WORKERS PARTICIPATION IN MANAGEMENT

(I) (i) Introduction:

Three groups of managerial decisions affect the workers of any industrial establishment and
hence the workers must have a say in it.
Economic decisions methods of manufacturing, automation, shutdown, lay-offs, and
mergers.
Personnel decisions recruitment and selection, promotions, demotions, transfers,
grievance settlement, work distribution.
Social decisions hours of work, welfare measures, questions affecting work rules and
conduct of individual workers safety, health, and sanitation and noise control.
Participation basically means sharing the decision-making power with the lower ranks of the
organization in an appropriate manner.
Definitions:
The concept of WPM is a broad and complex one. Depending on the socio-political environment
and cultural conditions, the scope and contents of participation change.
International Institute of Labour Studies: WPM is the participation resulting from the
practices which increase the scope for employees share of influence in decision-making at
different tiers of organizational hierarchy with concomitant (related) assumption of
responsibility.
ILO: Workers participation, may broadly be taken to cover all terms of association of
workers and their representatives with the decision-making process, ranging from exchange
of information, consultations, decisions and negotiations, to more institutionalized forms
such as the presence of workers member on management or supervisory boards or even
management by workers themselves (as practiced in Yugoslavia).
The main implications of workers participation in management as summarized by ILO:
Workers have ideas which can be useful;
Workers may work more intelligently if they are informed about the reasons for and the
intention of decisions that are taken in a participative atmosphere.
(I) (ii) Objectives:
According to Gosep, workers participation may be viewed as:
An instrument for increasing the efficiency of enterprises and establishing harmonious
relations;
A device for developing social education for promoting solidarity among workers and for
tapping human talents;
A means for achieving industrial peace and harmony which leads to higher productivity
and increased production;

A humanitarian act, elevating the status of a worker in the society;

An ideological way of developing self-management and promoting industrial democracy.

Other objectives of WPM can be cited as:

To improve the quality of working life (QWL) by allowing the workers greater influence
and involvement in work and satisfaction obtained from work; and
To secure the mutual co-operation of employees and employers in achieving industrial
peace; greater efficiency and productivity in the interest of the enterprise, the workers,
the consumers and the nation.
Importance:
Unique motivational power and a great psychological value.
Peace and harmony between workers and management.
Workers get to see how their actions would contribute to the overall growth of the
company.
They tend to view the decisions as `their own and are more enthusiastic in their
implementation.
Participation makes them more responsible.
They become more willing to take initiative and come out with cost-saving suggestions
and growth-oriented ideas.
(I) (iii) Essential condition for WPM:
The success of workers portion in management depends upon the following conditions.
The attitude and outlook of the parties should be enlightened and impartial so that a free
and frank exchange of thoughts and opinions could be possible. Where a right kind of
attitude exists and proper atmosphere prevails the process of participation is greatly
stimulated.

Both parties should have a genuine faith in the system and in each other and be willing to
work together. The management must give the participating institution its right place in
the managerial organization of the undertaking and implementing the policies of the
undertaking. The labor, on the other hand, must also whole heartedly co-operate with the
management through its trade unions. The foremen and supervisory cadre must also lend
their full support so that the accepted policies could be implemented without any
resentment on either side.

Participation should be real. The issues related to increase in production and productivity,
evaluation of costs, development of personnel, and expansion of markets should also be
brought under the jurisdiction of the participating bodies. These bodies should meet

