A PROJECT ON WORKER’S PARTICIPATION IN MANAGEMENT SUBMITTED TO In the fulfilment of the requirement For the degree of MBA in Hotel and Tourism Management. By RUCHI PANDYA To Ms. Palak Shah Human resource. Asia Pacific Institute of Management 2012-13 Preface The concept of workers’ participation in management is based on Human Relations approach to Management which brought about a new set of values to labour and management. Traditionally the concept of Workers’ Participation in Management (WPM) refers to participation of non-managerial employees in the decision-making process of the organization.
Workers’ participation is also known as ‘labour participation’ or ‘employee participation’ in management. In Germany it is known as co-determination while in Yugoslavia it is known as self-management. The International Labour Organization has been encouraging member nations to promote the scheme of Workers’ Participation in Management. Certificate This is to certify that Ms/Mr. ___________ has successfully completed the Research project entitled “Enterprise resource planning” for the fulfillment of MBA 1st Year project form 29th October 2012 – 3rd November 2012.
It Certified that, this work is original.
Project Guide MBA- Coordinator Ms. Palak Shah Ms. Palak Shah Date: – Date:- Table of contents Sr. No. | Title| Pg. no. | 1. | Introduction| 5| 2. | Definition| 5| 3. | Features| 6| 4. | Objectives| 6| 5. | Importance| 7| 6. | Approaches| 8| 7. | Levels| 9| 8. 9. 10. 11. 12. 13. 14. | Strategies/Forms/MethodsWorkers’ Participation in BHELWorkers’ Participation inManagement in IndiaReasons for failure of Workers participation Movement in IndiaCorrective stepsConclusionReferences| 10121414151516| Introduction
It becomes necessary to define both employee participation as well as what is meant by performance when we talk about workers participation in management. Employee participation may be defined as the process by which employees are involved in the decision making process of a business rather than merely being expect to following instructions and as such this forms what is referred to in HR as empowerment. Performance on the other hand can be considered from two perspectives, firstly there is the performance of the individual in question and how their personal performance is affected by the concept of employee participation.
Secondly there is the performance of the organisation as a whole to consider and how this will change with varying degrees of employee participation. Definition According to Keith Davis, Participation refers to the mental and emotional involvement of a person in a group situation which encourages him to contribute to group goals and share the responsibility of achievement. According to Walpole, Participation in Management gives the worker a sense of importance, pride and accomplishment; it gives him the freedom of opportunity for self-expression; a feeling of belongingness with the place of work and a sense of workmanship and creativity.
The concept of workers’ participation in management encompasses the following: It provides scope for employees in decision-making of the organization. The participation may be at the shop level, departmental level or at the top level. The participation includes the willingness to share the responsibility of the organization by the workers. It is also defined as a system of communication and consultation either formal or informal by which employees of an organization are kept informed about the affairs of the undertaking and through which express their opinion and contribute to management decisions. Features
Participation means mental and emotional involvement rather than mere physical presence. Workers participate in management not as individuals but collectively as a group through their representatives. Workers’ participation in management may be formal or informal. In both the cases it is a system of communication and consultation whereby employees express their opinions and contribute to managerial decisions. Workers control represents one extreme which suggests concentrations of all powers in workers, and management supremacy represents the other extreme, which implies a zealous defence of managerial person.
Workers’ participation in management is a resounding phrase, bridging the past and the future. The word ? workers participation is plentifully supplied with ideas, institutions and opinions. There are two basic ideas in the concept of workers’ participation in management: There are two groups of people in an undertaking (managers and workers) and that there are two separate sets of functions to be performed (managerial and operative). Managerial functions are essentially those concerned with planning, organizing, motivating, and controlling, in contrast with doing or operative work Objectives To establish Industrial Democracy. * To build the most dynamic Human Resources. * To satisfy the workers’ social and esteem needs. * To strengthen labour-management co-operation and thus maintain Industrial peace and harmony. * To promote increased productivity for the advantage of the organization, workers and the society at large. * Its psychological objective is to secure full recognition of the workers. 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. 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, Participation must work as complementary body to help collective bargaining, which creates conditions of work and also creates legal relations.
There should be a strong trade union, which has learnt the virtues of unit and self-reliance so that they may effectively take part in collective bargaining or participation. 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. Authority should be centralized through democratic management process. The participation should be at the two or at the most three levels. 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. Approaches Traditional views of the organisation and approaches to management have seen a clear distinction between the tasks of managers and those of the grass roots level employee.
