| || |
WORKERS’ PARTICIPATION IN MANAGEMENT -
January 4th, 2008
WORKERS’ PARTICIPATION IN MANAGEMENT
Three groups of managerial decisions affect the workers of any industrial establishment and hence the workers must have a say in it.
o Economic decisions – methods of manufacturing, automation, shutdown, lay-offs, mergers.
o Personnel decisions – recruitment and selection, promotions, demotions, transfers, grievance settlement, work distribution.
o Social decisions – hours of work, welfare measures, questions affecting work rules and conduct of individual worker’s safety, health, sanitation and noise control.
Participation basically means sharing the decision-making power with the lower ranks of the organization in an appropriate manner.
The concept of WPM is a broad and complex one.
Depending on the socio-political environment and cultural conditions, the scope and contents of participation change.
International Institute of Labour Studies: WPM is the participation resulting from the practices which increase the scope for employees’ share of influence in decision-making at different tiers of organizational hierarch with concomitant assumption of responsibility.
ILO: Workers’ participation, may broadly be taken to cover all terms of association of workers and their representatives with the decision-making process, ranging from exchange of information, consultations, decisions and negotiations, to more institutionalized forms such as the presence of workers’ member on management or supervisory boards or even management by workers themselves as practiced in Yugoslavia.
According to Gosep, workers’ participation may be viewed as:
o An instrument for increasing the efficiency of enterprises and establishing harmonious relations;
o A device for developing social education for promoting solidarity among workers and for tapping human talents;
o A means for achieving industrial peace and harmony which leads to higher productivity and increased production;
o A humanitarian act, elevating the status of a worker in the society;
o An ideological way of developing self-management and promoting industrial democracy.
Other objectives of WPM can be cited as:
o To improve the quality of working life (QWL) by allowing the workers greater influence and involvement in work and satisfaction obtained from work; and
o To secure the mutual co-operation of employees and employers in achieving industrial peace; greater efficiency and productivity in the interest of the enterprise, the workers, the consumers and the nation.
The main implications of workers’ participation in management as summarized by ILO:
o Workers have ideas which can be useful;
o Workers may work more intelligently if they are informed about the reasons for and the intention of decisions that are taken in a participative atmosphere.
Unique motivational power and a great psychological value.
Peace and harmony between workers and management.
Workers get to see how their actions would contribute to the overall growth of the company.
They tend to view the decisions as `their own’ and are more enthusiastic in their implementation.
Participation makes them more responsible.
o They become more willing to take initiative and come out with cost-saving suggestions and growth-oriented ideas.
Scope and ways of participation:
One view is that workers or the trade unions should, as equal partners, sit with the management and make joint managerial decisions.
The other view is that workers should only be given an opportunity, through their representatives, to influence managerial decisions at various levels.
In practice, the participation of workers can take place by one or all the methods listed below:
o Board level participation
o Ownership participation
o Complete control
o Staff or work councils
o Joint councils and committees
o Collective Bargaining
o Job enlargement and enrichment
o Suggestion schemes
o Quality circles
o Empowered teams
o Financial participation
Participation at the Board level:
This would be the highest form of industrial democracy.
The workers’ representative on the Board can play a useful role in safeguarding the interests of workers.
He or she can serve as a guide and a control element.
o He or she can prevail upon top management not to take measures that would be unpopular with the employees.
o He or she can guide the Board members on matters of investment in employee benefit schemes like housing, and so forth.
The Government of India took the initiative and appointed workers’ representatives on the Board of Hindustan Antibiotics (Pune), HMT (Bangalore), and even nationalized banks.
The Tatas, DCM, and a few others have adopted this practice.
Problems associated with this method:
o Focus of workers’ representatives is different from the focus of the remaining members of the Board.
o Communication and subsequently relations between the workers’ representative and the workers suffers after the former assumes directorship.
He or she tends to become alienated from the workers.
o As a result, he or she may be less effective with the other members of the Board in dealing with employee matters.
o Because of the differences in the cultural and educational backgrounds, and differences in behaviour and manners, such an employees’ representative may feel inferior to the other members, and he or she may feel suffocated. Hence, his or her role as a director may not be satisfying for either the workers or the management.
o Such representatives of workers’ on the Board, places them in a minority. And the decisions of the Board are arrived at on the basis of the majority vote.
Participation through ownership:
This involves making the workers’ shareholders of the company by inducing them to buy equity shares.
o In many cases, advances and financial assistance in the form of easy repayment options are extended to enable employees to buy equity shares.
Examples of this method are available in the manufacturing as well as the service sector.
o Makes the workers committed to the job and to the organization.
o Effect on participation is limited because ownership and management are two different things.
Participation through complete control:
Workers acquire complete control of the management through elected boards.
The system of self-management in Yugoslavia is based on this concept.