frequently and their decisions should be timely implemented and strictly adhered to.
Further,
o Participation must work as complementary body to help collective bargaining, which
creates conditions of work and also creates legal relations.
o There should be a strong trade union, which has learnt the virtues of unit and selfreliance so that they may effectively take part in collective bargaining or
participation.
o A peaceful atmosphere should be there wherein there are no strikes and lock-outs, for
their presence ruins the employees, harms the interest of the society, and puts the
employees to financial losses.
o Authority should be centralized through democratic management process. The
participation should be at the two or at the most three levels.
o Programs for training and education should be developed comprehensively. For this
purpose, Labor is to be given education not to the head alone, not to the heart alone,
not to the hands alone, but it is dedicated to the three; to make the workers think, feel
and act. Labor is to be educated to enable him to think clearly, rationally and
logically; to enable him to feel deeply and emotionally; and to enable him to act in a
responsible way.
Conclusion:
Management should be prepared to give all information connected with the working of the
industry and labor should handle that information with full confidence and responsibility. The
workers should become aware of their responsibilities. The leaders should initiate this in them.
Similarly, the top management should make the lower echelons to show a new attitude in the
light of the new relationship.
(I) (iv) Scope and ways of participation (Forms):
One view is that workers or the trade unions should, as equal partners, sit with the management
and make joint managerial decisions.
The other view is that workers should only be given an opportunity, through their
representatives, to influence managerial decisions at various levels.
In practice, the participation of workers can take place by one or all the methods listed below:
1. Board level participation
2. Ownership participation
3. Complete control
4. Staff or work councils
5. Joint councils and committees
6. Collective Bargaining
7. Job enlargement and enrichment
8. Suggestion schemes
9. Quality circles

10. Empowered teams

11. TQM
12. Financial participation
1. Participation at the Board level:
This would be the highest form of industrial democracy.
The workers representative on the Board can play a useful role in safeguarding the interests of
workers. He or she can serve as a guide and a control element.
He or she can prevail upon top management not to take measures that would be
unpopular with the employees.
He or she can guide the Board members on matters of investment in employee benefit
schemes like housing, and so forth.
The Government of India took the initiative and appointed workers representatives on the Board
of Hindustan Antibiotics (Pune), HMT (Bangalore), and even nationalized banks. The Tatas,
DCM, and a few others have adopted this practice.
Problems associated with this method:
Focus of workers representatives is different from the focus of the remaining members
of the Board.
Communication and subsequently relations between the workers representative and the
workers suffers after the former assumes directorship.
He or she tends to become alienated from the workers.
As a result, he or she may be less effective with the other members of the Board in
dealing with employee matters.
Because of the differences in the cultural and educational backgrounds, and differences in
behaviour and manners, such an employees representative may feel inferior to the other
members, and he or she may feel suffocated. Hence, his or her role as a director may not
be satisfying for either the workers or the management.
Such representatives of workers on the Board, places them in a minority. And the
decisions of the Board are arrived at on the basis of the majority vote.
2. Participation through ownership:
This involves making the workers shareholders of the company by inducing them to buy equity
shares.
In many cases, advances and financial assistance in the form of easy repayment options
are extended to enable employees to buy equity shares. Examples of this method are
available in the manufacturing as well as the service sector.
Advantage: Makes the workers committed to the job and to the organization.
Drawback: Effect on participation is limited because ownership and management are two
different things.

3. Participation through complete control:

Workers acquire complete control of the management through elected boards. The system of
self-management in Yugoslavia is based on this concept. Self-management gives complete
control to workers to manage directly all aspects of industries through their representatives.
Advantages:
Ensures identification of the workers with their organization.
Industrial disputes disappear when workers develop loyalty to the organization.
Trade unions welcome this type of participation.
Conclusion: Complete control by workers is not an answer to the problem of participation
because the workers do not evince interest in management decisions.
4. Participation through Staff and Works Councils:
Staff councils or works councils are bodies on which the representation is entirely of the
employees. There may be one council for the entire organization or a hierarchy of councils. The
employees of the respective sections elect the members of the councils. Such councils play a
varied role.
Their role ranges from seeking information on the managements intentions to a full
share in decision-making.
Such councils have not enjoyed too much of success because trade union leaders fear the erosion
of their power and prestige if such workers bodies were to prevail.
5. Participation through Joint Councils and Committees:
Joint councils are bodies comprising representatives of employers and employees. This method
sees a very loose form of participation, as these councils are mostly consultative bodies.
Work committees are a legal requirement in industrial establishments employing 100 or more
workers. Such committees discuss a wide range of topics connected to labour welfare.
Examples of such committees are welfare committee, safety committee, etc. Such committees
have not proven to be too effective in promoting industrial democracy, increasing productivity
and reducing labour unrest.
6. Participation through Collective Bargaining:
Through the process of CB, management and workers may reach collective agreement regarding
rules for the formulation and termination of the contract of employment, as well as conditions of
service in an establishment. Even though these agreements are not legally binding, they do have
some force. For CB to work, the workers and the employers representatives need to bargain in
the right spirit. But in practice, while bargaining, each party tries to take advantage of the other.
This process of CB cannot be called WPM in its strongest sense as in reality; CB is based on the
crude concept of exercising power for the benefit of one party. WPM, on the other hand, brings

