Participative Management is intended to provide an institutional structure in which interest- based conflicts become less bitter through preventive as well as positive ways.
This development is perhaps due to the realization that this might be the way to suppress conflicts, achieve a harmonious and qualitative development and also carry out the political programs of the most progressive forces in a society.
As per The International Institute for Labour Studies, workers participation in management is, “the participation resulting from practices which increase the scope for employees’ share of influence in decision making at different tiers of organisational hierarchy with concomitant assumption of responsibility”.
Learn about:- 1. Meaning and Definitions of Participative Management 2. Concept 3. Features 4. Objectives 5. Pre-Requisites 6. Philosophy 7. Properties 8. Benefits 9. Methods 10. Participative Management in India.
Participative Management: Meaning, Concept, Features, Objectives, Properties, Benefits, Methods and Pre-Requisites
Participative Management – Meaning and Definitions
Twentieth century has witnessed several drastic and revolutionary changes in the field of industries. The success of a business enterprise depends on cordial industrial relations. If the attitude of the workers towards their work is positive, they try to contribute their best for the achievement of organisational goals.
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The employer-employee relation should be strengthened to create a congenial work atmosphere so that the contribution of the employees towards the achievement of goals of management can be enhanced. This will pave way for the Industrial Harmony which is very essential for the uninterrupted production/service.
The word participation means sharing the decision making power with the lower levels of the employees in an organisation. Participation has tremendous motivational value and promotes harmony and peace between the workers and the management. Participative management is also known as workers’ participation in management. The concept of workers’ participation in management is considered as a mechanism where workers have a say in the decision making process of the enterprise. The workers are able to see how their activities can contribute to the overall growth of the organisation.
The workers’ participation in industry is the extension of democracy of the country. The success or failure of an undertaking is not the concern of management alone, since workers are also part of the organisation. For the peaceful evolution of economic system on democratic lines, it is essential that workers participation in management is accepted as a fundamental principle and urgent need.
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Workers’ participation in management is a new technique in which owners and workers are considered as members of the same family. Mahatma Gandhi was in favour of factory democracy in which workers’ and owners manage the affairs of the business. According to Allen Flanders, “The workers claim to be consulted by management is fundamentally a normal one. It rests on its merits regardless of economic results. As human beings, they have dignity and are entitled to self-respect”.
Definitions of Participative Management:
According to Keith Davis, “Participation is defined as an individual’s mental and emotional involvement in group goals and to share responsibility for them”.
As per The International Institute for Labour Studies, workers participation in management is, “the participation resulting from practices which increase the scope for employees’ share of influence in decision making at different tiers of organisational hierarchy with concomitant assumption of responsibility”.
Participative Management – Concept
The term participation is variously understood by involved parties. For management it is a joint consultation prior to decision making, for workers it means codetermination, while for government it is an association of labour with management without the final authority or responsibility in decision making.
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Participation is generally conceived of as a way of reducing power difference and, therefore, equality is stressed. Participation as a means to reduce power inequity however, seems difficult to accept because of the obvious difference in formal power positions between the labourer and the director.
For management it is a joint consultation before decision making; for workers it is co-determination, for trade unions it is the ushering in of a new era of social relationship. Administrators consider it merely the association of workers with management without assigning them any authority or responsibility.
In simple words, the theory lying behind the concept of participative management may be stated as:
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“The workers generally know the problems related to the work more accurately than others in the organization. They generally possess some views and suggestions relating to their work and have a desire to put them before the management. The management generally takes decisions on its own and imposes them on the workers. The views and suggestions of workers may or may not be relevant but ignoring them creates doubts in minds of workers about the intentions of management. This gives rise to labour-management conflict and makes workers alienated from the management.”
The philosophy underlying participative management stresses democratic participation in decision-making, maximum employer-employee collaboration, minimum state intervention, realization of a greater measure of social justice, greater industrial efficiency, and higher level of organizational health and effectiveness.
Participative Management echoes the millennial vision of nineteenth century-thinkers while heralding the evolution of new forms of individual organizations under twentieth century pressures. It has not only remained a means through which workers and their organizations can put forward their views and influence decisions, but also has developed into a new management strategy.
