UNIT 12

EVOLUTION, STRUCTURE AND PROCESSES

Evolution, Structure and Processes

Objectives
After going through this unit, you should be able to:
l l l

understand the importance of workers participation in management (WPM); review the growth and development of the concept both in India and abroad; and understand various forms/models of WPM.

Structure
12.1 12.2 12.3 12.4 12.5 12.6 12.7 12.8 12.9 12.10 Introduction Concept of WPM Objectives of WPM Arrangements, Structures/Levels, and Forms of WPM Pre-requisites for Effective Participation Historical Development of WPM Models in WPM Summary Self-Assessment Questions Further Readings

12.1

INTRODUCTION

It needs no reiteration that genuine participation of workers in the affairs of the organisation is a sine qua non not only for ensuring harmonious relations between the employees and employers but also to provide acceptable status to the employees. Empirical research has proved that the practice of genuine WPM benefits the organisations in terms of tapping the latent human resources (through getting employee suggestions and improving attitude towards work and the work organisation), and leading to higher productivity and increased production. Keith Davis (1967) claims that in various types of organisations under many types of operating situations, participation has helped to produce one or more of the following benefits : (i) higher productivity, (ii) employee satisfaction, (iii) improved quality of work, (iv) team work, (v) acceptance of change, (vi) creativity, (vii) responsible behaviour, (viii) commitment to goals, (ix) reduced turnover, and (x) reduced absenteeism.

12.2

CONCEPT OF WPM

The term workers participation in management means different things to different people depending upon the aims, extent to which participation is introduced and methods used to achieve participation. The usages such as industrial democracy,

Employee Involvement

workers participation, participative management, co-partnership, co-determination, participation of workers in decisions within the undertaking, employee involvement are all variants of the same concept. The sociologists view WPM as an instrument of varying potentialities to improve industrial relations and promote industrial peace. The psychologists consider participation as a mental and emotional involvement of a persons in a group situation which encourages workers to share managerial responsibility. The economists think that the real basis for workers participation is the higher productivity of labour and utilisation of collective experience of workers in order to advance the qualitative and quantitative conditions of production. The International Institute of Labour Studies (1968) views WPM as any process whereby wokers have a share in the reaching of managerial decisions in the enterprise. According to Alexander (1972) management may be considered participative if it gives scope for workers to influence its decision making process at any level or sphere, or if it shares with its workers some of its managerial prerogatives. According Tanic (1966), workers participation in management can take any form ranging from a situation where workers are cooperated with only in the physical and technical sense (joint management) to a situation where workers participate totally in organising the social system of production (workers government). Joint management is the most elementary form of workers participation in management, workers government being the ultimate that it can achieve. Behavioural scientists like Victor H. Vroom (1965), Rentis Likert (1961), Robert Blake (1964), and Douglas McGregor (1960) advocated participative management as a management innovation capable of making a positive contribution towards the health and effectiveness of the social organisation of an enterprise by taking into consideration human feelings and aspirations and by associating members in the process of management. From the various definitions and views about WPM it can be concluded that WPM is participation in decision-making process by the employees, associating themselves with the management in either of the forms: information sharing, advice, consultation, guidance, exchange of ideas, thoughts and opinions or partaking at any level or stage of the managerial process of an organisation.

12.3

OBJECTIVES OF WPM

From the foregoing review of definitions of WPM, we may summarise the objectives of WPM as follows : i) ii) to elevate workers status in industry; to promote democratic practices in the resolution of industrial relations problems;

iii) to mobilise the energy and intelligence of workers and management with a view to increasing productive efficiency; iv) to provide labour a sense of importance, pride and accomplishment, freedom and opportunity for self-expression; v) to promote cordial relations between management and workers; vi) to prevent alienation and exploitation of labour; and vii) to create a good communication system within the industrial establishment.
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12.4