both the parties together and develops appropriate mutual understanding and brings about a
mature responsible relationship.
7. Participation through Job Enlargement and Job Enrichment:
Excessive job specialization that is seen as a by-product of mass production in industries, leads
to boredom and associated problems in employees.
Two methods of job designing job enlargement and job enrichment are seen as methods of
addressing the problems.
Job enlargement means expanding the job content adding task elements horizontally.
Job enrichment means adding `motivators to the job to make it more rewarding. This is
WPM in that it offers freedom and scope to the workers to use their judgment. But this
form of participation is very basic as it provides only limited freedom to a worker
concerning the method of performing his/her job.
The worker has no say in other vital issues of concern to him issues such as job and
income security, welfare schemes and other policy decisions.
8. Participation through Suggestion Schemes:
Employees views are invited and reward is given for the best suggestion. With this scheme, the
employees interest in the problems of the organization is aroused and maintained. Progressive
managements increasingly use the suggestion schemes. Suggestions can come from various
levels. The ideas could range from changes in inspection procedures to design changes, process
simplification, paper-work reduction and the like. Out of various suggestions, those accepted
could provide marginal to substantial benefits to the company. The rewards given to the
employees are in line with the benefits derived from the suggestions.
9. Participation through Quality Circles:
Concept originated in Japan in the early 1960s and has now spread all over the world. A QC
consists of seven to ten people from the same work area who meet regularly to define, analyze,
and solve quality and related problems in their area. These circles require a lot of time and
commitment on the part of members for regular meetings, analysis, brainstorming, etc. Most
QCs have a definite life cycle one to three years. Few circles survive beyond this limit either
because they loose steam or they face simple problems. QCs can be an excellent bridge between
participative and non-participative approaches. For QCs to succeed in the long run, the
management needs to show its commitment by implementing some of the suggestions of the
groups and providing feedback on the disposition of all suggestions.
Training in problem-solving techniques is provided to the members. QCs are said to provide
quick, concrete, and impressive results when correctly implemented.
Advantages:
Employees become involved in decision-making, acquire communication and analytical
skills and improve efficiency of the work place.
Organization gets to enjoy higher savings-to-cost ratios.

Chances of QC members to get promotions are enhanced.

The Indian Scenario:

Tried by BHEL, Mahindra and Mahindra, Godrej and Boyce among others.
Experienced mixed results:
o M&M (jeep division) with 76 QCs has experienced favourable results.
Technical problems got solved.
Workers got to get out of their daily routine and do something
challenging.
Trade unions look at it as:
A way of overburdening workers, and
An attempt to undermine their role.
10. Empowered Teams:
Empowerment occurs when authority and responsibility are passed on to the employees who
then experience a sense of ownership and control over their jobs. Employees may feel more
responsible, may take initiative in their work, may get more work done, and may enjoy the work
more. For empowerment to occur, the following approach needs to be followed as compared to
the traditional approach:
Element
Organizational structure
Job design
Management role
Leadership
Information flow
Rewards
Job process