Participative Management is intended to provide an institutional structure in which interest- based conflicts become less bitter through preventive as well as positive ways. This development is perhaps due to the realization that this might be the way to suppress conflicts, achieve a harmonious and qualitative development and also carry out the political programs of the most progressive forces in a society.
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Various factors, such as socio-economic and political changes, the views of social thinkers, the theoretical orientations and the managerial philosophies have contributed a lot in its development.
Participation in the political context is an influencing process, so also at the plant level, it affects employee terms and conditions of employment. Yet at the same time, the dynamics of an enterprise’s viability and hence mutuality helps in establishing greater involvement rather than creating a feeling of alienation.
Workers should feel that in their work they are evaluated and respected as free persons of equal value within the framework of the rules and natural order and discipline needed in a well-regulated industry. In an atmosphere of cooperation, mutual respect and tolerance, they should have the natural right to influence conditions and measures that affect them directly and the whole community inside the undertaking.
In an organizational system participative management may be considered ‘as a philosophy, principle and a practice of ensuring industrial democracy through mutual consultation, communication and understanding by establishing faith, mutual trust and cooperation of workers and management.
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This will help to attain a whole hearted involvement of an organization’s own workforce, each involving, initiating and infusing with the organization in the area of his competence and concern, resulting in the achievement of organizational goals, individual well-being and industrial peace and harmony.
The International Institute for Labor Studies defined participative management as “the participation resulting from practices which increase the scope for employee’s share of influence in decision-making at different tiers of organizational hierarchy with concomitant assumption of responsibility”.
In its broad sense, employee participation means associating representatives of workers at every stage of decision-making, as is done in former West Germany and Yugoslavia, a process by which the workers’ share in decision-making extends beyond the decisions that are implicit in the specific contents of the job they do. This, in actual practice, amounts to the workers having a share in the reaching of final managerial decisions in an enterprise.
Thus, Participative Management may 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’ members on management or supervisory boards or even management by workers themselves as practiced in Yugoslavia.
Participative Management – 7 Main Features
1. Higher Status – Workers’ participation in management provides workers’ representative to be a part of decision making process along with the top executives of the company and it gives higher status to the employees.
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2. Outlook of workers – It develops a sense of belonging among the workers and brings about a change in the outlook of the workers.
3. Employer-employee relations – Participative management brings the workers and the management closer through meaningful discussions for achievement of organisational goals.
4. Beneficial to both parties – The management is able to make use of the rich experience of and suggestions of workers, for improving the productivity of the organisation.
5. Increase in responsibilities – An opportunity is given to workers to direct their initiative and creativity towards the objectives of the organisation. It encourages workers to accept responsibility as they are involved in discussions and decision making.
6. Universally recognised concept – It has universal recognition and has been practiced in many countries.
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7. Industrial democracy – Workers and management jointly manage the affairs of the company and it is a part of industrial democracy.
Participative Management – 8 Important Objectives
1. To raise productivity, production and efficiency of workers.
2. To satisfy the desire of workers for self-expression and improve the morale of the workers.
3. To establish harmonious relations between workers and management.
4. To obtain the fullest co-operation of workers in the working of the organisation.
5. To encourage social education which promotes solidarity in the working class.
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6. To create a common platform for direct negotiations and collective bargaining.
7. To remove grievances, misunderstandings in the minds of employees regarding the policies and practices of the organisation.
8. To make the workers more responsible and give constructive suggestions to solve problems.
Participative Management – 12 Necessary Pre-Requisites
1. The decision taken at various participatory forums must be implemented within the stipulated period so as to repose faith in the scheme.
2. Education and training should be developed comprehensively. Workers should be given proper training to improve their effectiveness during participation.
3. Working environment should be congenial to motivate workers to give wholehearted cooperation to the schemes.
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4. The employers and employees should come to an agreement as to how the various schemes would work at various levels.
5. The objectives to be achieved should be realistic and clear to all the participants.
6. The participative schemes should be introduced in stages starting from shop floor to board room.
7. All the schemes must be based on mutual trust and understanding and attempts to enforce it by law or force would defeat the very purpose of the scheme.
8. There should be free flow of information between labour and management throughout the organisation and this will lead to co-operation and understanding.
9. The trade union movement should be developed on sound lines so that the workers’ involvement in various schemes would be very effective.
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10. The management should design a proper system so that effectiveness of the scheme can be assessed periodically.