ARRANGEMENTS, STRUCTURE/LEVELS, DEGREES AND FORMS OF WPM

Evolution, Structure and Processes

Participative Arrangements
Participative arrangements may vary from a formal one i.e., explicitly recorded system of rules and agreements imposed on or granted to the organisation to an informal arrangement i.e., non-statutory, consensus emerging among the interacting members. The bases of formal participation include: i) ii) The legal bases, such as clauses in a countrys constitution, national levels (for example, Participative Management Bill, 1990 in India) or regional laws; The contractual bases which for most countries involve mainly collective bargaining agreements on a national, regional-sectoral, company or shop-floor level;

iii) The management policies, which are unilateral regulations about the involvement of various groups or individuals in decisions about the organisation. The informal participatory schemes are based on a consensus among the interacting social units or individuals and become legitimised through practice and evolving norms or customary procedures. The degree of formality or informality of participants is closely tied to the underlying values of the designers, to the goals and objectives which participation is to serve, and to the particular organisational and societal context in which the participatory system exists. For example, there has been a greater emphasis on the development of formal participatory structures in Germany and Yugoslavia than in England and the US, where the greater acceptance of human-growth or human development orientations has been associated with fewer formal participatory structures. Formal-informal dimensions of participation remains an issue of importance in current discussions which are particularly heated in the European Countries. Although Scandinavian Countries and Great Britain have traditionally emphasised less formal and more grass-roots approaches to participation, there have been recent legislative actions and greater public pressure to introduce more formal forms of participation through national laws. On the other hand, in Germany and the Netherlands, for example, with their tradition of legislated participation, there appears a growing interest in less formal on-the-job bargaining approaches to participation. In India, formal participation is emphasised by making constitutional amendments in regard to workers participation. The Government of India has announced time to tome schemes such as works committees, Joint Management Councils etc., and advised the public sector undertakings to adopt these schemes. During 1990, the Workers Participation in Management Bill, 1990 was introduced in the parliament.

Structure/Levels of Participation
It is possible to identify three types of structures pertaining to participative management. These relate to participative forums at the shop-floor, plant or unit, and enterprise levels basing on the issues that are dealt at each level. In India, the bipartite works committees under the Industrial Disputes Act, 1947 are examples of participative bodies at the grass root level. Here the range of issues discussed are narrow pertaining mainly to work in the organisation. Similarly, the shop councils (created under the Emergency Provisions of 1975) were participative forums at the plant level (here also the range of issues relate to production and productivity, and the

Employee Involvement

overall efficiency of the plant), while the Joint Management Councils1 were enterprise level bodies. The JMCs were designed to take up a broad range of issues including consultative functions, suggestion-making functions and administrative functions.

Degrees and Forms of Participative Management

WPM may take various forms and may be of different degrees. However, emphasis has been placed on the six forms of participation. These are : informative participation, consultative participation, associative participation, administrative participation, decisive participation, and ownership participation. a) Informative Participation : This refers to information sharing concerning the balance sheet, production, general economic situation of the plant etc. Here, though the workers will have no right to have a close scrutiny of the information provided, they can have an idea of what is going on in the organisation. Consultative Participation : This involves a higher degree of participation in the sense that here the workers are consulted on such matters like welfare programmes, and methods of work and safety. Here the workers/ representatives of workers act in an advisory capacity and the final decision rests with the management. Associative Participation : Here, the workers role will not be purely advisory, unlike that in consultative participation. The management will be under a moral obligation to accept and implement the unanimous decisions taken jointly. This will create a climate of partnership. Administrative Participation : This involves a greater degree of sharing by the workers in the authority and responsibility of management functions. Thus, this form of management allows the workers greater autonomy in the exercise of administrative and supervisory powers in respect of welfare measures and safety works, preparation of schedules of working hours and breaks and holidays etc. Decisive Participation : It is a form of participation where sharing of decision making is complete and the delegation of authority and responsibility of managerial function to the joint forum is maximum. Here in matters like economic, financial and administrative policies decisions are taken jointly. Ownership Participation : This involves the total control of management by workers through an elected board and workers council.

b)

c)

d)

e)

f)

From the foregoing description it is clear that labour can participate in the process of decision-making at all appropriate levels of management at the top in the board of directors to the base in different consultative committees and sub-committees. Furthermore, participation is possible in the entire range of management activities, though the areas and degrees may vary at different levels of management.

