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.