11.
PARTICIPATIVE MANAGEMENT
The
meaning
of
-
the
A THEORETICAL FRAMEWORK
concept
'Participative
Management' needs to be understood in the backround of its historical
evolution
from the beginning of this century.
It h a s been developed and improved in different f o r m s in different
countries
political
to
suit
the
requirements
of
the
system and economic structure of the countries
concerned.
In this chapter, the
Participative
Management
as
it
meaning of the concept of is understood
in
recent
It is followed by a discussion
years h a s been explained.
o f s o m e important definitions o f the concept, a s defined by the prominent experts in the field.
Since the concept of
Participative
developed
Management
implemented
in
attempt
also
is
historical developed
the western made
evolution
in
country, namely
U.S.S.R.
some of
industrialised this
of
countries.
experience o f
is mainly
the
The
chapter
to
and
being
countries, a n present
concept
in
most
experience
in
the
of
the
socialist
is also outlined briefly. the developing
the
The
countries too, a r e
discussed. T h e evolution and the development of the concept 'Participative Management' in India, are then analysed.
W I N G OF PARTICIPATIVE MANAGEENT
In workers'
recent
years
participation
much of management
research
and
discussions
in decision-making
literature.
on
have dominated
In its broadest possible
sense, workers' participation means wider involvement and participation making
by
process
a company's of
that
employees
in
organisation.
the decision-
Participation
in
decision-making is perhaps meant to include all employees.
The concept, 'Participation' has a long history of evolution and it is not a new concept altogether. the
time
o f Rig
Veda
in
India
and
Plato
In
From
European
thoughts, the problem o f ownership of wealth and employeremployee relations have been the subject matter of profound thinking. receiving
Recently special
the
concept
attention
from
of
participation
is
the
Governments,
the
Industrial Managers and the Academicians. theory behind
The underlying
'Participative Management' can be stated a s
follows: Generally workers have some views and suggestions in their minds for a particular problem and wish to put it before the managers and supervisors.
They feel that, their
suggestions would be suitable for the prevailing circumstances,
and
should
find
a
due
place
in
the management's
policies. on
its
T h e management normally takes the decision based own
experience
subordinates.
and
impose
This is one o f the most
them
on
thelr
important factors
causing labour-management conflict.
The suggestions offered by the workers may or may not be relevant but ignoring of their vlews without assessing them properly may
create frustration in the minds of the
workers about the intention of the management.
This makes
This type of situatlon
workers alienated from management.
can be averted if the views of workers are considered and implemented policies
in
and
relevant
also
in
cases
process
in of
designing
managerial
decision-making.
The
particlpation o f the workers in the management may bring a higher
level of satisfaction among
the workers that
they
are also responsible for the consequences (either success or failure) of the policies implemented.
Hence they will
take utmost care In solving the issues with a feeling that the enterprise is their own help
to remove
establishment.
the feeling of alienation of
It may
also
the workers
towards the management as we1 1 as others In the me institution.
T h e concept of workers' particlpation In management
emanated
conflict.
from the horror of Marxlan theory of class
After
a
long
struggle
between
labour
and
management, both the parties have come closer and realised
that
participation
solve most labour
and
co-operation
o f the problems
productivity,
profitability
of
resulting
labour
the
between
them
would
in enhancement
efficiency
enterprise.
The
of
and
the
concept
of
participation, though evolved over a long period of time, still it suffers from lack o f clarity and precision. exact
meaning,
significance
and
process
of
this
The vital
aspect of labour-management relations need to be understood clearly in the decision-making process of management.
The
management experts and executives are proclaiming that, the concept is a tool for improving the overall performance of an enterprise.
For them, It means that workers are glven
an opportunity to take part in those decisions which affect their wages, their working conditions, their very jobs, and this
participation
paves
the
way
for
a
harmonious
industrial relation and an atmosphere conducive to increase productlvlty and efficiency.
Most participation problems. when
of as
the a
scholars
panacea
to
In
the
solve
field all
treated
managerial
But, partlcipation is let alone a panacea.
understood
and
properly
organisation towards its goal.
applied,
it
can
lead
Yet the
DEFINITION OF PARTICIPATIVE M A N A G M N T It Management',
is
very
because
difficult
to define
cornnentators
differ
'Participatlve in
their
views
depending on the socio-economic goals of the countries they belong
to.
However
it
is
generally
influence of Participative Management
agreed
that
the
is quite significant
indeed. Allport
(1945)
refers
to,
"Participation
decision-making as active ( e g o ) involvement"'. regards, "It as a feeling o f obligation best
interests of a group"2.
Viteies
in
Schultz (1951)
to work for the
(1953) holds that,
"employee partlclpatlon in declsion-making in a democratic atmosphere created by
'permissive' leadership, facilitates
the development of 'internalized' motivation, and saves to raise the levels o f the employee production and ~ n o r a l e " ~ .