11. The management should take steps to ensure that the workers feel that they are an integral and important part of the organisation and increasing production and productivity would be beneficial to the both the parties in the long run.
12. Management should have a positive attitude towards trade union and should consider trade union as a highly valuable and powerful instrument for increasing production and productivity.
Participative Management – Philosophy
A survey of the concept of participative management reveals that there are various schools of Participative Management. The concept of Participative Management can be more clearly understood in the next of the Philosophy underlying these schools.
1. Reformist School:
From the beginning of modern industrial era, social thinkers in the factory organization and society concluded that in order to prevent workers from being exploited by managers workers should have as much power as the managers. Mustafa (1999) remarked that thinkers such as Saint Simon, Charles Fourier and Robert Owen advocated participation of workers in management for achieving distributive social justice.
They were concerned with the status of workers in the establishment and the society. They pleaded for conferring powers upon workers equal to that of employers. They believed that the future control of social affairs should lie mainly with the ‘producers’. ‘Producers’ included not only workers but also the capitalist employers.
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Saint Simon stood for unity among the productive classes against parasite non-producers on a basis of social control of the instruments of production and of their administration by means of the requisite scientific and business abilities. Charles Fourier emphasized close cooperation between employers and workers to eliminate exploitation and to promote the welfare of the latter.
He believed that most forms of labor could be made bearable, even attractive, if they were rightly organized.
Cole (1957) pointed out that the strengths of Fourier’s doctrine lay in the fact that it showed the need for adopting social institutions to actual human desires. This was clearly a great deal of wisdom in his insistence that men could live happily only if they were given large scope for the satisfaction of their natural desires and were not forced to live according to artificial pattern of conduct devised by moralist in the name of reason.
Robert Owen, on the other hand, preached the philosophy of co-operative endeavor in production. He wanted capital to receive only a fixed or maximum dividend, profit being devoted to the development of social services for the general benefit. He recognized his employees as having, in a real sense, a right to partnership in the enterprise, together with the managers and with those who provide the capital.
He also believed that in the course of time as the institutions of the new society developed, the desire to be richer than others would die out and the capital owners should voluntarily renounce their shares. “With the goodwill, it is possible to harmonize capitalist enterprise.”
Although the early social writings contained the seeds of the philosophy of co-management, they did not successfully spell out the doctrine of co-management or joint participation. It was left to the successors of Saint Simon, Fourier and Owen to develop the idea further and put it into concrete terms.
John Francis Bray argued that workers could remedy their wrongs only in a system of common ownership of the means of production and common labor, under conditions of free and equal association in cooperative-communities. Louis Blanc wanted the state, not to conduct industry, but to help to promote national workshops and co-operative associations to be managed by the workers themselves.
Workers’ control, according to him, would eliminate the evils of competition and ensure to workers the right to work and adjust share in the products of country. While these thinkers believed in the principles of ‘association’ or ‘sharing’ to secure the legitimate dues of workers and also to establish an egalitarian society, others like Proudhon, Fichte, and Lessale were rather suspicious of such association.
Proudhon said that under any scheme of ‘association’ or ‘sharing’, worker is subjected to the majority rule. This violates the reciprocal liberty of the individual. Fichte also emphasized the importance of individual creative activity expressed itself through ‘inter-personnel’ associative behavior.
He demanded that every man be given the means of expressing his personality in labor in association with his colleagues in an occupation suitable to his natural bent.
According to him, every worker has a right to have access to the means of production. Society’s method of securing this right was to establish a system of self-governing productive corporations, coordinating their efforts and existing their products by mutual agreement. These corporations were to own the means of production and to carry on the economic life of society.
Ferdinand Lessale put forward a program of workers’ co-operative and social ownership of enterprise with a view of “furthering the general good of the entire people”. “Thus, it was thought that participation of workers in management would sufficiently cater the needs of social justice. The main concern of the ideologists in advocating workers’ participation in management was the sharing of an operation of management power with workers.”
2. Marxist Approach:
As against Reformist approach there emerged another school that emphasized revolution and class struggle for attaining the egalitarian society. The founder of this school, Karl Marx advocated complete socialization of production as the only method of putting an end to the concentration of wealth and to the exploitation of workers by the owners of capital.