Self-management gives complete control to workers to manage directly all aspects of industries through their representatives.
o Ensures identification of the workers with their organization.
o Industrial disputes disappear when workers develop loyalty to the organization.
o Trade unions welcome this type of participation.
Conclusion: Complete control by workers is not an answer to the problem of participation because the workers do not evince interest in management decisions.
Participation through Staff and Works Councils:
Staff councils or works councils are bodies on which the representation is entirely of the employees.
There may be one council for the entire organization or a hierarchy of councils.
The employees of the respective sections elect the members of the councils.
Such councils play a varied role.
o Their role ranges from seeking information on the management’s intentions to a full share in decision-making.
Such councils have not enjoyed too much of success because trade union leaders fear the erosion of their power and prestige if such workers’ bodies were to prevail.
Participation through Joint Councils and Committees:
Joint councils are bodies comprising representatives of employers and employees.
o This method sees a very loose form of participation, as these councils are mostly consultative bodies.
Work committees are a legal requirement in industrial establishments employing 100 or more workers.
o Such committees discuss a wide range of topics connected to labour welfare.
o Examples of such committees are welfare committee, safety committee, etc.
o Such committees have not proven to be too effective in promoting industrial democracy, increasing productivity and reducing labour unrest.
Participation through Collective Bargaining:
Through the process of CB, management and workers may reach collective agreement regarding rules for the formulation and termination of the contract of employment, as well as conditions of service in an establishment.
Even though these agreements are not legally binding, they do have some force.
For CB to work, the workers’ and the employers’ representatives need to bargain in the right spirit.
But in practice, while bargaining, each party tries to take advantage of the other.
This process of CB cannot be called WPM in its strongest sense as in reality; CB is based on the crude concept of exercising power for the benefit of one party.
o WPM, on the other hand, brings both the parties together and develops appropriate mutual understanding and brings about a mature responsible relationship.
Participation through Job Enlargement and Job Enrichment:
Excessive job specialization that is seen as a by-product of mass production in industries, leads to boredom and associated problems in employees.
Two methods of job designing – job enlargement and job enrichment– are seen as methods of addressing the problems.
o Job enlargement means expanding the job content – adding task elements horizontally.
o Job enrichment means adding `motivators’ to the job to make it more rewarding.
This is WPM in that it offers freedom and scope to the workers to use their judgment.
But this form of participation is very basic as it provides only limited freedom to a worker concerning the method of performing his/her job.
The worker has no say in other vital issues of concern to him – issues such as job and income security, welfare schemes and other policy decisions.
Participation through Suggestion Schemes:
Employees’ views are invited and reward is given for the best suggestion.
With this scheme, the employees’ interest in the problems of the organization is aroused and maintained.
Progressive managements increasingly use the suggestion schemes.
Suggestions can come from various levels.
The ideas could range from changes in inspection procedures to design changes, process simplification, paper-work reduction and the like.
o Out of various suggestions, those accepted could provide marginal to substantial benefits to the company.
The rewards given to the employees are in line with the benefits derived from the suggestions.
Participation through Quality Circles:
Concept originated in Japan in the early 1960s and has now spread all over the world.
A QC consists of seven to ten people from the same work area who meet regularly to define, analyze, and solve quality and related problems in their area.
Training in problem-solving techniques is provided to the members.
QCs are said to provide quick, concrete, and impressive results when correctly implemented.
o Employees become involved in decision-making, acquire communication and analytical skills and improve efficiency of the work place.
o Organization gets to enjoy higher savings-to-cost ratios.
o Chances of QC members to get promotions are enhanced.
The Indian Scenario:
o Tried by BHEL, Mahindra and Mahindra, Godrej and Boyce among others.
o Experienced mixed results:
M&M (jeep division) with 76 QCs has experienced favourable results.
• Technical problems got solved.
• Workers got to get out of their daily routine and do something challenging.
Trade unions look at it as:
• A way of overburdening workers, and
• An attempt to undermine their role.
These circles require a lot of time and commitment on the part of members for regular meetings, analysis, brainstorming, etc.
Most QCs have a definite life cycle – one to three years.
o Few circles survive beyond this limit either because they loose steam or they face simple problems.
QCs can be an excellent bridge between participative and non-participative approaches.
For QCs to succeed in the long run, the management needs to show its commitment by implementing some of the suggestions of the groups and providing feedback on the disposition of all suggestions.
Empowerment occurs when authority and responsibility are passed on to the employees who then experience a sense of ownership and control over their jobs.
Employees may feel more responsible, may take initiative in their work, may get more work done, and may enjoy the work more.