Accordlng to Davls (1957), "Participation may be defined as the mental and emotional involvement of a person
l ~ l l ~ o r,G.M. t 1945. The Psychology of Participation. Psychological Review, 53, pp.117-131. 2 ~ c h u l t z , G.P. 1951. Worker Participation on Production Problems - A Discussion of experience with the Scanlon Plan. Personnel, 2 8 , pp.201-210. 3 ~ i t e i e s ,M.S. 1953. Motivation and Morale In Industry. New 'fork: Norton, p.164.
in a group situation which encourages him to contribute to group goals and share responsibilities in themu4. Tarmenbun (1966) defines part icipation as the "formal Involvement of members
in
the
exercise
of
control,
decision-making in group meetingsw 5
Lamners
(1967) pointed
decision-making may forms
of
upward
be
out,
defined as
exertion
of
through
"participation
the
power
organisations a s are perceived in
usually
. totality
by
of
in
such
subordinates
in
this sense can be of two
varieties i .e., direct or indirectn6.
Sawtell (1968) has
described the concept as, "any or all of the process by which employees rather than managers contribute positively towards the reaching o f managerial decisions which affect their workqq'.
4 ~ a v i s , ~ 1957. . Structure.
Alienation, Social Percept ion and ego
Journal of Consulting Psychology, 19,pp.Zl-27.
5 ~ a n n e n b a u m , ~ . ~ .1966. Social Psychology Organisation. London: Tavistock Publications.
of
Work
Power and Partlclpation declsion6 ~ a m n e r s , ~ . ~1967. . making in formal organisation. American Journal of Psycholoqy, 7 3 , pp.201-210.
7 ~ a w t e l l, R . 1968. Sharing London: Industrial Society, p.1.
our
Industrial
Future?
The
International
Institute
for
Labour
Studies
( 1 9 7 1 ) describes participation as, "process whereby workers
have a share in the reaching of managerial decisions in the
.
enterprise"'
Fox
(1971) described
'procedural orientation'
participation
as a
and o f f e r s the following account
of possible levels of the workers Involvement: "He may seek simply to b e informed o f proposed decisions in
the right
the hope that his reactions may be taken in to account; or to
protest
suggestions jointly,
against before
directly
decision they
or
are
when
made;
made;
or
indirectly
through
or
to
to
made
participate
representatives,
with management In actually making them, or to make them In concert with his fellows and impose them on management"9.
Most o f the definitions cited above appear to be less explicit, they
fail to mention the central theme o f
participation
-
subordinates.
The definitions putforth by Davis, Larmers,
joint
decision-making
by
superiors
and
Vlteles and Fox seem to be more appropriate in the present context.
In this research work the concept participation
is used according to their definitions.
'€3utterlss,~. Job Enrichment and Participation: A Study. London: Institute of Management p. 6.
Employee Personnel
'FOX,*. 1971. A sociology London: Collier Macmilian, p.9.
Industry.
,
of
work
in
EXPERIENCE ABROAD Before
analyslng
the
various
aspects
prevalent
in
of
some
the
actual
schemes
other
functioning
of
the
i t i s necessary t o s t u d y t h e
p a r t i c i p a t i v e scheme i n I n d i a ,
of
countries
workers' as
a
participation
pre-requisite
to
e x p l o r e t h e p o s s i b i l i t i e s f o r making i t e f f e c t i v e i n I n d i a . There
is
form and
of
today
better
is
of
open
with
security.
framework o f
Spain,
is
an
to
challenge,
workforce
the
So,
the workers'
U.K.,
U.S.A.,
age
is
opinion
that
some
i s both desirable
where
the
traditional
because
an
increaslngiy
less
willing
decision-making,
basic this
of
democracy
I t
organisational
pre-occupied
as
concensus
industrial
increased
educated
monopoly
such
growing
inevitable.
authority
job
a
'hygiene
provides
a
to
accept
and
factors' detailed
is
of
a
less
pay and
analytlcai
p a r t i c i p a t i o n i n other countries Austria,
Belgium,
Norway,
Sweden,
S w i t z e r l a n d , Denmark, West Germany, F i n l a n d , France,
Ireland,
Italy,
Yugoslavia,
Luxembourg,
P o l a n d and
Israel
Netherlands,
-
as
U.S.S.R.,
a background
for
the
d i s c u s s i o n o f t h e same i n I n d i a .
PARTICIPATION I N DEVELOPED COUNTRIES
UNITED KINGDOM The h i s t o r y o f
U.K.
the workers'
participation i n t h e
goes back t o 1920 when a conunittee, headed by
Mr.