Advocates of this view such F W Taylor (1911) and others within the scientific management school of thought sought to increase productivity and thus performance by deskilling the workforce and breaking tasks down into the most minuet component jobs so as to take advantage of specialisation of labour. The policies implemented by such advocates may be seen as the exact opposite of those who support the theory of employee participation as the scientific school of management sought to centralise power and control into the hands of managers rather than devolve it to the workforce.
From a performance perspective the introduction of scientific management techniques saw significant dividends yielded to those who employed them for instance production at the Bethlehem steelworks was maintained with a reduction of labour from 500 to 140 (ACCEL 2009) meaning that performance per employee had increased significantly. However these early developments in management theory previous to the conception of employee participation should not be used to discredit the theory due to a number of special considerations.
In the first instance such theories were applied to manufacturing operations and heavy industry and whilst these operations still form a large part of the economy today there has since been a large shift towards service industries requiring differing management styles and techniques. In addition at least part of the success of the scientific management may be associated with the technological developments of the day such as the introduction of the production line as highlighted by Ford’s success at the River Rouge plant in Detroit.
At the other end of the scale the “self directed work team” as defined by (Williams 1995) may be seen as the ultimate exercise in employee participation and has been implemented by companies such as 3M. Under this system teams are essentially left to fulfil the role of both the managers and employees of an operation with a significant input in production techniques, scheduling and improvement initiatives. Advocates of this approach to employee engagement highlight that were the theory has been put into practise productivity has increased between 30 and 50% (IIE 1996).
However on the other side of the spectrum such a high level of employee engagement may have negative consequences including lack of strategic focus as individual teams become ever more productive in their own areas of expertise but forget to consider how their individual team fits into the wider context. The lack of direct leadership can also be seen as providing an opportunity for accountability to be lost and thus falling performance, Bruce (2005) indicates that it is often the accountability of a leader which drives the particular individual to spur on a team or group to the successful completion of a task.
Finally as indicated by Robbins (2003) teams have a tendency to “self-reinforce” behaviour, were the general attitude of a self directing work team is generally positive this will increase the performance of both individuals and the organisation as a whole. On the other hand were the initial attitude and performance of the team is poor in the first instance and with no intervention from outside this can lead to a downward spiral of performance both for the individual and the team as a whole. However not all approaches to employee participation may be seen as quite so radical in their nature. A more frequent approach may be seen as involving mployees to a greater degree without taking such a radical devolvement of control as in the self directing work team approach. For instance Toyota may be seen as one of the leading companies in developing employee participation, Toyota’s commitment to employee participation goes so far as to be formally a part of the companies code of conduct (Toyota 2006). Strategies which may be seen as falling under the umbrella of employee engagement pursued by such companies include Kaizen the practise of including employees in quality improvement initiatives such as quality circles and other forms of consultation directly related to their area of work.
Levels of Management Participation or WPM Information participation: It ensures that employees are able to receive information and express their views pertaining to the matter of general economic importance. Consultative importance: Here workers are consulted on the matters of employee welfare such as work, safety and health. However, final decision always rests with the top-level management, as employees’ views are only advisory in nature. Associative participation: It is an extension of consultative participation as management here is under the moral obligation to accept and implement the unanimous decisions of the employees.
Under this method the managers and workers jointly take decisions. Administrative participation: It ensures greater share of workers’ participation in discharge of managerial functions. Here, decisions already taken by the management come to employees, preferably with alternatives for administration and employees have to select the best from those for implementation. Decisive participation: Highest level of participation where decisions are jointly taken on the matters relating to production, welfare etc. Strategies/ Methods of WPM Suggestion schemes: Participation of workers can take place through suggestion scheme. Under this method workers are invited and encouraged to offer suggestions for improving the working of the enterprise. A suggestion box is installed and any worker can write his suggestions and drop them in the box. Periodically all the suggestions are scrutinized by the suggestion committee or suggestion screening committee. The committee is constituted by equal representation from the management and the workers. The committee screens various suggestions received from the workers.
Good suggestions are accepted for implementation and suitable awards are given to the concerned workers. Suggestion schemes encourage workers’ interest in the functioning of an enterprise. * Works committee: Under the Industrial Disputes Act, 1947, every establishment employing 100 or more workers is required to constitute a works committee. Such a committee consists of equal number of representatives from the employer and the employees. The main purpose of this committee is to provide measures for securing and preserving amity and good relations between the employer and the employees. Management Councils: Under this system Joint Management Councils are constituted at the plant level. These councils were setup as early as 1958. These councils consist of equal number of representatives of the employers and employees, not exceeding 12 at the plant level. The plant should employ at least500 workers. The council discusses various matters relating to the working of the industry. This council is entrusted with the responsibility of administering welfare measures, supervision of safety and health schemes, scheduling of working hours, rewards for suggestions etc.