For empowerment to occur, the following approach needs to be followed as compared to the traditional approach:
Element Traditional Org. Empowered Teams
Organizational structure Layered, individual Flat, team
Job design Narrow, single task Whole process, multiple tasks
Management role Direct, control Coach, facilitate
Leadership Top-down Shared with the team
Information flow Controlled, limited Open, shared
Rewards Individual, seniority Team-based, skill-based
Job process Managers plan, control, improve Teams plan, control, improve
Features of empowered or self-directed teams:
o Empowered to share various management and leadership functions.
o Plan, control and improve their work.
o Often create their schedules and review their performance as a group.
o May prepare their own budgets and co-ordinate their work with other departments.
o Usually order materials, keep inventories and deal with suppliers.
o Frequently responsible for acquiring any new training they might need.
o May hire their own replacement to assume responsibility for the quality of their products or services.
Titan, Reliance, ABB, GE Plastics (India), Wipro Corporation and Wipro InfoTech are empowering employees – both frontline as well as production staff, and are enjoying positive results.
Total Quality Management:
TQM refers to the deep commitment, almost obsession, of an organization to quality.
Every step in company’s processes is subjected to intense and regular scrutiny for ways to improve it.
Some traditional beliefs are discarded.
o High quality costs more.
o Quality can be improved by inspection.
o Defects cannot be completely eliminated.
o Quality in the job of the QC personnel.
New principles of TQM are:
o Meet the customer’s requirement on time, the first time, and 100% of the time.
o Strive to do error-free work.
o Manage by prevention, not correction.
o Measure the cost of quality.
TQM is called participative because it is a formal programme involving every employee in the organization; making each one responsible for improving quality everyday.
This method involves less consultations or even joint decisions.
Performance of the organization is linked to the performance of the employee.
The logic behind this is that if an employee has a financial stake in the organization, he/she is likely to be more positively motivated and involved.
Some schemes of financial participation:
o Profit-linked pay
o Profit sharing and Employees’ Stock Option schemes.
o Pension-fund participation.
Pre-requisites for successful participation:
Management and operatives/employees should not work at cross-purposes i.e. they must have clearly defined and complementary objectives.
Free flow of communication and information.
Participation of outside trade union leaders to be avoided.
Strong and effective trade unionism.
Workers’ education and training. Trade unions and government needs to work in this area.
Trust between both the parties.
Workers should be associated at all levels of decision-making.
Employees cannot spend all their time in participation to the exclusion of all other work.
Limitations of participation:
Technology and organizations today are so complex that specialized work-roles are required.
o This means employees will not be able to participate effectively in matters beyond their particular environment.
Everybody need not want participation.
The role of trade unions in promoting participative management has been far from satisfactory.
Employers are unwilling to share power with the workers’ representatives.
Managers consider participative management a fraud.
Evolution of participative management in India:
The beginning towards WPM was made with the Industrial Disputes Act, 1947, which made Works Committees mandatory in industrial establishments employing 100 or more workers.
The Industrial Policy Resolution adopted by the government in 1956 stated that there should be some joint consultation to ensure industrial peace, and improve employer-employee relations.
The functions of both these joint bodies were to be consultative and were not binding on the management.
The response to these schemes was encouraging to begin with, but gradually waned.
o A study team was appointed in 1962 to report on the working of joint councils and committees.
The team identified some reasons for their failure.
No concrete steps were taken to remove the difficulties, or change the pattern of participative management.
During the emergency of 1975-77, the interest in these schemes was revived by the then Prime Minister by including Workers’ Participation in industry in the government’s 20-point programme.
o The government started persuading large enterprises to set up joint consultative committees and councils at different levels.
The Janata Government who came to power in 1977 carried on this initiative.
In was again emphasized by the Congress government who came back n 1979.
This continued in a “non-statutory vein” till the late 1980s, and the response from the employers and employees stayed luke-warm.
o Then, the 42nd Amendment to the Constitution was made.
Now, Article 43-A reads: The State shall take steps, by suitable legislation, or in any other way, to secure the participation of workers in the management of undertakings, establishments or other organizations engaged in any industry.
Thus, participative management is a constitutional commitment in India.
o And then, on May 30,1990; the government introduced the Participation of Workers in Management Bill in the Rajya Sabha.
The bill requires every industrial enterprise to constitute one or more `Shop-Floor Councils’ at the shop floor level, and`Establishment Council’ at the establishment level.
These councils will have equal representation of employers and employees.
Shop-Floor councils enjoy powers over a wide range of functions from production, wastage control to safety hazards.
The Establishment Council enjoys similar powers.
The bill provides for the constitution of a Board of Management of every corporate body owning an industrial establishment.
The bill also provides for penalties on individuals who contravene any provision of the bill.
In spite of all these efforts, only the government and the academicians have been interested in participative management.
But participative management is staging a comeback.
o The compulsions of emerging competitive environment have made employee involvement more relevant than ever before.
o Managers and the managed are forced to forget their known stands, break barriers, and work in unison.
Managers and workers are partners in the progress of business.