Witley,
was
appointed
participative
by
the
structure
Government of
to
recomnend
management.
In
1975,
a the
Government established another c m i t t e e under the chalrmanship
of
Lord
partlcipation.
Bullock
to
examine
the
subject
of
The Bullock Comnittee report, published in
1977, r e c m e n d s that employees should be given the right to
representation
on
a
unitary
employing 2000 or more workers
board in U.K.
in
all
companies
Previously, the
main vehicle for employee Influence over declsion-making is collective bargaining, and In particular, the shop steward. At present jolnt consultation is quite comnon in U.K.
In
industries, the joint c o m l t t e e s at
the
the nationalised plant level
(like power statlons, rnlnes, gas works and so
on) are part of a system which includes district, regional and nationaiised
comitt8es.
management
trade
and
As a matter
unions
do
not
of
take
fact both the
joint
consultation seriously.
UNITED STATES OF H R I C A
The belief that collective bargaining is the main road towards Industrial democracy, and that the collective agreement is
almost
united
in its widest sense is Its principal expression, unchallenged
states.
by
contemporary
The American
favoured collective bargaining
Unionism
thought has
In
the
lncreaslngly
to secure participation in
managerial
decision-making,
d i r e c t workers' Collective means
of
and
bargaining, workers'
some would p r e f e r Management".
of
course,
ignored a l l
forms
of
c o n s l d e r e d as a
may be
participation
in
management,
although
t o d e s c r i b e i t as "Worker P e n e t r a t i o n i n
Another
interesting
collective
bargaining
is
what
"Continuous
Bargaining"
by
the
management
has
r e p r e s e n t a t i o n i n f o r m a l management b o d i e s .
bodies
to
study
recent
may
be
creation
and
of
report
innovat i o n
In
described
as
joint
union
complex
-
issues.
D u r i n g t h e l a s t t h r e e decades o r s o , p r o f i t s h a r i n g schemes have been e v o l v e d i n t h e U.S.A. a s s o c i a t i n g workers w i t h
They a r e a n o t h e r means o f
t h e management.
Profit
sharing,
t h u s a t t e m p t s t o r e p l a c e any p o s s i b l e c o n f l i c t o f i n t e r e s t s between t h e w o r k e r s and t h e management.
AUSTRIA Participation the
context
social
of
the
partnership'
i n Austria
post-war
needs
tradition
to
of
be
viewed
'economic
between employers and employees,
in and
with
i t s agreement t o work c l o s e l y t o g e t h e r on economic measures and t o g i v e p r i o r i t y t o t h e o v e r a l l The system o f of was
28,
March,
t h e works c o u n c i l
1974).
needs o f
t h e company.
i n t r o d u c e d by t h e Act
1967 which a f t e r v a r i o u s i n t e r i m amendments
substantially
relations ~
was
c otf
Whenever
redrafted
1 4 , December,
in
the
collective
labour
1973 ( e f f e c t i v e from 1 , J u l y
e x i s t i n g company
law p r o v i d e s t h a t
there
must be a supervisory board in addition to the management board, the 1973 Act requires that employees be represented on
the board.
It applies to all
joint
stock companies,
with limited liability employing more then 3000 persons and to co-operative
socleties
employing more
than 40.
The
composition of the employee side o f the board must reflect the relative proportions o f white and blue collar workers in the works council and the enterwrise as a whole.
In Belgium, the actual law regarding Participative Management came in to existence in 1941. the
formulation
of
works
councils
at
The law requires unit
level.
The
establishment of works council was insisted on by the law of 20th September
1948.
the Natlonal Agreement
It was subsequently modified by and
the Royal
decree.
The works
council has three main functions: ( 1 ) a consultative and advisory role, ( i i ) the role of co-determination on certain issues, and (iii) the right to receive information.
Where delegation
no
assumes
works some
council of
its
exists,
rights
and
the
union
functions,
particularly those concerning information and consultation on the general prospects of the enterprise and on personnel issues.
NORWAY The
industrial
relation
system
c h a r a c t e r i z e d by a h i g h degree o f spirit
of
co-operation
agreement
centrelization
under
the
Trade
Union
Enterprises
managers
terms o f
of
with
the
of
1957
joint
for
stock
more
independent
e s t a b l i s h department
than
agreement
employees,
are
and
eligible
to
The Norwegian Companies Act
participation
at
introduces
and
and
l a s t negotiated I n
2000
departments
council.
Congress
co-operation
companies
particlpatlon at
and by a
The works c o u n c i l i s
which forms p a r t o f t h e b a s i c agreement, 1974.
is
came t o a f o r m a l shape i n 1935 by
between
c o n f e d e r a t i o n o f Employers i n Norway. established
Norway
between employers and t r a d e u n i o n s .