Activity A
Make a list, when and how often management invites workers to participate in decision making on major policy matters in your organisation or any organisation you are familiar with. What were the results of those decisions? ............................................................................................................................................ ............................................................................................................................................ ............................................................................................................................................ ............................................................................................................................................ ............................................................................................................................................
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12.5

PRE-REQUISITES FOR EFFECTIVE PARTICIPATION

Evolution, Structure and Processes

The pre-requisites for the success of any scheme of participative management are the following: 1) 2) 3) 4) There should be a strong, democratic and representative unionism for the success of participative management. There should be mutually-agreed and clearly-formulated objectives for participation to succeed. There should be a feeling of participation at all levels. Too much emphasis on hierarchical structure and close supervision is not conducive to participation. There should be effective consultation of the workers by the management to inculcate enthusiasm in them in the formulation of policies that affect them directly. Both the management and the workers must develop favourable attitudes and outlook and must have full faith in the soundness of the philosophy underlying the concept of labour participation. Education and training make a significant contribution to the purposeful working of participative management. The areas of education and training may relate to (a) conceptual and philosophical aspects, (b) aims, scope, roles and responsibilities, (c) changes in managerial and trade union approaches and relationship pattern, (d) communication skills, and (e) technical and managerial knowledge for decision-making. Forums of participation, areas of participation and guidelines for implementation of decisions should be specific and there should be prompt follow-up action and feedback.

5)

6)

7)

12.6

HISTORICAL DEVELOPMENT OF WPM

WPM in Other Countries

It was towards the end of the World WarI that the idea that workers should share in decisions which govern the life of the undertaking took practical shape with the setting up of joint committees or works councils in various countries of the West. In Great Britain, joint committees were advocated by the Whitely Report of 1916 and set up in principal undertakings two years later. Legislation on works councils was promulgated in Austria (1919) and Czechoslovakia (1920). After the World WarII, many countries in Europe were busy establishing works councils in legislative (Germany) or contractual terms. It was also the time when systematic arrangements for joint representations on supervisory boards (co-determination) were introduced first in the German coal and steel companies, and subsequently, in all industries. Since 1970, this renewal of interest in institutions for workers participation in decisions within undertakings (other than collective bargaining) has been particularly pronounced in Europe and some developing countries. In Western Europe, interest in the subject has been reflected in various ways: the Commission of the European Communities has organised research and proposals; special committees heave been set up to consider various aspects of participation, for instance, in Finland, France, Federal Republic of Germany. In the Netherlands, Norway, Sweden, United Kingdom, and Denmark and the national agreements on

Employee Involvement

co-operation in the undertaking have been revised. In Norway, the right of participation was the subject of a constitutional amendment in 1980. In Portugal, the constitution of 1976 proclaimed the workers right to bargain collectively and to set up workers committees and coordinating committees for the defence of their interests in undertakings. In Spain, the constitution adopted in1978 provides that the right to bargain collectively shall be guaranteed by law and that the public authority shall effectively provide the various kinds of participation within the undertaking. In France, every organisation employing 50 or more workmen is required to set-up a works committee under law (which has wide powers as far as welfare activities are concerned). The legislation also provides for direct workers representation on the boards of nationalised industries. In Yugoslavia, which established since 1950 an elaborate system of self-management, the workers are in control of the management of the enterprise through works council (established in each establishment as per the provisions of law) and its executive organ i.e. management board. The works councils and management boards have large powers to plan, organise and execute, though the details of the execution of the policy are left to the director of the undertaking (who is selected for a four year term by the works council and the local peoples committee). This is strictly not a case of participation in management but is one of complete control of management. In Russia and other planned economies of Eastern Europe, the economic reforms introduced since 1965, have contributed to the development and to a broadening of the scope of work agreement . Thus, in most European countries there is a highly structured participative process, and in many it is mandated by law (Alexander: 1972) The structure, content and form of WPM in these countries depend on the ideology and the system adopted by a particular society. In the developing countries, collective bargaining as a form of WPM, usually and mainly at the level of undertaking or establishment, has in most cases been developed and improved as the unions have grown stronger and the workers level of education has risen. The USA, in keeping with the capitalistic policy of laissez-faire, does not have structured or legalised WPM. The US organisations largely depend on trade unions and collective bargaining to provide participation to workers. The Japanese management commonly uses a collective consensus method of making decisions by involving employees at all levels and sharing information on important issues. The process of decision-making in Japanese enterprises, known as ringi, involves a consensual approach to decision-making throughout the organisation based on confidence in the capabilities of subordinates. The word ringi consists of Rin and gi. Rin in Japanese language means submitting proposal to ones superior and receiving his approval, and gi means deliberations and decisions. The ringi system is chiefly a management-level participatory structure. This system in Japanese companies is associated with dispersion of involvement in actual decision-making to lower levels in the management hierarchy. The three common methods of employee involvement in Japanese organisations are: (i) Day-to-day involvement (in which individuals are asked to identify opportunities or problems and find out best solution on their own); (ii) Representative groups (that focus on a units ongoing problems or involve employees throughout the organisation on a single issue); and (iii) Project and Task-forces (that consider problems shared by several units or organisations).

