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Workers’ Participation in Management :Workers’ Participation in Management John

Leitch has defined Industrial Democracy as “the organisation of any factory or other

business institution into a little democratic state with a representative government which

shall have both the legislative and executive phases”. In the same manner as political

democracy has converted subjects into citizens, with right of self-determination and self-

government, industrial democracy converts the workers from the mere subjects obeying

the orders of the employers, into citizens of the industrial world, with a right to self-

determination and self-government, that is, representative participation in making rules

and enforcing them. This is known as Workers’ Participation in Management. Workers’

participation in management means giving scope for workers to influence the managerial

decision-making process at different levels by various forms in the organisation. The

principal forms of workers’ participation are information sharing, joint consultation,

suggestion schemes, etc.

Scope of Workers’ Participation in Management :Scope of Workers’ Participation in

Management 1. Information Sharing. Share the information! That says it all. According

to this view, participation takes place when the management solicits the opinion of

workers before taking a decision. The management ultimately takes the decision.

Workers are given a say or an opportunity to influence decisions, they play a passive role

in the process of decision-making, but have no final say in the matter. 2. Sharing

Decision-Making. This school holds that participation of an individual in something

occurs when he actively takes part. The focus here is that there must exist taking part

actively. Workers sit with the representatives of management to take important decisions
particularly on matters affecting the workers. Workers may be members of Works

Committees, Joint Management Council, etc. along with the representatives of

management. The decisions are taken through mutual discussions between the

representatives of the workers and those of the management. 3. Self-control. The

essential feature of self-control (or management) is that management and workers are not

visualised as two distinct groups but as active members with equal voting rights.

Participation in Yugoslavia is an example of self-control.

Significance of Workers Participation :Significance of Workers Participation 1. Higher

Productivity: The increased productivity is possible only when there exists fullest co-

operation between labour and management. It has been found that poor labour

management relations do not encourage the workers to contribute anything more than the

minimum desirable to retain their jobs. Thus participation of workers in management is

essential to increase industrial productivity. 2. Greater Commitment: An important

prerequisite for forging greater individual commitment is the individual’s involvement

and opportunity to express himself. Participation allows individuals to express

themselves at the work place rather than being absorbed into a complex system of rules,

procedures and systems. If an individual knows that he can express his opinion and ideas,

a personal sense of gratification and involvement takes place within him. I am sure you

will agree that participation increases the level of commitment and the employees start

relating to the organisation. 3. Reduced Industrial Unrest. Industrial conflict is a struggle

between two organised groups, which are motivated by the belief that their respective

interests are endangered by the self-interested behaviour of the other. Participation cuts at
the very root of industrial conflict. It tries to remove or at least minimise the diverse and

conflicting interests between the parties, by substituting it with cooperation, homogeneity

and common interests. Both sides are integrated and decision arrived at are mutual rather

than individual.

Significance of Workers Participation :Significance of Workers Participation 4.

Improved Decisions. I am sure that you will agree that communication is never a one way

process, Also note that it is seldom, if ever, possible for managers to have knowledge of

all alternatives and all consequences related to the decisions which they must make.

Because of the existence of barriers to the upward flow of information in most

enterprises, much valuable information possessed by subordinates never reaches their

managers. Participation tends to break down the barriers, and makes the information

available to managers. To the extent such information alters the decisions, the quality of

decisions is improved. 5. Human Resource Development. Participation provides

education to workers in the management of industry. It fosters initiative and creativity

among them. It develops a sense of responsibility. Informal leaders get an opportunity to

reinforce their position and status by playing an active role in decision-making and by

inducing the members of the group to abide by them. 6. Reduced Resistance to Change.

Last but not the least, it should be noted that changes are arbitrarily introduced from

above without explanation. Subordinates tend to feel insecure and take counter measures

aimed at sabotage of changes. But when they have participated in the decision making

process, they have had an opportunity to be heard. They know what to expect and why.

Their resistance to change is reduced.


Pre–requisites for the success of Workers’ Participation in Management :Pre–

requisites for the success of Workers’ Participation in Management I. The overall climate

in the organisation should be favourable to workers’ participation. There should be an

attitude of mutual co-operation, confidence, and respect for each other. Management, in

particular, should be genuinely receptive to the labour’s ideas so that the latter can

perceive that their ideas are useful. II. There must be sufficient time to participate before

action is required; because participation in emergent situations is hardly advisable. III.

The subject of participation must be relevant to the enterprise; it must concern something

in which both the parties are interested, otherwise the parties are likely to become

indifferent to the process of participation. IV. The workers’ representatives should have

the ability such as intelligence and knowledge, to participate. It is not appropriate to ask

workers to participate in technical aspects of the machinery; but they can participate

successfully in problems relating to their work. The contributions made by the workers

should be worthwhile and should benefit the workers in the long run. It should be in the

interest of the management as well! Now maintaining that balance is not that easy but

that is what experience is all about!!

Pre–requisites for the success of Workers’ Participation in Management :Pre–

requisites for the success of Workers’ Participation in Management There must be

effective system of communication. Both labour’s representatives and management’s

representatives must be able to understand each other and express themselves without any

inhibitions. The whole idea after all is to be able to speak out one’s mind and listen to the
counterpart’s point of view! VI. Participation should not adversely affect the status or

authority of the participants. Managers will not participate, if their authority is threatened.

Workers will hesitate in participating if they think that their status is being adversely

affected. In fact for worker’s participation to be effective, both the management and the

labour should get rid of their ego problems and share their ideas. I am sure that you will

agree that no relationship can continue for long if there are ego clashes. Both the parties

should make efforts to come closer rather than moving away. VII. The financial cost of

participation should always be lesser than the benefits-both economic and non-economic-

of participation. We all can understand the economic aspect but as far as the non-

economic part is concerned, it will depend on the organisations. What I can tell you at

this point of time is that the pains and pleasures should be matched! The pleasures should

be much more as compared to the pains. VIII. Participation should be within the

framework of overall policy of the enterprise in question .I am sure you will agree that

every decision has to be in line with the Vision and Mission statements of the

organisation.
WORKERS’ PARTICIPATION IN MANAGEMENT

Introduction:

¬ 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.

Definitions:

¬ 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.

Objectives:

¬ 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.

Importance:

¬ 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 TQM

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.

¬ Advantage:

o Makes the workers committed to the job and to the organization.

¬ Drawback:

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.

¬ Advantages:

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.

¬ Advantages:

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.

Empowered Teams:

¬ 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.

Financial Participation:

¬ 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.