The i n d u s t r i a l democracy the
in
Board
the supervisory
level
applies
compulsory
board l e v e l of
to
all
employee
a two-tier
b o a r d s t r u c t u r e i n companies above a c e r t a i n s i z e .
SPAIN The works c o u n c i l 18th
August,
September, COUncil
1947,
1953,
must
be
supplemented
and
employee
the
company.
by
further
establlshed
more t h a n 50 w o r k e r s . for
system i s based on a d e c r e e o f the
decree
dispositions.
i n any
undertaking
The Act o f 2 1 s t J u l y ,
representation The
by
decree
on
the
2241/1965
11th
A works employing
1962, p r o v i d e s
b o a r d of laid
of
directors
down
that
of
only
companies w i t h more t h a n 500 employees s h o u l d b e c o v e r e d by the
provisions
Of
the
1962 A c t .
companies h a d employee employee works
representation
representatives
council,
although
I n 1972,
on
the
less
on t h e
than
board.
400 The
b o a r d a r e e l e c t e d by
the
the board r e t a i n s a i i m l t e d r i g h t
t o veto.
Industrial relations by
the
primacy of
reinforced
-
council
by the
i n Sweden a r e c h a r a c t e r i z e d
c o l l e c t i v e bargaining,
Government Swadeshi
supplemented and
Legislation.
name
was f o r m a i l s e d I n t h e y e a r
for
Joint
workers'
enterprise
particlpation
-
1938, u n d e r an agreement between
t h e E m p l o y e r s ' F e d e r a t l o n a n d t h e c o n f e d e r a t i o n o f Swadeshi labour
unions.
voluntary
The
wbrks
council
c o l l e c t i v e agreements,
Arbetsglvareforenenlngem
and
is
established
under
c o n c l u d e d between Svenska
the
Trade
U n ~ o n Federation
Lands O r g a n i s a t i o n and Tjanstemannens
central organisation
in
December
1964,
1966 and
1968.
An A c t
came i n t o f o r c e on 1 s t A p r i l , particlpation at June 1976. July,
1976.
employees o f
board l e v e l
of
1973,
1972,
which
i n t r o d u c e d employees
for a trial
p e r i o d ending
In
The A c t was t h e n e x t e n d e d i n d e f i n i t e l y f r o m 1 s t The
employees'
representatives
must
be
t h e company and a r e a p p o i n t e d d l r e c t l y by t h e
l o c a l t r a d e u n i o n o f t h e company.
SWITZERLAND Just over 35 per cent of the worklng populatlon In Switzerland are organised in trade unions works councils exlst In some 60 per cent o f enterprises wlth more than 50 employees.
T h e works council Is mainly envisaged as one
stage In a formal procedure for settllng grievances. 1971,
three
initiative
trade
union
federations
proposing
a
Article
new
launched 34
of
a
the
In joint
federal
constitutlon which would permit the federal government to legislate
for
organisations federal
co-determination in
plant,
government
proposal,
and
permitting
of
company
workers
and
parliament
and
their
management.
The
launched
participation of employees
a
counter (but not
the trade unlons), at plant level only.
Slnce the turn of the century, Danish industrlal relations have been based on the princlple of co-operation between
the
two
sides
of
a
industry.
collective bargaining
In
Denmark
It
the
need
lays
emphasis
agreements. main rights
The
-
on
co-operation
The
system
of
Is highly centrallzed.
for
voluntary
collective
committee exercises
three
( I ) the right of Information, ( i i ) the right
of 'co-influence', and (iil) the right of co-determlnatlon.
T h e Companies Act of 13th June, 1973 (effective from
1st
January,l974)
which
introduced
provisions
for
employee representation applies to the 'supervisory board' o f a two-tier board structure.
The majority o f the board
o f dlrectors must consist of persons who a r e not part of the management, and its chairman may not be a manager.
WEST GERMANY
In Germany was
introduced
through
determination. within a
workers'
participation
"mitbestimnung"
Partlcipation
in
complete structure of
West
in management
which
means
Germany
co-
operates
representative agreements
designed to secure co-operation and industrial democracy at all levels o f
the enterprise.
tion was
introduced
in West
Germany
provldes
the
The scheme of co-determinaGermany
best
about 3 0 years ago.
example
of
successful
implementation o f workers' participation in the form of codetermination.
Although works councils existed in Germany
before the last w a r , their modern form really d a t e s back to the
works
partlclpation introduced by
constitution at
board
Act
of
level
the occupation
in
1952. Germany
Employee was
first
powers o f the "Ruhr barons"
and became federal law in those industries by the Act o f
1951.
Partlcipation was extended to limited companies with
m o r e than 5 0 0 employees by another Act
in 1952, and has
recently after a long debate been further amended by a new In all cases, employee participation st board
Act of 1976.
level applies to the supervisory board within a two-tler structure.