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Origins of WPM in India

The idea of workers participation in management in India was formally put into practice with the enactment of the Industrial Disputes Act, 1947 which came into effect on April 1, 1947. But instances of informal joint consultation can be traced back to the 1920s in the Government Printing Press, Tata Iron and Steel Company, Jamshedpur, Indian Aluminium Works, Belur, Buckingham and Carnatic Mills, Madras and in the Railways. Further, the scheme of joint consultation and voluntary arbitration introduced in the Ahmedabad Textile Mills due to the active role played by Mahatma Gandhi was also a novel example in the history of joint consultation in the country. Although consultation in all these organisations was of rudimentary type, it was significant as it was first of its kind in the country. Under the Industrial Disputes Act, 1947 it is mandatory for all industrial establishments employing 100 or more workmen to set-up Works Committees. Consisting of equal number of representatives of employers and workmen engaged in the establishment, the works committees discuss work related issues. The main purpose of these committees is to promote measures for securing and preserving amity and good relations between the employer and the workmen. In the works committees participation is mainly limited to aspects of welfare management. In 1958, Joint Management Councils were introduced. JMCs were to be entrusted with administrative responsibility for various matters relating to welfare, safety, vocational training, preparation of holiday schedules etc. They were to be consulted in matters of change in work operation, amendment or formulation of standing orders, rationalisation etc., to encourage smooth work operations, and enhance productivity. Representation of workmen in the JMCs was based on nominations by the recognised trade unions. JMCs did not receive much support from unions or management. It was alleged that JMCs and works committees appeared similar in scope and function and that multiplicity of bipartite consultative bodies served no purpose. And where the membership strength of unions was disputed, composition of the councils became a contentious issue. Following the nationalisation of banks under the Nationalised Banks (Management and Miscellaneous Provisions) Scheme, 1970, the Government required all the nationalised banks to appoint worker-directors on their Boards of Directors. The scheme requires verification of trade union membership, identification of a representative union and the appointment of a worker-director from a panel of three names proposed to the Government by the representative union of the concerned bank. The tenure of a worker-director is three years. However, in actual practice, the process of appointment of worker-directors has been getting unduly delayed. This happens on account of the practical difficulties involved in the completion of the process of membership verification. The interest in the field of WPM was again revived in 1975. On October 30, 1975, under the 20-Point Economic Programme, the Government of India framed a scheme of Workers Participation in Industry at Shop-floor and Plant Levels, which was made applicable to the manufacturing and mining industries in the public, private, and cooperative sectors, as well as those run departmentally, employing 500 or more workers. The scheme provides for Shop Councils at the shop/departmental level and Joint Councils at the plant/enterprise level. The shop and the joint (plant) level councils were assigned specific functions relating to production and productivity, management of waste reduction, absenteeism, safety, maximising machine and manpower utilisation etc. The scheme, which was voluntary in nature, did not lay down norms for the nomination of representatives to the councils. As such, it was left

