Lesson: 40

Title: If we walk Together! : Workers Participation in Management Topics to be covered: Industrial democracy and participative management Meaning of workers participation in management Scope Significance Forms Pre-requisites for the success Keith Davis on WPM Article on Workers Participation must in decision- making. By: Girish Chadha

Employee Empowerment
Topics to be covered: Introduction Forms of empowerment o Works Committee o Joint management Councils o Worker Director o Shop and Joint Councils o Quality Circles

My dear friends, Today we are going to see things from the employees point of view. Yes, we are going to study Workers Participation in Management. Let us see the other side!! Do you remember that we have read this term before? Let me see your interest and regularity! If you cant recall let me help you out. We have read this in handling industrial disputesto be precise; we had referred to this concept in the preventive machinery.

Let us find out how do the employees feel when they are allowed to participate in decision-making We shall begin discussing with an overview of the Industrial Democracy and link it with workers participation in management. Industrial Democracy and Participative Management The concept of industrial democracy is an extension of the concept of democracy to the sphere of industrial activity. It is democracy in the industrial world. Industrial Democracy can be understood better as two separate words that are Industrial and Democracy. Industrial would obviously mean the sum of various organisations operating in a particular field. As far as democracy is concerned, I am sure we all had studied this in school. Let me see what do you remember! Yes, Democracy is a state in which the citizens are allowed to be a part of the whole gamut. If you remember, there was a particular expression that we used to define democracy.Of the people, By the people and For the People!! Let us understand the concept of Industrial Democracy with the help of a definition. 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. The fundamental step in the introduction of democratic principles and practices in industrial management is the creation and implementation of various schemes for workers participation in decision-making and management. The formation of works committees, works councils, joint consultative committees and the inclusion of representatives of workers on the board of directors are some of these measures. (We will be studying these schemes in detail, later in this lesson) The basic intention in such measures is to provide an opportunity for the workers to express their views on all matters in which they are competent to do so and that will affect them in the long run.

Workers Participation in Management The managers, workers and industrial relations experts interpret the term workers participation in management in different ways. Some mangers interpret it as information sharing while others consider it as joint consultation prior to decision making. However this is not all about it! The workers generally think of it as joint decision-making. That means workers treat participation as equivalent to co-decision in the spheres of management of the enterprise. After all they want to really participate! Now let us see what do the industrial relations experts feel about participative management! They regard it as an association of labour with management without the final authority or responsibility in the general area of managerial functions. To them, it means that the management shares in an appropriate manner the decision-making power with the lower ranks of the organisation. Thus, 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. After this discussion, could you please explain what have you understood about workers participation in management? To what extent do you think, the workers should be allowed to participate? Let us now discuss the scope of Workers Participation in Management

Scope: Please note that it was Elton Mayo who first advocated the idea or workers participation in management in his famous Hawthorne Studies (1927-32). Since then three points of view on participation have emerged .Let us discuss them one by one: 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. Self-control implies a process in which subordinates exercise control on the mechanism of decision-making as full and active members. It is formal involvement of workers in the determination of the course of action. Let me introduce you to another topic! It is Collective bargaining. Collective bargaining is not the same as joint decision-making. It is the manner in which workers influence managerial decision that distinguishes joint decision-making from collective bargaining. In joint decision-making, the interests of the labour and management are based on mutual faith and reciprocity of interests. They sit around the table and make decisions. On the other hand, collective bargaining is based on the acceptance of two entities in the organisation-the management and the union. It is based on power relationship and it is the relative power of each party, which is the main factor in deciding issues. The parties sit across the table, negotiate and try to arrive at an agreement. Since workers representatives are able to exert greater influence on managerial decisions through joint decisionmaking and collective bargaining, these two forms of participation may be considered higher forms of participation and consultation and information sharing as lower forms of participation of workers in management. After understanding the meaning and scope, let us now discuss the significance of Workers Participation The need of workers participation is felt because of the following reasons:

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 individuals 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. 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.