FINLAND
At employee
present,
participation
comnittee.
the in
only
formal
Finland
is
structure the
for
production
Under the terms of the law of December, 1949, a
production cornittee must be established in any industrial establishment with more than 60 employees.
It may also be
established
employers
in
other enterprises,
employees s o wish.
if
both
and
In enterprises with a maximum of 120
employees, the comnittee consists of two representatives of the employer
and
four
representatives of
the employees.
Employee representatives are appointed for a two year term of o f f i c e , through, a secret ballot o f all employees in the appropriate employment group.
FRANCE
Workers' movement in France. or more
participation
has
been
a
spontaneous
All the industrial units employing 50
workers were
required
to
form works
cornnittee,
according to the Government ordinance of 1946 which amended the 1945 ordinance.
The public sector has been exempted.
Provlslon
for
employee
representatlon
on
the
board
of
private sector French companies is some what complicated. The law of 24th July,1966 enabled companies to adopt a twotler board system. appolntlng
a
supervisor
managing body. of
January,
The shareholders' general assembly is board
which
In
turn
appoints
a
Profit-sharing dates back to an ordinance 1959,
whlch
Introduced
a
number
of
tax
exemption for enterprises which inltlated voluntary profltsharing schemes.
It was superseded by an ordinance o f 17th
August,1967, which made profit-sharing schemes obligatory to all undertakings employing more than 100 employees. Act
of
An
1973, extended the provision for profit-sharing to
all enterprises with 50 or more employees.
The law o f 27th
December,l973, also encourages enterprises to promote share participation.
IRELAND There works council
is at
present
in Ireland.
no statutory provision
been established by voluntary
collective agreements or by
employers initiative in many companies. purely
advisory
questions, and
discussing plant
shop.
and is
for
A works council has, however,
consultative
generally
The councll has a
functlon
specifically
on
personnel
prevented
from
issues more appropriate to the trade unlons or Under
the Factory Act
of
1955, workers
In
factories are given statutory rights to establish a safety cornnittee
to exercise a consultative
measures. present
Employee limited
to
particlpatlon the Public
at
function on
safety
board
is at
level
sector, where
some trade
unionists have been appointed to the board of some state enterprises
in
a
purely
individual
capacity.
In
1974,
addressing the Irish Congress o f Trade Unions the Ministry of Labour expanded its support in principle for the idea of employee
representation
component
of
any
at
board
level a s
comprehensive
"an
approach
essential to
worker
participation".
ITALY
The
structure
of
industrial relations
in
Italy
reflects the impact o f rapid post-war industrialization on economic and social development.
In July, 1972, the three
major confederations set up jolnt federation confederazione Generale
Italiana
del
Lavoro,
Confederazione
Italiana
Sindicatl Lavoratori and Union Italiana del Lavoro to coordinate
many
bargalning.
of
Their
their
activities,
Including
a f f i l i a t e s subsequently
federation at industry and area level.
set
collective up
joint
The 'hot autumn' o f
industrial disputes in 1968 and 1969 saw the emergence o f a new and important movement at plant level, and that o f the Shop stewards and the factory councll.
The factory council
was
a
spontaneous
legislative power
development
support.
to
resolve
The factory the
These
enjoys
council
differences
collective agreements at plant Issues.
and
include
no
formal
exercises
and
to
its
negotiate
level over a wide range of
pay,
manning
levels,
Internal
transfers and promotions, organisation of work, vocational training and Indeed almost any aspect of personnel policy.
LUXEWWRG
Participation
in Luxembourg must be seen in the
context of a highly lnstitutionalised system of collective bargaining and consultation at national level. step
in
the
direction
of
profit-sharing
The first
and
workers'
representation in luxembourg were taken by the employers of the iron and steel industry at the beginning of the present century.
Collective agreements in Luxembourg are regulated
by the law of 12th June,1965. were
established
private The
sector
by
the
with
decision-making. employee
statutory limited
The law of
representation
enterprises.
of
6th May,
enterprises with more than
joint-comnittees
consultative,
law
Moreover, joint cormittees
in
powers
powers
of
1974,
in
are
primarily
supervision
6th May, 1974 provides the
council
all
150 employees.
of
ail
and for
public
Employee representatives of the council share
the s a m e r i g h t s and responsibilities as all other members.
NETHERLANDS
T h e works council was established by law in the Netherlands council
in
Act
1950.
of
The
1971
law was amended by
which
considerably
functions of the works council.
the works
extended
the
In addition to the works
council, a central council may also be established in any company
or
council.
group o f companies with more
The
central
works
council
than one works
exercises
the
same
rights and powers as do works council at enterprise level. Any company with capital and reserves of Rs.10
million or
more, with a compulsory works council, and with atleast 100 employees, must adopt a two-tier board structure.