Evolution, Structure and Processes

11

Employee Involvement

to management to work out an acceptable formula for representation to the councils providing for flexibility in the nomination of representatives. This arrangement seemed to have made matters more difficult, except where a single union was the dominant union and interested in such bipartite functions. In 1976, the Constitution was amended and Article 43-A was inserted in the Directive Principles of State Policy. This Article provides that 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 organisations engaged in any industry. On January 4, 1977 another scheme of WPM was announced by the Government. This scheme was meant only for the public sector enterprises, such as commercial and service organisations like hospitals, Posts and Telegraphs, Railways, State Electricity Boards etc., employing 100 or more employees. This scheme virtually adopted the format of the 1975 scheme. Again. in 1977, the Government (Janata Government) put aside the earlier schemes and appointed an 18-member committee under the Chairmanship of Ravindra Varma, the Union Labour Minister, to recommend a comprehensive scheme of WPM. The Committee, which submitted its report in 1979, recommended a three-tier system of participation. The recommendations of the committee were considered in 1980 by the Labour Ministers Conference. But, owing to sharp differences of opinion relating to a few pertinent issues such as procedure to be followed in selection of workers representatives, the matter was left to the Government for decision. No serious effort was, however, made to implement the recommendations of the committee. On December 30, 1983, the Government announced another new scheme called Employees Participation in Management. The scheme (voluntary in nature) was applicable to all industries except those in the defence sector, departmental under takings of the Central Government and Posts and Telegraphs Organisations. It envisaged, like the 1975 scheme of WPM, creation of a two-tier consultative system at the shop and plant levels. A provision for introducing the scheme at the Board level was also made. But it was dropped at a later stage. The scope of the scheme was widened to include supervisory category among the workers. The scheme brought within the scope of discussions issues relating to welfare, environment, personnel, plant operations and functioning, community development, and the financial matters relating to profit and loss, balance sheet, operating costs, plant financial costs, labour and management costs, etc. However, this scheme remained in cold storage apparently due to the Governments failure to pursue the scheme vigorously. The National Front Government, which came to power at the centre in December 1989, introduced a Bill, known as Participation of Workers in Management Bill in the Rajya Sabha on May 30, 1990. This was the first comprehensive legislative effort towards the promotion of WPM in the country. The Bill, like the earlier schemes, envisaged the setting up of the councils at the shop-floor and at the establishment levels. The Bill also recommended representation at the Board level. Stipulated to cover both the public and private sectors, the Bill envisaged 25 per cent representation to employees at the Board level and 50 per cent at the shop-floor and the establishment levels. The Bill became a subject of discussions at various forums, and while discussions and comments were in progress, the National Front Government at the centre fell. Although the Bill could not be passed as yet, it represents an important aspect of Government policy in regard to promotion of WPM with an element of compulsion. The fate of the Bill hangs in balance in view of the obvious hurdles in the way of participative management in the country, especially on a statutory basis.

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The Second National Commission on Labour (2002) recommended that the time has come for Government to enact a law to provide for participatory forums at all

levels keeping in mind the necessity to ensure that the responsibility and freedom to take managerial decisions are not fragmented to the detriment of the enterprise, the social partners or society at large.

Evolution, Structure and Processes

12.7

MODELS IN WPM

Collective Bargaining Model

In theory collective bargaining represents a different form of participation. Collective bargaining provides to the management and the workers the right, through collective agreements, to lay down certain rules for the formulation and the termination of contract of employment as well as the conditions of service in an establishment. Collective bargaining has been used as an important method of influencing managerial decisions.

Works Councils Model

Staff or works councils are exclusive bodies of the employees. There may be one council for the entire organisation or a hierarchy works councils from shop floor to the Staff Board. Members are elected by the employees of the relevant sections. They have different functions in the management of an enterprise, ranging from eliciting information on managements intentions to full share in decision-making. Here there is a basic assumption of a harmony of interests, at least on key issues.

Joint Management Councils Model

These are joint bodies comprising the representatives of the management and employees. Their functions may range from decision-making on some issues to merely advising the management as consultative bodies. In Britain and India, the JMCs are commonly used form of WPM. Mostly their role is advisory and consultative, with decision-making being left to the top management.