Under this approach all the enterprises are owned by the State and the workers themselves constitute the management. The class structure of the society was buttressed by the State that was under the control of capitalist running class. Therefore, the remedy was for the workers to destroy this state and set up proletarian state. This approach takes the color of workers’ control rather than that of workers’ participation as it contemplates workers as management themselves.
3. Syndicalism Approach:
France was the original home of Syndicalism blending Anarchist Communism with trade unionism in its most popular time. The doctrine was responsible for movements for workers’ control in countries as far as Norway and Australia. Anarchism is the father of Syndicalism, but trade unionism is its mother.
Syndicalism had two distinct aspects- (a) policy of direct action against capitalism – a general strike to overthrow the system, and (b) a vision of the future society.
Syndicalists agreed that after nationalization and actual administration of the various industries and services, production would be in the hands of the organized workers through the trade unions. They proposed the control of production to be exercised by the direct-producers themselves.
Sometime later they gave up the idea of separate ownership of industries by workers. Instead, they put forward the idea of the federation of the various groups of industries managed by a General Council to regulate and distribute in the interest of the producers in general.
The idea became so much fashionable that Snowden quotes the Spectator: Apart from its methods, Syndicalism means no more than a form of co-operation. Similarly Times is quoted, “The root idea of Syndicalism is not only not objectionable but excellent. It was the parent of co-operation, and will eventually be realized in co-partnership. It is by far the most rational and feasible form of Socialism”.
4. Socialistic Approach:
Socialistic approach considers workers’ participation in management as an important factor in the development and perfection of socialistic democracy. This ensures fullest decentralization and participation in management as multi-dimensional program for socialist construction. The economic reconstruction is based upon the nationalization of the means of production and exchange.
Under Communism, state machinery is abolished and the functions of the State are taken away by the society through public organization based on mutual consent and co-operation and the compulsion element in relation to members of the society is removed. In the process of taking away powers from the state and delegating its functions to the society, workers’ participation in management is of great importance.
Workers’ self-governing bodies may be formed which can participate effectively and efficiently in management. Such bodies have actual experience of the activities of the people and are much aware of the local conditions prevailing there. These bodies initiate the taking away of powers of State.
Socialist democracy is created from the workers of lower rank and they are trained in such a way that they can promote the professional interest of the workers in the most effective manner. The collective management of the means of production creates integrated personality and national integration.
5. Pluralistic Approach:
This philosophy is applicable mainly in Britain, Japan and America. Allan Flaunders, Clegg and other are the main profounder. According to this approach, collective bargaining is the mode of participation and is the method of solving the disputes between management and the workers by negotiation.
Conflict is endemic in an industrial organization. According to this conflict theory of trade unionism the management shows an inherent tendency to overlook the interests of workers and it always tries to exploit labor and due to that, management must, therefore, be coerced and threatened with obstructive policies and practices in order to safeguard and promote the interest of workers.
So it is the responsibility of the workers or the union to oppose the management’s proposal, it is the objective of the other to oppose it and so with the result negotiations start and common matters are settled in between. It is the prime function of the trade unions to protect the interest of the workers in this perennial conflict.
This approach suffers from certain drawbacks. It is incorrect to believe that workers can derive permanent benefit from any arrangements that overlooks the largest interest of the community, the consumer and the industry. It is also not correct to believe that unions can derive their strength only by withdrawing co-operation and that the interests of the workers can be served only by adopting restrictive and obstructive practices.
On the other hand, the workers are the worst sufferers, if and when productivity is impaired. Conflict is destructive passion and constant preoccupation which drives to encourage basal tendencies in human nature. Moreover, collective bargaining is on the verge of vanishing and out-dated now-a-days.
6. Integrative Approach of Business:
In the present age, in contrast to past, a trade union has become essentially a social organization looking after the all-round interests of workers as a social group. The trade union must play the more positive role of sharing in the development of industry and of preparing and training workers to discharge their responsibilities as citizens.
The industry has certain responsibilities to fulfill towards the employees, the shareholders, the consumers, and community and above all towards the nation. To the employee it must offer fair and appropriate conditions of service, and opportunity for industrial development, satisfaction of the urge for status, dignity and fellowship.
Participation signifies workers’ identification with the progress and development of business. The managing ability of all employees is an untapped source of social wealth. Participation aims at utilizing the intimate knowledge and experience possessed by worker as a result of the direct daily contact with processes and operation carried out in a business.