Certain
exemptions are allowed in the case of group of companies, particularly 1971,
those with
overseas interests.
specifically
therefore
representation at board
level,
but
The Act
precludes
of
employee
is designed to ensure
that the financial composition o f the supervisory board is acceptable to both the employees and shareholders.
U.S.S.R.
T h e Soviet enterprise
economy as a whole, a s well a s each
individually,
carefully drawn up plans. enterprises could eC0nomlc management
are
developed
on
the
basis
of
Socialist system of organislng
draw a huge mass of people o f the country.
Soviet
in
to the
trade unions
have a direct end vital role to play in the economic and cultural development, In worklng out and implementing laws concerning problems of production, labour, public services, cultural education, that is all the problems affecting the vital
Interests o f the people.
Another method by which
factory and o f f i c e workers exercise an influence on the organisation of production and agreements
concluded
at
labour are the collective
industrial
and
transport
enterprlses, on constructlon sites and state farmg,and at machine and tractor stations. that
the
soviet
management
It may, however, be noted has
never
opposed
to
the
workers, for its members were once workers themselves and the ranks of the management are continually being
fllled
by former workers who have been trained at the expenses of the
state.
Both
managers
and
workers
have
the
same
interests whlch are determined by the desire to improve and expand production and increase the material well-being o f the people. PARTICIPATION IN DEVELOPING COUNTRIES
YUGOSLAV IA Yugoslavia provldes the most classic example of workers' participation in management. In
industrial
undertakings,
February 1922, but
was
The self-management
formally
instituted
in
the basic law of introducing workers'
participation In management was passed in 1950.
The most
Important
workers'
instltutlons
participation Local
are
peoples'
under
workers'
comnittee
the
Yugoslavian
council, and
Trade
enterprise level, the works council
Management unions.
Board, At
the
Is the highest body
which conslsts of 15 to 120 (depending on the size of the enterprise) members elected by the workers and the staff for
a
period
permanent members
of
3
years.
executive of and
It
is
The management
In
the
the council conslsts of 5 to 1 1
held
responsible
running o f the enterprises. voice
board,
the appointment
for
the
efficlent
The people's comnittee h a s a of
the directors
and
actlve role in the educational activities and the morale and skill of the workers.
play
an
improving
Trade unions have no
dlrect role In the management of the undertaking, but they have the right to present lists of candidates for electlon to the workers council.
In fine, Yugoslavian system would
work in a socialist system.
POLAND
The
"Employee Councils"
were set u p spontaneously these
two
have
undertakings supervision.
assumed
which
In many full
resumed
and
"Works Comnlttee"
parts of Poland, and
charge
of
operation
the
lndustrlal
under
their
T h e workers' council were granted full legal
1956.
status by a law passed in November, replaced
in
December,
1958 by
This law was
another, which
basis o f workers representation at present. council
of
trade
council
of
the
over
the
and
the
T h e central
general
and
regional
industrial
unions have
extensive
framework
o f workers'
participation
entire
management.
unions
forms the
The
comnunist
party,
which
is
powers
called
in in
Poland a s the polish united workers' party, controls the workers' present
participation there
experience
is
in
no
the
scheme
even
satisfactory
fleld
of
more
closely.
assessment
workers'
At polish
of
participation
in
management. ISRAEL
The
workers'
participation
introduced through flve schemes. the
Works
Comnittee,
Joint
Production
Council and Joint Management experimented. central
has
Israel
has been
C o m n i t t e e , Plant
(Management Board) h a v e been
For the management
management
in
At the enterprise level
been
o f holding companies a
establlshed.
Workers'
comnlttee is exclusively a body o f the representatives of workers. workers purposes.
This and
comnittee
assist The
Joint
the
is
expected
management
Production
to
represent
for
Comnlttee
the
constructive Is
a
body
establlshed to advice the management on issues related to incent lve schemes, health and safety o f workers. Eventhwgh
plant
councils
have
expectation, they
been
established
have vanished
in their
wlth
much
infancy.
The
Joint-Management scheme has been Introduced in 1967.
This
management board is responsible for all matters pertaining to profitability and production, organisation, utilisation of
manpower
and
development
and
expanslon
of
the
undertakings.
EVOLUTION OF PARTICIPATIVE MANAGEMENT IN INDIA The management
scheme
has
consultation
a
as
long
a
of
workers'
history
in
participatory
and
management
much longer history of evolution. around
participation India
the
in joint
style has
a
It was first introduced
1910 in the textile industry which is one of the
oldest
of
Gandhiji
the
was
organised the
first
industries Indian
of
political
the
country.
leader
who
advocated the formation of a labour unions to redress the grievances o f workers. Company at
In India
,
the TATA Iron and Steel
Jamshedpur was perhaps the first to Set u p a
works comnittee consisting of the representatives of the management
and
the
workers.