To sum up, benefits of workers participation in management include higher productivity, employee satisfaction, improved quality of work, team-work, acceptance of change, establishment of industrial democracy, creation of an environment of industrial harmony and peace, etc. It should therefore be noted that workers participation in management could be effective if it is used in the way that is most suitable to the organization. Now let us discuss the factors that are necessary for making WPM successful. The pre requisites for the success of Workers Participation in Management are: 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 labours 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. Any guesses as to why it is not 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!! V. There must be effective system of communication. Both labours representatives and managements 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 ones mind and listen to the counterparts point of view! 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 workers participation to be effective, both the management and the labour should get rid of their ego problems and share their

VI.

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. And how can we forget the financial point of view! VII. The financial cost of participation should always be lesser than the benefitsboth 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. 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. This reminds me of what Mahatma Gandhi had said. He was of the view that if you are in a confused state of mind and dont know what to do then just think of the poorest person of your country. Think as to how would your decision affect him. If the decision would go in his favour then go for it otherwise decide against it. Similarly the aim of all the major activities in the organisation should be viewed in a way that they benefit the organisation in the long run if not in the short run. Even if the battle is lost the war should be won!! IX. Participation should be an ongoing activity in the organisation, and should not be restricted to unfavourable situations only. The management and the labour should meet on a continuous basis so as to exchange ideas so as to better the overall scenario. Steps should be taken to avoid fire rather than control fire! And now for some tips from Keith Davis. He has laid down a few pre-requisites for effective workers participation in management. These include the following: Ample time must be available. The financial cost of participation should not exceed the values, economic or non-economic, that it produces. The subject of participation must be relevant to the participants. The participants should have abilities, intelligence, and knowledge to participate effectively.

VIII.

The participants must be able to communicate in order to be able to exchange ideas. Participation for deciding a course of action can take place only within the area of groups job freedom. Some degree of restriction on job units is, however, necessary in any organisation in order to maintain internal stability; subunits cannot make decisions that violate company policy collective bargaining agreement or similar restraints. Finally, the manager must ensure that: i. He understands what he is doing; ii. He has developed some social science skills; and iii. He will respect the role expectations of people.

Workers' participation must in decision-making, says labour secretary

Girish Chadha

Source: 1999 Indian Express Newspapers (Bombay) Ltd. New Delhi, Oct 29: Trade unions and industry should come together and frame an industrial relations policy.

The unions must also establish their linkages with external bodies such as NGO, consumer rights groups, women's groups and decide on the role that they would like to have in the workplace, said secretary, ministry of labour, LD Mishra. Thus, the trade unions would have to work out matters related to their modes of functioning and also their actual functions such as imparting work ethos and facilitating development of human resources, said Mishra at a workshop on `Role of unions for India - Vision 21st century' organised by the Confederation of Indian Industry. The development of human resources must be one of the major focuses for trade unions, said Mishra. Some priorities should be training for fast upgradation of skills in order to cope with the high rate of skills obsolescence that exists today, development of quality consciousness, building leadership and building of effective communication and information systems, which were an important component of risk-sharing, he added. Regarding the issue of skill development, Mishra emphasised that the focus must be on skills that are relevant in this ear of globalisation and rapid technology innovation. On the matter of the tripartite structure of labour-related institutions, Mishra said that this was the very basis for working of the International Labour Organisation (ILO) and the ministry of labour. Thus, social dialogue was a very important component of labour relations. Mishra pointed out that today trade unions and worker groups have very little influence when it comes to framing of policies that affect them. This was not a good sign as workers must have a say in the matters related to the workplace. Memberships of trade unions were also declining, for instance, total trade union membership was down to two per cent of the total workforce, said Mishra. Source: 1999 Indian Express Newspapers (Bombay) Ltd.

Employee Empowerment
Let me ask you a question right away! What does empowerment mean? It means to give power to someone. Who is this someone and what does he have the power to? The answer to this question is that the employees have the power to take decisions. They have the power to involve themselves in the decision concerning them.