Trade unions fear that these councils will weaken their strength as workers come under the direct influence of these councils. * Work directors: Under this method, one or two representatives of workers are nominated or elected to the Board of Directors. This is the full-fledged and highest form of workers’ participation in management. The basic idea behind this method is that the representation of workers at the top-level would usher Industrial Democracy, congenial employee-employer relations and safeguard the workers’ interests.
The Government of India introduced this scheme in several public sector enterprises such as Hindustan Antibiotics, Hindustan Organic Chemicals Ltd etc. However the scheme of appointment of such a director from among the employees failed miserably and the scheme was subsequently dropped. * Co-partnership: Co-partnership involves employees’ participation in the share capital of a company in which they are employed. By virtue of their being shareholders, they have the right to participate in the management of the company. Shares of the company can be acquired by workers making cash payment or by way of stock options scheme.
The basic objective of stock options is not to pass on control in the hands of employees but providing better financial incentives for industrial productivity. But in developed countries, WPM through co-partnership is limited. * Joint Councils: The joint councils are constituted for the whole unit, in every Industrial Unit employing 500 or more workers, there should be a Joint Council for the whole unit. Only such persons who are actually engaged in the unit shall be the members of Joint Council. A joint council shall meet at least once in a quarter. The chief executive of the unit shall be the chairperson of the joint council.
The vice-chairman of the joint council will be nominated by the worker members of the council. The decisions of the Joint Council shall be based on the consensus and not on the basis of voting. * Shop councils: Government of India on the 30th of October 1975 announced a new scheme in WPM. In every Industrial establishment employing 500 or more workmen, the employer shall constitute a shop council. Shop council represents each department or a shop in a unit. Each shop council consists of an equal number of representatives from both employer and employees.
The employers’ representatives will be nominated by the management and must consist of persons within the establishment. The workers’ representatives will be from among the workers of the department or shop concerned. The total number of employees may not exceed 12. Methods Finally having considered the potential benefits and drawbacks of employee participation one must consider the methods used in order to under take employee participation. In many instances the benefits an organisation can gain from employee participation come from extracting knowledge from the workforce which already exists.
As such many of the methods which need to be considered are issues in communications since the knowledge and information already exists but is often not being extracted and used by those higher up the corporate structure. One key method highlighted by Adiar (1989 p32-34) is that of consultation, consultation may be interpreted as any genuine attempt to gain the knowledge, feelings and opinions of the workforce which may then be used in the decision making process. As such the methods used may be broad in range from quality circles and focus groups through to town hall style meetings or suggest box schemes.
However to qualify as true consultation each of these acts must take place before decisions are made. It is often felt by many that consultation takes place after decisions have already been made by those in senior management positions. In these cases performance may actually decrease as the workforce perceives a lack of commitment from the management with in the organisation, were consultation is undertake after decisions have already truly been made this may also be seen as a misallocation of resources by the company.
Another consideration of employee participation is that of employee reward. There are many options for encouraging employees to take a greater level of responsibility for their actions and thus increasing there overall level of participation. Such considerations may include share schemes, bonuses or additional annual leave related to certain performance levels. Regardless of the method employed the mechanism may be seen as a function of agency theory in which the interest of the employee and organisation can be harmonised thus increasing performance.
By linking the employees personal performance to the ability for the employee as an individual to benefit the belief is that performance will increase as the employee peruses a personal opportunity. Worker’s participation in BHEL How to make the quality of work life better has been a subject of attention for quite some time at the Hardwar plant of Bharat Heavy Electricals Limited (BHEL). In April 1975, Professor Nitish De, Dean of the National Labour Institute, visited the plant and suggested a new concept for improving work environment known as “job redesign and work commitment. He held a series of discussions with the General Manager, senior managers, and various groups of officers, supervisors, and labour unions’ leaders to explain the basic philosophy behind the new system. A number of countries in the west have tried this new concept, especially in Italy and Sweden where this concept originated and has taken a full shape. This not only reduced the efficiency of workers, but, in the long run, affected output of organizations and progressively retarded the initiative and drive for improved working systems.
As a first step, a meeting of all the workers, supervisors, and officers connected with the group was arranged to acquaint them with the philosophy of the scheme and to fully involve them in decision-making. The salient features of the scheme were highlighted and a task force consisting of members from the workers’ group, supervisors, and engineers was formed to implement the scheme. The first breakthrough came in work performance by introducing an element of variety in the work routine.