Traditional Organization
Layered, individual
Narrow, single task
Direct, control
Top-down
Controlled, limited
Individual, seniority based
Managers plan, control,
improve

Empowered Teams
Flat, team
Whole process, multiple tasks
Coach, facilitate
Shared with the team
Open, shared
Team-based, skill-based
Teams plan, control, and
improve

Features of empowered or self-directed teams:

Empowered to share various management and leadership functions.
Plan, control and improve their work.
Often create their schedules and review their performance as a group.
May prepare their own budgets and co-ordinate their work with other departments.
o Usually order materials, keep inventories and deal with suppliers.
o Frequently responsible for acquiring any new training they might need.
o May hire their own replacement to assume responsibility for the quality of their
products or services

Titan, Reliance, ABB, GE Plastics (India), Wipro Corporation and Wipro InfoTech are
empowering employees both frontline as well as production staff, and are enjoying positive
results.
11. Total Quality Management:
TQM refers to the deep commitment, almost obsession, of an organization to quality.
Every step in companys processes is subjected to intense and regular scrutiny for ways to
improve it.
Some traditional beliefs are discarded.
High quality costs more.
Quality can be improved by inspection.
Defects cannot be completely eliminated.
Quality in the job of the QC personnel.
New principles of TQM are:
Meet the customers requirement on time, the first time, and 100% of the time.
Strive to do error-free work.
Manage by prevention, not correction.
Measure the cost of quality.
TQM is called participative because it is a formal programme involving every employee
in the organization; making each one responsible for improving quality everyday.

12. Financial Participation:

This method involves less consultations or even joint decisions. Performance of the organization
is linked to the performance of the employee. The logic behind this is that if an employee has a
financial stake in the organization, he/she is likely to be more positively motivated and involved.
Some schemes of financial participation:
Profit-linked pay
Profit sharing and Employees Stock Option schemes.
Pension-fund participation.
Pre-requisites for successful participation:
Management and operatives/employees should not work at cross-purposes i.e. they must
have clearly defined and complementary objectives.
Free flow of communication and information.
Participation of outside trade union leaders to be avoided
Strong and effective trade unionism.
Workers education and training.

Trade unions and government needs to work in this area.

Trust between both the parties.
Workers should be associated at all levels of decision-making.
Employees cannot spend all their time in participation to the exclusion of all other work.

Limitations of participation:
Technology and organizations today are so complex that specialized work-roles are required.
This means employees will not be able to participate effectively in matters beyond their
particular environment. Everybody need not want participation.
The role of trade unions in promoting participative management has been far from
satisfactory.
Employers are unwilling to share power with the workers representatives. Managers
consider participative management a fraud.

(I) (v) Reason for Limited Success :

1. Firstly, the fundamental difficulties in the way lie in the concept itself. There is a basic
conflict of interests between the workers and the owners of the business enterprise.
Participation involves parting with power. Managements have been reluctant to part with
their authority and prerogative to manage the enterprises. Similarly trade unions have not
been prepared to divest themselves of their power manifested in bargaining and pressure.
2. Secondly, multiplicity of trade unions and factionalism has been a serious obstacle in the way
of workers participation in management. In view of the claims and counter claims, apathy
and willingness, hostility and cooperation displayed by rival unions or their factions,
designation of workers representatives on the participative forums often becomes a very
difficult task.
3. The government with its anxiety of maintaining cordial relations between labour and
management, increasing production and productivity, achieving planned targets and
accelerating the pace of economic and industrial development, came forward with different
schemes of workers participation in management. Many employers and trade unions still
considers them as imposition from outside. Its enforcement by law or compulsion would
thwart the very purpose of scheme and would act as serious constraint on its successful
implementation.
4. Fourthly, both managements and trade unions have often complained of a plethora of joint
bodies in Indian industries for example, works committees, joint management councils, shop
councils, unit councils, plant councils, establishment councils, canteen committees,
production committees, safety committees, welfare committees, grievance committees , and
so on. Thus, it is natural for them to become bewildered by this multiplicity of joint bodies.
5. Another hurdle has been lack of specific arrangements for sharing the gains of participation.
Workers are assured in a vague manner, that they would gain if production increases and
quality of products improves as a result of participation, but vague and remote expectations
cannot be expected to enthuse the workers. A prior arrangement for sharing the fruits of
participation is a necessary condition for the success of the scheme on a lasting basis.
6. It is the government in India which is more anxious for the establishment of the schemes of
participation than the parties which have to work them out. However, displaying an attitude
of cooperation with the government in maintaining industrial harmony, most national
organizations of employers and trade unions supported the schemes at the national forums,
but they have generally failed to enthuse their affiliates about the usefulness of the schemes.
7. Lastly, it has also been realized that lack of education and training with regard to the content,
process, utility and other relevant aspects of participation have also proved an impediment to
the growth of workers participation in the country.

