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

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.