Secondly, self-managing work teams were developed which took collective responsibility for achieving targets. Day-to-day planning was taken up by the group members as they were the best judges of the situation. This converted the authoritative attitude of a supervisor to a participative one. The group worked as a team which developed the spirit of cooperation and a strain-free atmosphere of working. The word “indispensible” came to be regarded as nonexistent. Each participant started taking position of the other when necessity arose.
The group’s monthly output rose from 642 standard hours in May (1975) to 2010 hours in December. The efficiency of the group had also been increasing, from around 27 per cent to 60 per cent in the same period. BHEL had too much assumptions and thoughts that every increment of fractionation in a job represented potential increment in production. Some sections of workers unions have assumed far too long that they could prevent workers from being exposed to unreasonable hazards and strains but not from boredom.
An experimenting society has to approach the humanization of work by replacing assumptions with facts and by learning such facts through the familiar and unavoidable process of trial and evaluation. It may be difficult to forecast when the scheme would be implemented on a mass scale. But results so far achieved are encouraging and the goal looks to be nearer every day. This experiment has to be given a fair trial and set an example that unions, management, and even the government can collaborate successfully to the benefit of all that is society. Workers’ Participation in Management in India
Workers’ participation in Management in India was given importance only after Independence. Industrial Disputes Act, 1947 was the first step in this direction, which recommended for the setting up of works committees. The joint management councils were established in 1950 which increased the labour participation in management. Since July 1975 the two-tier participation called shop councils at shop level and Joint councils were introduced. Workers’ participation in Management Bill, 1990 was introduced in Parliament which provided scope for upliftment of workers.
Reasons for failure of Workers participation Movement in India: * Employers resist the participation of workers in decision-making. This is because they feel that workers are not competent enough to take decisions. * Workers’ representatives who participate in management have to perform the dual roles of workers’ spokesman and a co-manager. Very few representatives are competent enough to assume the two incompatible roles. * Generally Trade Unions’ leaders who represent workers are also active members of various political parties.
While participating in management they tend to give priority to political interests rather than the workers’ cause. * Schemes of workers’ participation have been initiated and sponsored by the Government. However, there has been a lack of interest and initiative on the part of both the trade unions and employers. * In India, labour laws regulate virtually all terms and conditions of employment at the workplace. Workers do not feel the urge to participate in management, having an innate feeling that they are born to serve and not to rule. The focus has always been on participation at the higher levels, lower levels have never been allowed to participate much in the decision-making in the organizations. * The unwillingness of the employer to share powers with the workers’ representatives, the disinterest of the workers and the perfunctory attitude of the government towards participation in management act as stumbling blocks in the way of promotion of participative management. Corrective steps * Employer should adopt a progressive outlook. They should consider the industry as a joint endeavour in which workers have an equal say.
Workers should be provided and enlightened about the benefits of their participation in the management. * Employers and workers should agree on the objectives of the industry. They should recognize and respect the rights of each other. * Workers and their representatives should be provided education and training in the philosophy and process of participative management. Workers should be made aware of the benefits of participative management. * There should be effective communication between workers and management and effective consultation of workers by the management in decisions that have an impact on them. Participation should be a continuous process. To begin with, participation should start at the operating level of management. * A mutual co-operation and commitment to participation must be developed by both management and labour. * Modern scholars are of the mind that the old adage “a worker is a worker, a manager is a manager; never the twain shall meet” should be replaced by “managers and workers are partners in the progress of business” Conclusion One conclusion would be that increased employee participation has the otential to create significant increases in performance for both the individual and the organisation as a whole. From the organisational perspective there may be significant increases in financial performance as the high costs of labour turnover are reduced as part of the increase in participation. Secondly the organisation is likely to experience a significant increase in performance with regard to its competitive advantage as the organisation will now be using its labour in potentially a more efficient way in the form of a strategic resource as opposed to a simple cash for labour transaction.
From the individual perspective increased participation can lead to increases in performance as firstly an improved attitude to work increases output and secondly the benefits of the individual being able to organise their work in the way they see best contributes to work being organised in a more efficient way. However whist it is acknowledged that increased employee participation can contribute significantly to increased performance it is by no means either a panacea for all organisational ills nor is it a necessity for improving performance in all instances.
One should remember that whist some companies such as Toyota have adopted a positive attitude towards employee participation there are still many successful companies which maintain a tradition approach towards the division of management and employee tasks. Further more companies operating such traditional approaches to the management of their employees are not limited the manufacturing sector with call centres being a prime example of where the service sector has failed to embrace increased employee participation choosing alternative methods to improve performance.
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