Workers' Participation in Management

Workers' Participation in Management

PROF. B. R. VIRAMANI*

Workers' Participation in Management in India is closelylinked to the British rule in India. Even since the recommenda-tions of Whiteley Commission in Britain in 1920 there have beensome discussions about the introduction of joint ManagementCouncils in India. However, no concrete steps were taken by theBritish rulers in India. It was only after the independence thatthe participative movement in India gained momentum.

The Industrial Disputes Act passed by the Indian Parlia-ment in 1947 provided for the establishment of works com-mittees in large industrial undertakings, comprising equal numberof employers' and workers' representatives. The workers' repre-sentatives were to be electd by plant workers. The objectives ofthe works committee were to 'promote' measures for securingand preserving amity and good relations between employer andworkmen and to that end to comment upon matters of their com-mon interest or concern and ensure to compose any materialdifference of opinion in respect of such matters. They were todiscuss wide range of topics connected with welfare aspects, likeconditions of work as well as ventilation and toilets, drinkingwater and canteen, medical and health services, safety, holidays,recreational activities and administration of welfare funds. How-ever, topics like wages, terms of contract, rationalisation etc.,which come under the purview of the collective bargaining wereexcluded. The role of the works committee was consultative andadvisory in nature and their decisions were not binding on themanagement.

* Senior Member of Faculty, Administrative Staff College of India,Bela Vista, Hyderabad, 500 475.

PROF. B. R. VIRAMANI 223

In 1956, an Industrial Policy Resolution was adopted bythe Government which stated that there should be some jointconsultation whereby workers be associated with the managementwith a view to maintaining industrial peace and improve indu-strial relations. A study group, comprising representatives fromthe government, trade unions and the employers was sent toU.K., Sweden, France, Belgium, West Germany and Yugoslaviato study the experience of the worker's participation in manage-ment. On the basis of this study, the group suggested a schemeof workers' participation in management which was almost simi-lar to the British system of Joint Management Council andCommittees.

The functions of Joint Management Councils were primarilyconsultative which included (i) administration of standing ordersand their amendments, (ii) retirement, (iii) rationalisation andclosure. Their recommendations were not at all binding on themanagement. Even if the management was reluctant to sharecomplete financial and other information about the enterprise, theJoint Management Council or the workers had no remedy toforce the management to share such information.

The Joint.Management Conncil-also had the right to receiveinformation and give suggestion on issues like (a) general eco-nomic situation of the enterprise, b) the state of market, (c)production and sales figures, (d) the annual balance sheet andprofit and loss account and (e) long-term ex pansion plans ofthe company. The Joint Management Council was also givensame administrative role in welfare measures, safety provisionssuggestion schemes etc.

Initially there was lot of enthusiasm about such councilsand more than 100 large concerns established Joint ManagementCounsils in their enterprise. However, gradually the interest insuch councils diminished.

The Government of India set up a study group in 1962 toreport on the working of the Joint Management Councils. Thestudy group did identify some of the weaknesses of Joint Ma-nagernent Councils and recommended that mbre stress be laidon the workers' education, involving the middle management

PROF. B. R. VIRAMAN1 225

BRITISH BIAS

The outlook of the Indian Managers in India is fast chang-ing - from the old feudalistic to modern democratic. In WesternCountries change came through painful evolutionary processwhile in India changes are being affected rapidly. Due to thevast gap between the thinking of the intellectual elite and thetradition bound Indian masses, the changes sought to be broughtabout through State policy have not struck roots. Therefore, theinstitutions created exist formally but do not function effectively.

Moreover, for historical reasons, the Indian elite weremostly influenced in the past by the British system, since collec-tive bargaining is given predominance by the trade unions inBritain. In India also all the parties including, academicians con-sider free and frank collective bargaining to be an end all andbe all of industrial relations systems. The copy of the Britishsystem is also naturally reflected in the structure of workers'participation in management. A time has now come when Indiashould develop its own institutions; and possibly learn from othercountries too where the participative system has been consideredto be 'a success like West Germany. Thus in Britain the so-calledsystem of free and frank collective bargaining has not workedand she is seeking a way out. However, in India though all theparties emphasise on mutual trust, ,understancling, co-partnership,etc., they recommend collective bargaining which is based onmistrust and misunderstanding as a solution. The system of jointmanagement councils and committees has neither worked inBritain nor in India. Therefore, the revival of the same institu.tions is not likely to succeed, unless some other system is tried.