The
setting
up
of
these
comnittees was strongly recomnended by State Governments 10
and the Royal C o m n f s s i o n on Labour.
1 ° ~ a v i s , ~ . 1963. The Case for Management. Buslness Horizon, 6 , pp.55-60.
Participative
DEVELOPMENT OF THE CONCEPT I N I N D I A
T h e Government has been trying for the last four decades to introduce the scheme of workers' participation in management.
The
schemes
o f works comnittees, joint
management councils and worker-director aim at institutionalization
of
democracy.
These schemes have been
hope that the
the
theme
participation
process
of
and
and
Steel
trade
concept
of
industrial
introduced wlth
the
involvement of employees in
decision-maklng
suspicion and hostiilty relations.
or
will
reduce
mutual
and create harmonious industrial
The works comnittee, set u p by the T A T A Iron Company
union
trade union
Limited, in
1919 with management
representatives, did
rivalries.
In
not
last
1920, as per
long
and
due
to
the advise of
Mahatma G a n d h i , the Ahmedabad Textile Mill and the unions of the Mlll agreed to set u p joint consultation councils to settle disputes.
T h e Royal Corrmission on labour ( 1 9 3 1 )
in its report though accepted that workers' organlsations a r e weak,
recomnended
that
efforts
in the direction
of
constituting works comnittee should be taken.
In given a Act of
legal
1947.
should b e
India,
Participative
framework T h e Act
through
Management
has
been
the Industrial Dlsputes
Insisted that the works comnittee
formed if the number of employees exceed o n e
hundred.
T h e scheme h a s all along been an integral part
of Government's
labour pollcy
philosophy h a s been enunciated Five Year Plan documents. (1951),
the
planning
in India.
Its underlying
from time to time in the
In the First
comnisslon
Flve Year Plan
considered
that
works
comnlttees, "will be the best vehicle for improving labour relations and promoting employer-employee relationship in the Interest of higher productlon and greater well-being of the workers through the progress of industryn1'.
The
importance
of
participation
has
been
described in t h e Industrial Policy Resolution of 1956, In the following words: "In a socialist democracy, labour Is a partner in the comnon task of development.
There should
be
technicians,
joint
consultation
and
the workers and
should wherever possible, be associated progressively with management.
Enterprises in public sector, have to set an
example in this model"12.
T h e Second for
ensuring
Flve Year
industrial
Plan Document
peace,
better
state that
relations
and
increased co-operation, steps should be taken Increasingly
11
Documents of the First Five Year Plans, Published by t h e Planning Comnisslon. l a ~ e p o r t so f the Royal Comnlssion on Labour in India,1931.
to associate labour with management, and requisite Then
in
for 1957,
voluntary
Joint
it
is "a pre-
of a socialist soclety.
the establishment
Management
Councils were
in~tituted"'~.
Despite felt
that
these
workers'
efforts,
been successful in India. little encouragement greater managerial
and
to
those w h o would
speedier
practices
development
...
possibly
without
the
not
does
has
been
generally
in management
has
not
"The Indian experience provides
less participatlon evidence
It
participation
of
that
to
see a
participative
there might
such e f f o r t s .
suggest
like
have been
But
certainly
these have
notable advances in increasing the participative
led
to
role o f
workers or union in the decisions of the firmut4.
T h e Third Five Year Plan ( 1 9 6 1 ) a l s o emphasised the need for the strengthening of industrial democracy in the
country.
It
maintained
that,
"for
the
peaceful
evolution of the economic system on a democratic basis, it is
essential
that
workers'
participation
in management
should be accepted a s a fundamental principle and a s a n
' 3 ~ o c u m e n t s o f the Second Five Year Plans, Published by the Planning Comnission. 1 4 ~ i v e Year Plan. 1957. Draft model agreement. Indlan Labour C o n f e r e n c e , 15th Section, 1 1 July, p.254.
urgent need".
The plan document visualized that in course
of time "management should arise out of the working class itself"
and
that
such
a
step would
greatly
help
"to
promote social mobility which is an important ingredient of a Socialist system"15.
The industrial
Government
of
relations
India adopted
strategies
industrialization process
and
a
to
number
of
facilitate
the scheme of
"workers'
representation in Industry" [(Resolution No.S.61011
(4)/75-
DK-I (B)] on October 30, 1975, the workers' participation 16 was declared as a part of twenty point economic programne. Reduction
of
industrial
conflict
and
Improvement
of
productivity were the maln objectives of the programme. Shri. R. Venkataraman, the then Union Minister of Finance in
his
speech,
Participation adopted
by
in this
in
a
conference,
Management Government
is to
one
said:
"workers'
the
techniques
a
harmonlous
of
achieve
relationship between labour and management and to promote social justice.