Workers Self-management Model

This institutional type is characterised by a substantial degree of workers participation on the main decision-making bodies, coupled with either a system of workers ownership or the right to use the assets of the enterprise. A system of selfmanagement in Yugoslavia is based on this concept. These are certain models in WPM prevalent in various countries.

Activity B
Briefly describe the models of workers participation in management which are being used in your organisation or any organisation you are familiar with. Also explain which model is most suitable to your organisation and why? ............................................................................................................................................ ............................................................................................................................................ ............................................................................................................................................ ............................................................................................................................................ ............................................................................................................................................ ............................................................................................................................................
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Employee Involvement

12.8

SUMMARY

In this unit, we have dealt with the concept, objectives and the structure/levels and forms of employee involvement/workers participation in management. Further, we have outlined the pre-requisites for effective participation. We have reviewed the historical development/practices of workers participation in India and abroad. In some countries the WPM is successful and in others it is not. In India it failed to take off. As observed by the second National Commission on Labour, the time has come for Government to enact a law to provide for participatory forums at all levels of the organisations.

12.9
1) 2) 3) 4)

SELF-ASSESSMENT QUESTIONS

What are the aims and objectives of Workers Participation in Management? Outline the origins of Workers Participation in Management in India. Briefly discuss the workers participation/employee involvement practices of an organisation with which you are familiar. What are the pre-requisites for effective participation?

12.10

FURTHER READINGS

Alexander, K.C. 1972. Participative Management: The Indian Experience, New Delhi: Shri Ram Centre for Industrial Relations and Human Resources. Beach, Dale S. 1980. Personnel, New York: Macmillan Publishing Company. Biswas, S.K. 1993. Japanese Model of Workers Involvement: A Succour for India in Ruddar Datt (Ed.) 1993. Workers Participation and Workers Ownership, Delhi: Pragati Publications, pp. 170-182. Datt, Ruddar (Ed.) 1993. Workers Participation and Workers Ownership, Delhi: Pragati Publications. Davis, Keith. 1967. Human Relations at Work, Bombay: Tata McGraw-Hill Publishing Co. Ltd. Ghiya, D.P. 1993. Workers Participation in Management in Indian Railways, in Ruddar Datt (Ed.), 1993. Workers Participation and Workers Ownership, op. cit., pp. 265-275. Government of India. 2002. Report of the National Commission on Labour, 2002. IGNOU: 1993. MS-24, Block-4, Unit-14. Workers Participation in Management, pp. 5 12. ILO. 1983. Workers Participation in Decisions within Undertakings, Geneva: ILO. International Institute of Labour Studies. 1968. Workers Participation in Management, Bulletin 5. Likert, Rensis. 1961. New Patterns of Management, New York: McGraw-Hill. McGregor, Douglas et al. 1960. Human Side of Enterprise, New York: McGraw-Hill. Perumal, S. Velayudha. 1993. Workers Participation: The Myth and Reality in India in Ruddar Datt (Ed.) 1993. Workers Participation and Workers Ownership, Delhi: Pragati Publications, pp. 67-82. Sarathi, Parth. 1986. Japanese System of Management: An Overview, Lok Udyog, March 1986, pp. 35-43.

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Sarma, A.M. 1998. Industrial Relations, Mumbai: Himalaya Publishing House. Singh, B.N. and Mamta Singh. 1993. Workers Participation in Management in Ruddar Datt (Ed.) 1993. Workers Participation and Workers Ownership, Delhi: Pragati Publications, pp. 197-207. Sinha, P.R.N, Indubala Sinha and Seema Priyadarshini Shekhar. 2004. Industrial Relations, Trade Unions, and Labour Legislation, Delhi: Pearson Education Pvt. Ltd. Tanic, Zivan. 1969. Workers Participation in Management: A Report and a View Point, New Delhi: Shri Ram Centre for Industrial Relations and Human Resources. Thakur, C.P. and K.C. Sethy (Eds.). 1973. Industrial Democracy : Some Issues and Experiences, New Delhi: Shri Ram Centre for Industrial Relations and Human Resources. Virmani, B.R. 1978. Workers Participation in Management, New Delhi: Macmillan Company of India Ltd.

Evolution, Structure and Processes

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