ATTITUDES OF EMPLOYERS

The concept of master and servant is still prevalent in ourindustrial. sector. Though lip sympathy to workers' participationin management is given, very few, especially the employers anatop management, are willing to practise it unless it results inpersonal gains to them. For example, the' employers would acceptworkers' participation provided the workers' representatives IDS

the management line and think only of increase in productionin a narrow sense. The moment they ask for complete sharing


the workers are really interested, with the result that such tradeunion leaders cease in practice to be the real representatives ofworkers. A meaningful participation is only possible when theemployee representatives at all levels of participative institutionscome from the workers themselves and not from outside.

Another pre-requisite for the success of the workers' parti-cipation is that the social power in industries has to be distributedin such a way that it tends to be shared by all rather than itbeing concentrated in a minority of alienated leadership. For thesuccess of the participative structure, it is also necessary that theleadership is responsible to and removable by the many. If theleadership is, on the contrary, controlled by some political partyor loyal to a narrow social stratum, it will not ensure effectiveworking of any participative management structures. In the In-dian context, the narrow commitment to political parties orgroups is a hindrance to workers' participation in managementas it has to confine to the narrow party lines. As such, the parti-cipative institutions created in India should be workers' institu-tions and not the institutions belonging to a particular group.

ROLE OF WORKERS' REPRESENTATIVES

Looking at the trade union movement in India and thelevel of the workers' responsibility on top participative bodies,it becomes clear that the workers' representatives find it difficultto reconcile union power with the purpose and objectives of theorganisations, while making at the same time a direct impact onthe working life of those whom they represent.

Thus, there seems to be a role conflict, whether the workers'representatives should work as part of the management or as thewatch-dog of the workers' interests. Working as part of the ma-nagement alienates them from the workers. Thus, their role,largely depends upon the objectives which the concerned partieswould like to achieve from participation. If the objective is toprevent exploitation, the major role of the workers' representa-tives in the participative bodies becomes that of a watch-dog.They will have to ensure that while taking any policy decisions,the short as well as long-term needs and interests of employees


ORGANISATION CULTURE

For the success of participative institutions, a suitable cul-ture has to be created in the organisations. The personnel poli-cies of an enterprise, including appraisal and promotional sy-stems, must support the participative institutions. The super-visory sand managerial style of leadership at the work place hasto be made participative. In one of the studies conducted byDhingra, out of 265 managers in public secrtor undertakings inIndia, nearly 50 percent of the managers did not believe in parti-cipative style of management at the work place.' The personnelpolicies of the organisation also indirectly supported those whodo not have mental acclimatisation to participation by providingpromotion to only such managers. Thus, a pre-requisite of parti-cipative management is the creation of an appropriate climateand culture congenial to participative institutions.

PRODUCTIVITY AND EQUITY

In India, one of the pressure tactics of the trade unions toget their demands accepted is to curb production through director indirect industrial actions. The management pays in the samecoin by threatening their employment, security and wages. Thesepressure tactics result in decreased productiviey and ultimatelyreduces the profit to be shared by the parties. In Germany, boththe parties have no dispute over the fact that the size of thecake has to be increased in the interest of the national economyas well as in their mutual interests. The main point in disputeis just distribution. Co-determination in Germany has played amajor role in ensuring equitable distribution. However, in Indiathe workers fear that by increasing the profit they are not likelyto be benefited and, therefore, they are not motivated to increaseproductivity. Participation can help in removing such a misunder-standing and also assure equitable distribution.

STATE INFLUENCE ON INDIAN ENTREPRENEURS

Workers' participation in management is not a German orWestern invention. In all the countries, including India, trade

1. Dhingra O.P. "Participative predisposition of public sector managers"Lod Udyog, 1972, 5(12), 1201-11.


about voluntary change in their outlook. Some outside force maybe necessary to initiate changes. Even in countries like Germanyopposition to Hitler's regime was a factor which brought tradeunions together and participative structures were given fullsupport by the government in the shape of legislation in post-war Germany. In India too, the recent emergency had its lessonto trade unions to sink their differences and combine and strivefor real participation of the workers. Government will have totake a leading role in bringing about such salutary changesthrough legislation.