This knowledge can be invaluable assistance to management. Participation that rests on understanding between workers and management is an important but delicate task.
All this implies that it is the responsibility of management to show continuously to labor the common purpose for which both management and the labor have to work. The common purpose embodies advantages to workers and the management and both must strive for its accomplishment.
7. Gandhian Approach:
Gandhi believed that all money and property originally belongs to society and those who are possessing it are only the trustees of the society whose duty is to increase the earning and value of the trust property. He should charge only that much from the trust property as is absolutely essential for his subsistence and honorable living.
Excess of one’s income over and above one’s is a social surplus to be employed for the benefit of the society. Breach of trust is a crime and is punishable under law. Under the trusteeship theory of Gandhi certain limited property rights are admissible. The Trusteeship theory of Gandhi does not recognize the inherent, unrestricted, irresponsible and absolute right of private property.
In accordance with Gandhi’s theory of trusteeship, there must be parity between the remuneration of the trustees and the workers and should normally not be more than the latter. The managerial skills of the trustees, the talents and expertise of labor were neither to be exploited nor used to sub-serve vested interests of the law.
On the contrary, society as a whole must derive the benefits. Such a theory of trusteeship, not contrary to the interests of the capitalist but it sought common good through a proper utilization of their experience and talent. For Gandhi, trusteeship involved the building of consensus of a society for implementing it for social good.
Gandhi wanted that the rich should become the trustees of the society by sharing their surplus wealth with the poor and under- privileged. Gandhi was deeply influenced by Ruskin’s Unto This Last and he was of the firm opinion that by nature all human being were equal and there should not be any economic discrimination or disparity among different individuals in respect of income, consumption and other bare necessities of life.
Participative Management – Properties
The more precise conceptual properties of participation are not very clear although the following elements seem to be involved:
1. The amount of verbal interaction between a supervisor and his subordinates.
2. The degree to which a supervisor performs his role in a group-centered way.
3. The degree to which a supervisor is active in making decisions and setting goals for his work units.
Despite the variations in interpretation there seems to be a consensus that participation means sharing, in an appropriate manage, the decision-making power with the lower ranks of the organization. The general assumption is that by using such a process workers would be able to contribute to the overall effectiveness of the organization.
Mhetras has suggested five levels of participation in decision making which range on a scale from minimum to maximum. Since these levels of participation can indicate the extent of co-determination in an organization, they deserve attention. We have tried to highlight these levels briefly, ranking them from the minimum to the maximum degree of participation.
Participative Management – Top 10 Methods
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:
Method # 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.
Method # 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.
Method # 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.
Method # 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.
Method # 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.
Method # 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.
Method # 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.
Business World (1994) reports that experience in Indian industries have been a mixed one. With Mahindra Jeeps Division (it has 76 QCs), the result has been favorable. Technical problems that had plagued the process since its inception were solved eight months after the first circle was formed.
To several workers, accustomed to thinking of work as a mindless routine, what happens on the shop floor (through QCs) is a welcome relief. They feel confident of themselves and gain satisfaction that they are being recognized.
On the flip side, it may be stated that unions have viewed QCs as means of extracting more labor. Efforts at motivating workers have always been seen as an attempt to wean them away from the union. QCs give added power to the individual worker, not the union.
The QC program failed in SKF and the company recently introduced a continuous-improvement program. At Alfa Laval, the experience was similar. An earlier attempt at QC had failed. Under a changed management, workers who were sent off on a paid holiday prior to retrenchment and were brought back and redeployed.
The fear that it could happen again made the union receptive to the management’s new program. This time, Alfa’s QC movement became the best example of shop- floor participation in the Pimpri-Chinchwad industrial belt.
Method # 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%.
TQM is widely believed to have originated in the post-world war Japan. Today, 1 out of 3 American companies have adopted TQM in their industries. In Japan and some south Asian countries,
TQM has been adopted as a mission. In India, TQM has started in the true sense of the term in the early 90s and is yet to take any deep root in the Indian organizations excepting some companies such as L&T, Kirloskar Group, Sunderam group of companies, Telco and few other Automobile Companies.