The Directive Principles o f State policy
1 5 ~ o c u m e n t sof the Third Five Year Plans, Published by the Planning Comnission. 16~overnment o f India. Resolution No.S.61011(4)/75DK 1 ( 8 ) , 30th October,1975, Ministry of Labour, New Delhl.
enshrined
in
our
constitutlon
have
laid
down
that
the
state shall take steps by suitable legislation or in any other manner, to ensure the partlcipatfon the management
of workers in
of undertakings, establishments
organlsatlons engaged In any Industry.
or other
The Government has
undertaken several steps to Implement this constitutional directive
.. ."I7 The
Fourth
Five
Year
Plan
urged
for
the
extension o f the Scheme to the publlc sector undertakings, and emphasised llnk
in
the
its importance a s an essent la1 functional structure
of
industrial
relations.
The
Administrative Reforms comnission, in its report on public sector undertaking, reconmended
that
of the workers should be included
a s Board of Directors
of the Public sector undertakings. are
those who
are
actually
the representatives
working
Such representatives In
the enterprise.
Such representation was recomnended for the industry units only.'' The
Fifth
Five Year
Plan
too highlighted
the
need for industrial democracy and considered participation
17Speech by the Indian Union Minlster Shri.R.Venkataraman, Public Enterprlse, p.16. 1 8 ~ u l l e t i n , 1968. Studies, 5, p.184.
of
Finance
International Institute of Labour
by workers in the management process a s highly desirable. Finally the scheme lay of
4
effectiv two-way
greater emphasis on the importance comnunlcatlon
and
exchange
information between the management and the workers. the
publication
enterprlses
of
1186
approximately
have
the publlc
scheme
in
sector
implemented
a
Since
November,
and
private
scheme
for
participation in management on the shop floor
of
1975, sector
workers'
level.19
The then Union Minister M r . Vengala Rao told in the Rajya Sabha, "The scheme for workers' participation in management has been implemented in shop floor plant level in 9 4 central public sector undertakings. that
there
workers'
Is
no
public
participation
at
sector board
He has told
undertaking level.
which
had
However, trade
unlon/leaders have been appointed in the Board of Directors of Seven Public Sector undertakings.
There is no need to
adopt
the
"hlre
undertakings
and have
fire"
schemes
sufficient
as
powers
public to
sector
deal
with
lnef f icient employees. 20
19chandra ,M. 1977. Workers' Management. Productivity, 18(1), p.99. 2 0 ~ p e e c h by Flnanclal Express.
Partlcipation
the Indian Unlon Madras, March 2 2 , p.4.
in
Minlster,l988.
T h e Sachar Comnlttee also recomnended issue o f shares to workers. new issue must proposed a
It proposed that 10 to 15 per cent of
be made
loom or
to the workers.
12 months'
salary
The Comnittee or a maximum of
Rs.12,000 must be provided to the workers for acquiring shares.
21
As soon a s the Janata Government took charge in 1977 a comnittee on workers' particlpation and equity was formed
In
September,l977
Thiru.Ravlndra
Varma and
under
the
chalrmanshlp
it submitted a draft
report
of in
1978 with the following r e c o m n e n d a t ~ o n s . ~ ~
a)
To have a three-tier system of participation at shop floor and corporate level.
b)
Supervisors
and
middle
management
personnel
should have participation~ln dlfferent forums. c)
There should be
an agency
both
at
state and
central level to monitor the implementation of the scheme and its review.
" ~ a c h a r Comni t tee Report. 2 2 ~ a x m l Narayan. 1984. Workers's Part icipat Ion in Bombay: Himalaya Pub1 ishing kbuse,p.lt.
Pub1 ic Enterprises.
The relation
Sixth
during
Plan
the
noted
the
preceding
strained
years
industrial
which
had
partly
contributed to inadequate capacity utiiisatlon in several key sectors.
Emphasising the need t o devise an effective
strategy for reducing the incidence of industriai unrest, the
plan
workers' The
document,
among
participation
Seventh
scope for
Plan,
other
things,
stressed
states
that
there
is a
considerable
In industriai relations.
improvement
that
in industry should be encouraged.
maintains that effective participation
It also
of workers is o n e
of the important determinants of productivity.23
However, programme,
workers'
in
the
included.
But
in
considered
the
workers'
F
directed ommerciai
new
participation the
banks
1987-88
twenty
budget,
participation to
point
scheme
sanction
has the in
ioan
economic not
been
Government equity
and
liberally
workers w h o wish to acquire shares of their own company.
to 24
2 3 ~ o c u m e n t s of the Sixth Five Year P l a n s , Published by Planning Comnission.