(I) (vi) Suggestions for Improvement:

For the successful initiation and functioning of the institutions of workers participation in
management, serious attention has to be given to the removal of the hurdles (as above). Efforts
should be made to stir up the management and workers at the local or enterprise level to
understand the schemes and to derive concrete benefits from them.
The government efforts should be confined to giving guidelines and to remove the impediments
in the way, for example, reducing trade union rivalry by amending trade union laws, regulating
procedural aspects of collective bargaining, expanding workers education programme and
evolving a system of sharing the fruits of participation.
(I) (vii) Evolution of participative management in India:
The beginning towards WPM was made with the Industrial Disputes Act, 1947, which made
Works Committees mandatory in industrial establishments employing 100 or more workers. The
Industrial Policy Resolution adopted by the government in 1956 stated that there should be some
joint consultation to ensure industrial peace, and improve employer-employee relations. The
functions of both these joint bodies were to be consultative and were not binding on the
management. The response to these schemes was encouraging to begin with, but gradually
waned.
A study team was appointed in 1962 to report on the working of joint councils and
committees. The team identified some reasons for their failure.
o No concrete steps were taken to remove the difficulties, or change the pattern of
participative management.
During the emergency of 1975-77, the interest in these schemes was revived by the then
Prime Minister by including Workers Participation in industry in the governments 20point programme (refer for detail Page 246 of Industrial Relations, Trade Unions and
Labour Legislation by P.R.N.Sinha, Indubala Sinha, Seema Priyadarshini Shekhar).
The government started persuading large enterprises to set up joint consultative
committees and councils at different levels.
The Janata Government who came to power in 1977 carried on this initiative. It was
again emphasized by the Congress government who came back in 1979. This continued
in a non-statutory vein till the late 1980s, and the response from the employers and
employees stayed Luke-warm. Then, the 42nd Amendment to the Constitution was made.
Now, Article 43-A reads: The State shall take steps, by suitable legislation, or in any
other way, to secure the participation of workers in the management of undertakings,
establishments or other organizations engaged in any industry. Thus, participative
management is a constitutional commitment in India.
And then, on May 30, 1990, the government introduced the Participation of Workers in
Management Bill in the Rajya Sabha.
o The bill requires every industrial enterprise to constitute one or more `Shop-Floor
Councils at the shop floor level, and `Establishment Council at the establishment
level. These councils will have equal representation of employers and employees.

Shop-Floor councils enjoy powers over a wide range of functions from production,
wastage control to safety hazards. The Establishment Council enjoys similar powers.
The bill provides for the constitution of a Board of Management of every corporate
body owning an industrial establishment.
o The bill also provides for penalties on individuals who contravene any provision of
the bill.
In spite of all these efforts, only the government and the academicians have been interested in
participative management. But participative management is staging a comeback. The
compulsions of emerging competitive environment have made employee involvement more
relevant than ever before. Managers and the managed are forced to forget their known stands,
break barriers, and work in unison. Managers and workers are partners in the progress of
business.