Technically speaking the meaning of empowerment is to make a person eligible for discharging his duties in a socially desirable manner so that he can get his proper entitlement, status and recognition. In other words true meaning of empowerment is to give the person best guidelines and directions. Empowerment does not mean just giving authority. In true sense empowerment is participation of people in decision-making. Having understood the meaning of empowerment, you will agree that empowerment will enable the employee to contribute more to the organisation and he will assert himself in a more meaningful way. This helps in keeping employees motivated, charged, involved, and to develop the selfconfidence. In modern democracy empowerment of the local self-government like panchayats, municipal corporations help in solving their problems amicably and strengthen the base of participative process. Women empowerment is also part of it, which is a more discussed subject currently in our country. In the context of industrial relations, empowerment can be practiced through the following committees and councils (These are also commonly referred to as the forms of Participation): Works Committee Joint Management Councils also known as JMC Worker Director Shop and Joint Councils Quality Circle

Let us discuss them one by one. (1) Works Committees (1947): The Industrial Disputes Act, 1947, provides for the setting up of bipartite works committees as a scheme of workers participation in management that consist of representatives of employers and employees. The Act provides for these bodies in every undertaking employing 100 or more workmen. Please note that the aim of setting up of these bodies is to promote measure for maintaining harmonious relations in the workplace and to sort out differences of opinion in respect of matters of common interest to employers and employee. Now that is an important role! The Bombay Industrial Relations Act, 1946, also provides for these bodies, but under the provisions of this Act they can be set up only in units that have a recognised union and

they are called joint committees. The workers directly elect their representatives where there is a union. Let us now discuss the functions of the Works Committees: You should be aware that the works committee is also known as the joint committees. These are consultative bodies. Their functions include discussion of conditions of work like: Lighting Ventilation Temperature Sanitation Water supply for drinking purpose Provision of canteens Medical services Safe working conditions Administration of welfare funds Educational and recreational activities Encouragement of thrift and savings.

The duty of the Works Committee also includes promoting measures for securing and preserving amity and good relations between the employers and workmen and to comment upon matters of their common interest or concern and endeavor to reconcile any material difference of opinion in respect of such matters. Coming on to the Structure: The works committees have as office bearers, a President, a Vice President, a Secretary and a Joint Secretary. The President is a nominee of the employer and the Vice-President is the workers representative. The tenure of these bodies is two years. The total strength of these bodies should not exceed 20. The employees representatives have to be chosen by the employees. These committees functioned actively in some organization like Tata Iron and Steel Company, Indian Aluminum Works at Belur and Hindustan Lever. In all these, the managements have evolved joint committees independently of the statutory requirements. (2) Joint Management Councils (JMCS 1958) The Second Five-Year Plan recommended the setting up of joint councils of management consisting of representatives of workers and management.

The Government of India deputed a study group (1957) to study the schemes of workers participation in management in countries like UK, France, Belgium and Yugoslavia. The report of the study group was considered by the Indian Labour Conference (ILC) in its 15th session in 1957 and it made certain recommendations. a. Workers participation in management schemes should be set up in selected undertakings on a voluntary basis. b. A sub-committee consisting of representatives of employers, workers and government should be set up for considering the details of workers participation in management schemes. It was also recommended that the committee should select the undertakings where workers participation in management schemes would be introduced on an experimental basis. I hope you understand this. Let us now understand the Objectives: The objectives of Joint Management Councils are as follows: i. ii. iii. iv. v. To increase the association of employers and employee thereby promoting cordial industrial relations; To improve the operational efficiency of the workers; To provide welfare facilities to them To educate workers so that they are well prepared to participate in these schemes; and To satisfy the psychological needs of workers.

A question that can come up in your mind at this time is that can any organisation be allowed to set up the JMCs. or are there any pre-requisites to it? Your question can be answered with the help of the recommendations made by the Indian Labour tripartite sub-committee. The requirements are: i. ii. The unit must have 500 or more employees It should have a fair record of industrial relations

iii. iv. v. vi.

It should have a well-organised trade union The management and the workers should agree to establish JMCs Employers (in case if private sector) should be members of the leading Employers Organisation Trade Union should be affiliated to one of the Central Federations.

