow1
Rew7
Rew6
Rew5
Rew4
Rew3
Rew2
<--<--<--<--<--<--<--<--<--<--<--<--<--<--<--<--<--<--<---
EI
EI
EI
EI
INF
INF
INF
KNO
KNO
KNO
POW
POW
POW
REW
REW
REW
REW
REW
REW
Estimate
.726
.755
.801
.758
.929
.506
.539
.827
.887
.777
.751
.492
.358
.543
.765
.752
.671
.453
.512
The goodness of fit indices of the second-order order model improved
with the introduction of the higher order latent factor, employee
involvement. The 2 is 1.867, CFI is 0.942 and TLI is 0.927. With an
RMSEA of 0.60, the model appears to be a good fit with the data. As Fig
2 shows, the second order factor measurement model supports
Hypothesis 2.
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Proceedings of 10th Annual London Business Research Conference
10 - 11 August 2015, Imperial College, London, UK
ISBN: 978-1-922069-81-8
Figure 2: The second-order EI model
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Proceedings of 10th Annual London Business Research Conference
10 - 11 August 2015, Imperial College, London, UK
ISBN: 978-1-922069-81-8
5. Conclusion
Of the interventions being used frequently, it is interesting to note that respondents
seem to be using leadership skills and team building skills training with large
numbers of employees. ESOPs, profit-sharing and team incentives are also used
frequently. Empowerment is more than a buzz word and schemes like quality circles,
SMWTs and job enrichment are put into place by the respondents to genuinely
create more democratic workplaces. The one area of concern would be the sharing
of information. It is rather strange that the easiest of interventions, the sharing of
information with employees, does not seem to have found too much favour. Perhaps,
it is part of the Indian culture, to keep information limited to top management as
secretive, rather than risk losing it if it is shared. That is something companies need
to rectify.
Indian companies seem to have done their homework and realised that true
involvement needs more than sporadic use of some interventions, but needs to be a
comprehensive, integrated program that encompasses information sharing,
knowledge sharing, power and reward sharing with as many employees as possible.
Limitations of the Study
The data has some important limitations:
 It addresses only organisations that are members of the Confederation of
Indian Industry and, thus, fails to say anything about the vast numbers of
other companies that are part of Indian industry, but are not members of the
CII.
 It represents a view from the top. Senior managers completed the surveys
and views from other levels in the organisation- middle managers, front-line
supervisors and shop-floor workers- may be somewhat different.
 The survey research method allows for examination of statistical association
at one point in time.
Despite its limitations, this study is a fairly comprehensive account of practices and
approaches to employee involvement in Indian businesses. It provides important
contributions to the literature and for managers. In particular, the study emphasizes
the importance of implementing a comprehensive EI programme comprising the key
practices, rather than implementing a few selected practices.
Future Areas of Research
 Future research could focus on assessing the generalizability of concepts and
practices that are expected to work. To achieve this, empirical studies need to
be carried out, which should contribute towards building the knowledge base
necessary for understanding how specific employee involvement mechanisms
may be effectively put to work.
 Replication studies could be undertaken as part of research to uncover and
document best practices for organisations to emulate. These are crucial steps
towards helping organisational designers establish context and conditions in
which employee involvement programmes may be operationalised to achieve
organisational success. Evaluation of how appropriate and effective these
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Proceedings of 10th Annual London Business Research Conference
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ISBN: 978-1-922069-81-8

programmes could turn out to be when implemented would be of value to
them.
A longitudinal research study to systematically investigate the findings in this
study at the level of an individual organisation may also be of interest to
academics and practitioners.
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