Janak Mehta, the prominent advocate of TQM in India has said that in India more than manufacturing, it is the service sector that took its time to recognize the importance of TQM. TQM is an overall organizational strategy that is formulated at the top management level and then is diffused throughout the organization.
Everyone in the organization, from the CEO to the lowest paid workers is involved in the TQM process. If people understand what to do, how to do it and obtain feedback on their performance, they can be encouraged to take responsibility for the quality of their work.
The more people feel involved, the greater will be their commitment to customer satisfaction. Systems, standards and technology themselves will not provide quality. The role of people is extremely important in the continuous improvement of quality within an organization.
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.
Method # 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 (1991) 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 co-ordinate 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.
Business World (1994) reports that, Empowerment is catching on among Indian managers. Companies as diverse as Titan, Reliance, ABB, Tata Information Systems (TISL), GE Plastics India and Philips are empowering employees-both frontline, as well as production staff. Wipro Corporation has 29 such teams and their number is expected to go up to 130.
Wipro InfoTech, on the other hand, has 10 such teams and the plan is to hike them to around 45 to 50, At Reliance, divisional heads run their divisions like managing directors run their companies.
Method # 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.
Participative Management – 8 Major Benefits
1. The responsibility for implementing decisions taken rests with the workers.
2. Decision taken is very effective since it is arrived after lengthy discussions in which worker’s representative is also involved.
3. Increase in production due to job satisfaction.
4. Workers perform their task with high spirit and achievement of organisational goal is made easy.
5. Labour turnover and absenteeism, two ills of labour force reduced considerably.
6. Improvement in employer-employee relations paves way for perfect industrial harmony.
7. Opportunity for the employees to give suggestions without any reservation.
8. Increase in profit of the organisation and better bonus for the workers.
Participative Management in India
The system of participative management in India represents the consultation level of participation by the employees, the form that gives limited participation. The basic aim of such machinery is to improve industrial relations so as to increase productivity in industries, though the other aims like improving workers’ conditions and other facilities are also attached with the same.
Participative Management in India has an old history. It has undergone a number of important changes since the days of its dawn during the pre-Independence period. It was in 1910 when, for the first time, the employees of Textile industry initiated some sort of informal consultation with mill committees, formed specifically for peace and harmony, in response to the threat posed by the growing trade union movement.
In 1919, the management of Tata Iron and Steel Company at Jamshedpur introduced the scheme of Works Committees with management and trade union representatives. In 1920, at the instance of Mahatma Gandhi, the Ahmedabad Textile industry and the unions agreed to set up joint consultation councils to settle disputes and failing at council stage, the dispute would be referred to an arbitrator.
The report of the Whitley Commission in the United Kingdom impressed the then Govt., of India and joint committees were constituted at TISCO, Ahmedabad Cotton Textile Industry and Buckingham and Karnataka Mills under the name of Work-peoples’ welfare committees. In 1921, government of Bengal urged the setting up of Works committees in industrial undertaking in India on the British model of Whitley Council.
All these bodies sought to serve either as preventive machinery for industrial disputes or for assisting production or ensuring the code of conduct and discipline in industry, or as machinery for fixation of wages. Thus, their objective, broadly speaking, was to maintain cooperation or to provide a common forum for discussing certain issues and problems relating to labor and industrial management. But these did not work effectively.
In 1929, the Royal Commission on Labor was appointed to enquire into the causes of intense labor unrest in the country. The commission, among other things, examined the working of these committees. The commission was not impressed by their performance except in a few cases.
Trade union rivalry, lack of sincere interest on the part of employers, the illiteracy and ignorance of workers, all these had contributed to the poor performance of these committees. Yet the commission had attached great importance to these committees in the field of industrial relations.
It recommended the constitution of a larger body representative of labor and management of industry at the central level. But the system of joint-consultation did not make much headway as the Great Depression of the thirties seriously affected industrial relations. After 1940, with the emergence of the tripartite labour organization (which eventually became the Indian Labor Conference), trade unionists and political leaders made demands for the association of labor in the management.
The Indian Federation of Labor in 1944 and All India Trade Union Congress in 1945 further endorsed demands, particularly for nationalized industries. Thus, the seeds of workers’ participation in management were sown during the pre-Independence which really sprouted, nurtured and blossomed along with the growth of Independent India.