However please note that it was observed by the sub-committee that if the workers and employers mutually agree they could set up the JMCs even if these conditions are not met. And now the Functions: The following are the important functions of JMCs: a. b. To be consulted on matters like standing orders, retrenchment, retionalisation, closure, reduction of operations etc. To receive information to discuss and offer suggestions. c. To shoulder administrative responsibilities like maintaining welfare measures, safety measures, training schemes, working hours, payment of rewards etc. Working of JMCs: Over the years, there has been a good growth in number of units adopted by JMCs in public sector. JMCs in some of the public sector undertakings, for example, Bharat Heavy Electricals Ltd., have provided an appropriate Forum for effective communications and management unreservedly furnished all facts and information sought for. But the working of the JMCs indicates that they have not been successful both in private and public sectors. JMC was first introduced in Hindustan Machine Tools in 1958 among the Public Sector Units but survived less than one year. The scheme has also failed in other Public Sector Units like Posts and Telegraphs, Railway, Hindustan Insecticides, Indian Airlines Corp., Air India and in Fertilizer Chemical Corporations. It is often criticised by different quarters that the scheme of employee participation in management did not make headway though it was initiated with much enthusiasm. The national commission on labour observed that, mental reservations which operated against it are same both in ranks of management and among the workers

Please research on the cause of failures of the JMCs Now let us discuss the next form of empowerment or participation. I have deliberately used the word forms here. Does it remind you of something? Yes, we have studied these headings in WPM. The next one is worker Director. (3) Worker Directors (1970): Following the recommendations of Administrative Reforms Commission the Government has accepted that representatives of workers be taken on the Board of Directors Public Sector Undertakings. That is some participation! It was introduced in Hindustan Antibiotics Ltd., Hindustan Organic Chemicals Ltd., National Coal Mines Development Corporation, BHEL, National Textile Mills, Newsprint and Paper Mills etc. The Worker Director was supposed to be elected by all the workers of the company through secret ballot. Please note that after the nationalisation of banks, the Government advised all nationalised banks to appoint employee directors to their Boards one representing employees and the other representing officers having tenure of 3 years. The scheme required verification of Trade Union Membership, identification of the representative union and the selection of a worker director who is chosen out of a panel of three names furnished to the Govt. by the representative union within a prescribed period. In some of the banks, the scheme could not be introduced smoothly after 1971 owing to the difficulties in verifying union membership figures. As study of the scheme in the nationalised banks by the National Labour Institute has indicated that it has failed in promoting cordial relations between labour and management. What do you think went wrong? What would you have done to make it a success? Discussing the second last topic for today and that is Shop and Joint Councils.

(4) Shop and Joint Councils (1975 and 1977): The 1975 scheme has come into existence after the emergency has declared in June 1975.It has envisaged the setting up of shops councils at the shop/departmental level and joint councils at the enterprise level. These were to be introduced in manufacturing and mining units employing 500 or more workers whether in public, private or co-operative sector. The actual number of shop councils in an enterprise was to be decided by the employer after consultations with the recognized union/workers. The chosen workers representatives must be actually working in the shop of department concerned as to be Management and Vice-Chairman by the workers representatives will elect the Chairman of the Council. It was decided that the Council shall function for two years and will meet regularly to discuss matters relating to the following factors: Safety Discipline Physical working conditions Welfare measures Productivity norms and targets Absenteeism Flow of communications etc.

It was also decided that the joint Council having a tenure of 2 years shall be constituted for an enterprise consisting of representatives of both the management and the labour. The Chief Executive shall be the Chairman of the Council and the representatives of workers shall nominate the Vice Chairman. The Council will meet once in a quarter to discuss matter that remains unsolved by shop councils including: Schedules of working hours, Holidays, Optimum use of material, Productivity standards, Training facilities to develop skills of workers, Awards to workers for creative suggestions, General health, Safety and welfare of workers, etc.

