There are three groups-social, personnel and economic – of managerial decisions which have a direct impact on the employees of any organization. Economic decisions include the methods of manufacturing, automation, shut down, lay-offs, mergers and similar other functions. Personnel decisions refer to recruitment and selection, promotions, demotions, transfers, grievance settlement, work distributions, and so on.
Social decisions are related to welfare measures, hours of work, questions affecting work rules, the conduct of individual employees, safety, health, sanitation and noise control. The employees must have a say in the decisions on the issues. Researchers vary about the extent and scope of- workers’ participation in social, economic and personnel decisions. Some are of the opinion that the workers or the trade unions should, on parity basis, sit with the management as equal partners and make joint managerial decisions on all matters.
Others say that the workers should only be given an opportunity, through their representatives, to influence managerial decisions at various levels. The first view could lead to the workers’ actual participation in the decision-making process of the management, while the second will work out to be consultation of workers in managerial decisions.
In practice, however, the participation of workers is influenced by any or all of the methods described below:
1. Participation through Ownership:
Workers may become more involved in industries by making them shareholders of the company. The management may promote the scheme by allowing the workers to make payments in installments. It may also advance loans or even give financial assistance to such workers to enable them to buy equity shares. Instances of workers holding shares in their companies are many.
Participation through ownership has the distinct advantage of making the worker committed to the job and to the organization but its effect on participation is limited because ownership is different from management in the company form of ownership.
2. Participation through Complete Control:
In this method workers acquire complete control of the management through elected boards. The system of self-management in Yugoslavia is based on this concept. It gives complete control to workers to manage directly all aspects of industries through their representatives.
The system of complete control ensures the identification of the workers with their organization. Industrial disputes disappear when workers develop loyalty to the organization. Trade unions welcome this type of participation. But complete control by workers is not an answer to the problem of participation because the workers do not evince interest in management decisions.
3. Participation through Staff or 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 works councils, from the shop floor to the Board level. The employees of the respective councils elect the members of the councils.
The councils have different functions in the management of an enterprise, ranging from eliciting information on the management’s intentions to a full share in decision- making. They are a right step in the direction of industrial democracy. But they are not successful because of the fear expressed by trade union leaders that being mainly workers’ bodies, staff councils may erode their power and prestige.
4. Participation through Joint Councils and Committees:
Joint councils are bodies comprising representatives of employers and employees. The functions of these bodies may range from decision making on some issues, to merely advising the management as consultative bodies. The joint councils are of consultative nature and indicate a loose type of participation because their suggestions are not binding on the management.
These councils serve no useful purpose. They only provide a platform to employers and employees as they may give free vent to their complaints and grievances without making any attempt to find remedies and solutions.
Works committees have been constituted in industrial establishments employing 100 or more workers, and these comprise representatives of employers and employees. The constitution of a works committee is a legal requirement under the provisions of the Industrial Disputes Act, 1947.
The committees discuss a wide range of topics connected with the workers’ welfare. Certain voluntary committees, like the welfare committee, the safety committee, the canteen committee, the incentives committee, have also been constituted in most manufacturing establishments.
There is no need for so many committees and sub-committees, and the effectiveness of their role in promoting industrial democracy, increased productivity and reduced labor unrest is beyond doubt. The opinion of most of the managers about the committees is that they have only a nuisance value.
5. Participation through Collective Bargaining:
The principle of collective bargaining confers on the management and the workers the right, through collective agreements, to lay down certain rules for the formulation and termination of the contract of employment, as well as the conditions of service in an establishment. Such agreements are normally binding on parties and have the force of the law. Collective bargaining can really work well if the bargaining parties make use of the opportunity for bargaining in the right spirit and for a positive purpose.
But, in practice, whenever the parties get together for the purpose of bargaining, they try to take advantage of the other, often using strikes, lockouts and other- strong-arm tactics. Collective bargaining is no substitute for workers’ participation in management.
Participation brings both the parties together and develops appropriate mutual understanding, and brings about a mature and responsible relationship. Collective bargaining, on the contrary, is based on the crude concept of power and its exercise for collective bargaining that may end up in mistrust, withholding of information, and use of pressure tactics.
6. Participation through Suggestion Schemes:
Employees’ views on such matters as machine utilization, waste management, energy conservation and safety measures are invited, and reward is given for the best suggestion. This procedure enables the management to arouse and maintain the employees’ interest in the problems of their concern and its management.
The progressive managements increasingly use the suggestions schemes. The suggestions flow from various levels, though mainly from the operators. The ideas range from changes in inspection procedures to design changes, process simplification, paper-work reduction, and the like. The rewards to the employees are commensurate with the benefits derived from the suggestions.
7. Participation through Quality Circles:
Quality Circles are created with producing quick, concrete and impressive results when correctly implemented. In Quality Circles employees are involved in decision making which makes them acquire communication and analytical skills and improve the efficiency at the work place.
Savings to cost-ratios generally are higher than those achieved with other productivity program. Because the program is voluntary, employees and unions generally do not view them as another cost-control effort. Moreover, circle members enhance their chances of promotion to supervisory positions.
8. Participation through Total Quality Management:
TQM is defined as a “Management approach of an organization, centered on quality, based on participation of all its members and aiming at long term success through customer satisfaction and benefits to all members of the organization and to society.” It refers to the deep commitment of an organization to quality.
Quality of products and services is an obsession, and every step in the company’s processes is subjected to intense and regular scrutiny for ways to improve it. This emphasis on quality in product and services is forcing the industries to adopt internationally recognized and proven quality management systems in their operations to stay in the business.
This reminds us to the prediction of J.M. Juran, the quality Guru of the world. He said that business in 21st century shall be decided by “Quality” and industries ignoring this fact shall be wiped out. Internationally, there have been several authoritative studies to compute the cost of non-compliance. They point out that manufacturing industries that do not adhere to the TQM precepts may lose around 25% on this account alone the loss by way of cost in the service sector could be as high as 40-50%.
HR has to initiate employee involvement in TQM activity. Ultimately, the operator has to produce physically the quality on the shop floor. It is therefore very important that he understands the quality requirements of his job. This is possible provided his involvement in the job is very high and he is a very committed and empowered worker.
9. Participation through Empowered Teams:
Empowering refers to passing on authority and responsibility. Empowerment occurs when power goes to employees who then experience a sense of ownership and control over their jobs. Wellins thinks that empowered individuals know that their jobs belong to them. Given a say on how things are done, employees feel more responsible.
When they feel responsible, they show more initiative in their work, get more done, and enjoy the work more. Empowered teams share various management and leadership functions, plan, control and improve their own work processes, set their own goals and inspect their own work, create their own schedules and review their performance as a group, prepare their own budgets and coordinate their work with other departments, usually order materials, keep inventories and deal with suppliers, are frequently responsible for acquiring any new training they might need, hire their own replacement or assume responsibility for disciplining their own members, take responsibility for the quality of their products and services.
10. Financial Participation:
Financial participation differs from other forms of employee involvement in that it is less likely to involve employees in consultation or decisional processes. The general purpose of financial participation is to enhance employee commitment to the organization by linking the performance of the firm to that of the employee. The employee is more likely to be positively motivated and involved if he or she has a financial stake in the company by having a share of profits or by being a shareholder.