Although, the concept of participative management attracted attention of a few public sector organizations during pre-independence era, its wide adoption could be seen only after independence. The first governmental efforts towards participative management came in the form of Industrial Disputes Act, 1947, providing for the establishment of Works Committee.
The committee was made obligatory for all units employing over one hundred workers. The Works Committee was envisaged as a first step in the attempt to resolve labor-management differences and promote an environment of cooperation between them at the plant level. Thus the statutory provision for the Works Committee embodied a concrete program for joint consultation in industry.
In the beginning, the response of the employers to the Works Committee was encouraging. By the end of September 1951, there came into existence 1,142 Works Committees. The progress made by the Works Committees made the government optimistic about its potentiality for solving industrial disputes and for improving labor-management relations.
The First Five Year Plan paid tributes to the instrumentality of the Works Committee in industrial relations. The Government was attracted to the successful operation of various models of participative management in different countries, and a tripartite study group visited few European countries like U.K. Yugoslavia, Sweden, France, Belgium and Germany.
Based upon the report submitted by the study group, the Indian Labor Conference in 1958 accepted the scheme of Joint Management Council, which was to be adopted. The emphasis on PM was obviously placed by the Govt., of the independent India, as a part of the scheme to make this a socialist state.
A further step in this direction was the launching in 1957 of the scheme for Joint Management Councils. (JMC). The scheme was voluntary and its essential features were consultation, information sharing and joint administration. The councils had the right to obtain information regarding the working of the undertaking and had direct administrative responsibility for matters concerning workers welfare, training and allied subjects.
Their main function was to bring about mutual consultation between employers and workers in many important areas that affect industrial relations. The Report of the National Commission on Labor mentioned that about 150 joint management councils and 3,133 works committees (out of 4,730 required) were in existence at the time of its investigation.
Even though the number of bipartite committees in existence is quite impressive, it is generally felt that they have not realized the aims for which they were set up. Several studies made on the working of industrial democracy in India have revealed the poor working of the Works Committees, Joint Management Councils, and other schemes for workers’ participation in management.
The Indian experience provides little encouragement to those who would like to see a greater and speedier development of participative management practices. The Government’s efforts to promote such practices by means of Works Committees have not been notably successful and the same fate seems to have overtaken the more sensitive efforts to establish joint management councils.
Possibly there might have been less participation without such efforts, but certainly the evidence does not suggest that these have led to notable advances in increasing the participative role of workers or unions in the decisions of the firm.
The relevant references in the Five Year Plans show that government’s orientation towards workers’ participation in management gradually went into firm roots. The Third Five Year Plan stated that management cadres ought to arise out of the working class itself.
The draft Fourth Five Year Plan declared that joint management ought to be a main element in the structure of industrial relations. State enterprises were assigned a pioneering role because they can create among workers a sense of identification and personal involvement in the enterprises to which they belong. The same approach was stressed in Fourth, Fifth and Sixth Five Year Plans.
JMC’s did not receive much support from Unions or management. It was alleged that JMCs & 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 council became a contentious issue.
Subsequent to the nationalization of banks, under the Nationalized Banks (Management and Miscellaneous Provisions) Scheme 1970, the Govt., required all nationalized banks to appoint employee directors to their boards one representing workmen and the other representing officers. The scheme required verification of trade union membership, identification of the representative union and the appointment of a worker director.
In 1971, a scheme of inducting representatives of workmen as directors on the boards of management of public sector undertakings was introduced on an experimental basis in a few selected enterprises where there was a duly recognized union and the labor management relations were cordial with a tradition of mutual settlement of disputes.
In 1975, the government introduced a scheme of workers’ participation in industry at the shop floor and plant levels in manufacturing and mining sectors. Initially, the scheme was made applicable to industries employing 500 workers or more, whether in the public or private sectors, including departmentally run organizations. The scheme was made flexible so as to allow variations to suit individual requirements.
Based on some experience gained in the working of the scheme of 1975, another scheme was workers’ participation in management in commercial and service organizations having large scale public dealings and employing at least 100 persons were brought in January 1977.
The scheme was made applicable to organizations like hospitals, posts and telegraphs offices, railway stations/booking office, banks, road transport undertakings, state electricity boards, public distribution system etc.
In Sept. 1977 Government appointed a committee on workers participation in Management and Equity to consider and recommend an outline of a comprehensive scheme of workers’ participation at different levels of management in industrial establishments and undertakings.