Any institutional structure of workers' participation in ma-nagement must initially overcome some of the problems specifiedas under:

Tackling multiplicity of trade unions and participationfor the emergence of healthy trade union movement inthe country;

Education of workers and management to train themfor participation in management;

Attitudinal changes both in workers and management,to adopt participative style of management;

Complete sharing of information by the companies withthe employees;

Development of appropriate trade union leadership;

Institutional structure of settling any differences anddisputes in a just manner without affecting productivity;

Prevention of workers' exploitation;

Reduction of workers' alienation from trade union aswell as enterprises.

LESSONS FROM EUROPEAN AND INDIAN EXPERIENCES

From the experience of the various models of workers'participation, especially in Britain, Germany, Yugoslavia andIndia, one can derive conclusions which may help in effectively


level problems like workers' education, welfare facilitieslike housing, hospitals, holiday homes etc. They may haveto concentrate on new issues like the movement for work-ers' ownership of the enterprise as in Germany. If the tradeunions do not change their objectives, then there could bea real danger of trade unions fighting for their own sakeand not for the sake of working class, whose interest theyare expected to espouse. This could be damaging to thelong-term interests of workers as well as the nation as hasbeen happening in Britain.

Strong and effective trade union is desirable for the successof participative bodies. Politicisation and multiplicity oftrade unions are not conducive to workers participation inmanagement. Until this cohesion is achieved, it may bedesirable to have direct participation of the workers throughtheir own fellow workers at the plant rather than the tradeunions, which may bring in their external politics to theparticipative bodies sowing seeds of their failure.

Workers' education and training are necessary ancillariesfor the effective working of participative management.Trade unions and the government can play a major role inorganising and conducting such training programmes

Mere consultation of the workers by the management willnot succeed unless the workers are sure that they can re-ally influence the management policies affecting them di-rectly. Workers are not interested in discussing only peripheral issues which are of minor consequence to them. Ma-nagement should be prepared to discuss in the participat-ive bodies all the issues including wages with the workers.

Collective bargaining cannot be a substitute for workers'participation in management. Real participation bringsboth the parties together and results in developing appro-priate understanding, establishing responsible and maturerelatiionship. On the other hand, collective bargaining pre-se is based on power struggle and may end up with mis-trust, non-sharing of information and use of pressure tactics.If collective bargaining is considered as a form of partici-


(n) There could be possibility of the major portion of resourcesof the enterprises being diverted to workers without muchconsideration for further investment. This may happen es-pecially in public enterprises. It may be desirable to re-serve certain percentage of the resources for reinvestmenteither through mutual agreement or through governmentlegislation. If this is not done, it may result in the enter-prise becoming sick with decline in employment, reducedproduction and inflation.

(0) There may not be any direct relationship between producti-vity and participative management. If the objective of parti-cipation is to increase productivity, participation may notsucceed. One can always get increased productivity throughautocratic style of leadership. What participation can achieveis the prevention of exploitation, reduction of alienation,positive ways of settling conflicts and making both theparties more responsible. This may help in creating a healthyindustrial relations climate, having some longterm indirectimpact on productivity.

AN ALTERNATIVE MODEL

Considering various issues and special features and pro-blems of India, I present a comprehensive alternative model forworkers' participation in management (see chart).

WORKERS' COUNCILS IN EACH ENTERPRISE

It is suggested that a workers' Council may be establishedin each plant. It should be similar to German or Yugoslavianpattern but different so far as its constitution and functions areconcerned. It will be exclusively an elected body of workerswithout any external leadership. The number of Workers' Councilmembers would vary depending upon the strength of the em-ployees in an enterprise. There could be one Workers' Councilmember for every 100 or 200 employees or even less. It shouldalso represent the various levels of Alternative model for India,


employees like the blue collar, the white collar and the super-visory staff. The members of the Workers' Councils would beelected by the workers for a term of three to four years.

There would be an executive committee of the Workers'Council, consisting of 4 to 10 members, depending upon thesize of the company. The members of the Executive Committeewill be elected by the Workers' Council and will manage day-to-day affairs of the Council and periodically report to the GeneralBody of the Workers' Councils. The members of the Workers'Council shall be legally protected against dismissal or dischargeso long as they hold office. Some Executive Committee mem-bers of the Workers' Council, especially the President andVice-President, shall have to be released from their normal dutiesor discharge their responsibilities to the Council. The Councilshould be legally prohibited from declaring strikes or any formof industrial action.