Apart from manufacturing and mining units, commercial and service organisations (such as Railways, Hospitals, P&T, State Electricity Board) were also covered in the 1979

scheme. Both the schemes evoked considerable interest and were introduced with lot of enthusiasm, covering of wide spectrum of public and private sector units. However, after the emergency was lifted, most of the Councils became defunct. There were several problems in this scheme as well. Actually things sound good in theory but they may not be good in practice. Several operational problems surfaced from time to time, including: (a) (b) (c) (d) (e) (f) Inadequate sharing of information Absence of a participative culture Indifferent attitudes of management Lack of interest on the part of workers Failure to clarify the norms for nomination of representatives Absence of a single union interested in a bipartite consultative process, etc.

This lead to a new scheme that was laid down in 1984.Let us examine that. The New Scheme (1984): A new scheme of workers participation in management was prepared and notified in 1984 after reviewing the progress of various schemes in the industry. It was applicable to all central, public sector enterprises. It was decided that workers would be allowed to participate at three levels that is the shop level, the plant level, and the Board level. The mode of representation of workers representative was to be determined by consultation with the concerned Unions. A wide range of work related issues (personnel, welfare, plant, operations, and financial matters etc.) were brought within the ambit of the Councils. Please note that The Ministry of Labour constituted a tripartite Committee to review the working of the scheme and to suggest corrective measures. And the last topic for today is Quality Circles. I am sure you will be aware of this term. It is a Japanese concept. Let us understand the basic concept. (5) Quality Circles (QC) Quality circle is made up of a small group of people belonging to the same department of an organisation, who after receiving training take up solving quality and productivity related problems of their units. In Japan, a QC is a group of about ten employees within a

single company department. QC is a good example of group work and WPM to increase the per-capita productivity and for making better quality and human relations in any work environment. Now let us examine that how does the Quality Circles Work? Quality Circles follow several sequential steps to identify, analyse and solve quality related problems. The process runs thus: a) Identify problems: Initially members are asked to express their views regarding the problems in a work area. All such vies are recorded on a piece of paper without raising any objections. After several such sittings certain important issues surface. Now, the filtration process starts. Problems relating to another area, union- related matters, problems where the members do not have necessary response, experience and knowledge, individual grievances etc. are eliminated from the list. Only the most important ones are picked up for further processing. The leader facilitates discussions alone desired lines and helps in identifying most pressing problems that demand the attention of members. Members may occasionally think that the circle has run out of problems then everything goes on smoothly. It is at this point the leader must organize another brain storming session to generate ideas. b) Analyse Problems: Members are now expected to focus on the identified problems, analyse them thoroughly and find out the impact of such problems on the organization. The process of the problem and likely impact are ascertained using diagrams charts, etc. With support from other departments, the validity of each cause is examined thoroughly. And what could be the last step? Obviously, putting forth the solutions. c) Recommend Solutions: Once the important causes of the problem and the likely impacts are identified, a set of viable solutions is presented before the management through the steering committee. In the management presentation the leader and members describe to their manager what project they have been working on and what recommendations they wish to make. Supporting charts and tables are appended to the recommendation. This presentation represents a most exciting form of participation, communication and recognition for all. Such presentations are generally made after every three months! Now this leaves us with only one more class followed by revision.

Please listen to me very carefully now .We will be revising the whole syllabus unit wise. I request you to attend the revision classes and let me assure you that you will benefit a lot from those classes. One more thing before I wind up for the day! We will all be here just in case you have any problem in understanding anything. That is it for the day and remember reading those articles and coming to the class tomorrow.

Point To Ponder: Which of these forms of participation can be most effective in the Indian scenario?

Workers Participation in Management

Concept
Information Sharing Joint Consultation Joint decision - making

Scope
Information sharing Sharing Decision making Self-control

Significance
Higher Productivity Greater communication Reduced Industrial Unrest Improved Decisions Human Resource Development Reduced Resistance to change

Forms of workers participation in Management

Suggestion schemes Joint consultation Employees representation on the Board of directors Co-partnership Quality circles.

Pre-requests for success

Overall climate Time Matter Ability of workers representatives Effective communication system Status and authority of Management & union Financial cost Overall policy framework On-going activity.

Empowerment
Works Committee Functions Structure

Joint Management Councils

Objectives Functions Working

 Workers Directors Shop and Joint Councils Quality Circles