The committee had also to consider the need for a statutory scheme for workers’ participation in management, the extent to which the concept of trusteeship in industry could be given a practical shape, and the extent and manner in which participation of workers in equity holdings is encouraged.
The committee recommended a three-tier system of participation, viz. at the corporate level, plant level and shop floor level. The employers in the private sector favored only a two-tier system and not at the board level. In the light of the recommendations of the committee and experience gained so far, the government formulated and introduced a new comprehensive scheme on a voluntary basis for workers’ participation in management on 30 Dec. 1983.
In 1981 a study of the working of this scheme came to a conclusion that the scheme had not been a success. Consequently the Ministry of Finance, removed the appointment of workers’ directors from the management boards of all nationalized banks.
The origin of the Indian attitude towards the PM can also be traced back to Mahatma Gandhi’s concept of ‘trusteeship’. Trusteeship means that employers should not regard themselves sole owners of mills and factories of which they might be legal owners. They should regard themselves as trustees”. (Rudravasavaraj) The concept of trusteeship is quite ahead of the concept of participation.
But, in practice, Gandhi’s idea of trusteeship immediately failed to influence those who had to implement it. However, from the viewpoint of the evolution of the concept of PM, it can be treated as an idea which later influenced the policy makers of India.
In 1977, the Government put aside the earlier schemes and formulated a three-tier scheme of workers participation in management in both the public and private sector undertakings employing 500 or more workers. In 1983, the government announced another scheme for establishment of Joint Councils in public sector undertakings up to the Board level and also redefining the scope and activities of Shop and the Plant Councils.
The scheme was applicable to all central public sector enterprises. It envisaged constitution of bipartite forums at shop and plant levels. Board level representation was to be considered in these public sector undertakings. The scheme brought within the scope of discussion 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.
A new scheme of workers participation in management was formulated and introduced in Parliament in 1990. The document of the scheme made it clear that various experimentations on workers’ participation in management during the last forty years have not achieved much success.
The 1990 Bill, like the earlier schemes, envisaged the setting up of the councils at the shop floor and at the establishment levels. The scheme also recommended representation at the Board Level.
It sought to accord statutory status to workers participation in management and was stipulated to cover both the public and the private sectors. It envisaged 25 percent representation to workers at the board level and 50 percent at the shop floor and the plant level. However, the scheme was not passed by the Parliament and therefore, did not become operational.
An analysis of the various schemes introduced by the Government of India highlights the major problems such as mode of representation, scope of the forums, level of participation, coverage of the schemes important the voluntary nature of the schemes.
Workers’ Participation at TISCO:
Since Tata Iron and Steel Company are the pioneers in establishing joint consultation in India, it is worthwhile to look at workers’ participation at TISCO.
Closer association of employees with management at TISCO began in 1919 and was formalized in August 1956. The purpose was to promote increased productivity, provide a better understanding to the employees of their role and importance, and to satisfy the urge for self-expression.
The scheme as set up at TISCO consist of a three-tiered system with Joint Department Councils (JDCs) constituted at the departmental level. Next, Joint Works Councils (JWC) for the entire work, and at the top the Joint Consultative Council of Management (JCCM).
The specific functions of these three bodies were as follows:
(1) JDCs were “to study operational results and production problems, advise on the steps deemed necessary to promote and rationalize production, improve productivity and discipline and economize cost. Promotion of welfare and safety, encouragement of suggestions and improvement of working conditions also fell within their purview.”
(2) JWCs were “to discharge special function of reviewing every month the working of JDCs and other committees such as Suggestion Box Committee, Safety Committee, Canteen Managing Committee, etc.”
(3) JCCM was given the task of advising management on production and welfare and also looking at matters referred to by JDCs and JWCs.
In order to ensure that these committees did not overlap the functions of other committees, separate task groups were formed. Special courses were offered to prepare both management and union representatives to effectively utilize the facility. TISCO’s experience with workers’ participation has been satisfactory.
From 1957 to the middle of 1972 JDSs have discussed a total of 14,104 suggestion of which 70.3 per cent have been implemented. These suggestions have covered a wide range of topics and issues, but the most important point remember, perhaps, is that the councils have been successful in involving workers equally in the process of production.