FUNCTIONS OF COUNCILS

The Workers' Council shall represent exclusively the in-terests of the employees of the enterprise. Initially the Councilmay be given extensive rights of co-decision and participationwith the management only in social matters. So far as economicand personal matters are concerned, the Councils shall haveonly the right of consultation and eliciting information.

Social Matters: The social matters in which the Workers' Coun-cils shall be consulted for its prior approval before implementa-tion would be - The functioning of the work rules like workinghours, distribution for working time, shift system; Manner ofpayment of wages; Establishment of general principles for grantof annual and other holidays; Safety measures; Form, contentand administration of various welfare schemes; Allocation ofhousing; Incentive schemes; Administration of suggestionschemes; and any other matter mutually agreed upon by theemployers and the Workers' Councils.

Personnel and Staff Matters: In staff matters, the Workers'Council shall have right of advance consultation and seeking allinformation from the management. However, it will have no right


only a decision with a brief statement giving reasons as it can-not be expected to give a detailed exposition. Its decisions willnot be a part of the case law or constitute as precedents to becited in future. The objective is to solve day-to-day problemsand not to establish case laws.

Initially, only social matters have been made subjects ofcomplete and equal participation, but as the Workers' Councilsacquire acumen and workers got trained to share more responsi-bility then some of the personnel as well as economic matterscould become subjects of equal participation and co-decisionwithout merely remaining consultative or informatory issue.

Board of Directors: In the board of directors, it is suggested thattwo-thirds of the members should be shareholders' representativesor government representatives, in the case of nationalised sector,while the remaining one-third should be the employees' repre-sentatives. The employees' representatives may comprise gat leastone from the blue collar workers, one from white collar em-ployees and one from executives. The workers' representativeswill be proposed by the Workers' Council and elected by the totalbody of employees. There will be one additional trade union re-presentative provided the trade union has two-thirds of the em-ployees of the enterprise as its members. Such a trade union willnominate its representative on the Board in consultation withthe Workers' Council of the enterprise.

Initially, only minority participation of the workers and theemployees has been suggested at the board level. Their mainrole will be that of a watch dog of the workers' interests. Thoughthey can make suggestions which can increase the efficiency ofthe enterprise they should ensure that all the aspects of em-ployees' interests are duly considered while policy decisions arebeing taken at the board level. Normally, the chairman of theWorkers' Council should automatically be made one of the em-ployees' representatives on the board.

Special Committees of the Workers' Councils: The Workers'Councils will also constitute some special Committees to dealwith specific matters. These could be in the form of a financialand economic committee, a personnel committee, a welfare oom-


to work in close liaison with the Workers Councils to get theirsupport. It will he worthwhile having legislation which bars thepersons from holding the duality of trade union office and poli-tical office. Workers Councils will also help developing secondor third line of leadership among the workers which is at presentlacking in the trade unions.

Emergence of Workers specialists: The constitution of specialcommittees within workers council will help in developing a spe-cial cadre of employees who can be trained in particular areasso that they become well informed and competantly participatein decision-making with the management.

Increased efficience and development of responsible Leadership:The sharing of information on all matters with the employeeswill make workers as well as management reciprocally respon-sible to the enterprise. Workers can know the causes of anywasteful expenditure and question management. Indirectly, itwill be a good training ground for the workers to be more res-ponsible restrained in their demands as there will no longer beany secret information with the management.

Check on abuse of managerial powers: Instances are not lackingwhere the management indulged in various malpractices andmanipulation of accounts. Sharing of information with the Wor-kers' Councils could be a check on such abuses, ultimately re-sulting in efficiency in the long run.

Reduction of alienation, better sense of belonging resulting inIndustrial Peace: Since the workers will have a say in day-to-daymatters affecting them, they will develop a greater sense of be-longing among them. Workers' council is expected to be con-sulted on all the major decisions well in advance, which willsoften industrial relations and bring about peace in industry.

Genuine Sense of Participation: It will also inculcate a genuinesense of participation in all matters which affect the workersinstead of a superficial crust of participation that they have beenhaving through joint management councils and committees ofmerely advisory character.


workers' welfare. They will continue to represent macrolevel andcollective interest of the working class as a whole at national aswell as Board Level. They will also try to gradually promoteworkers participation in management in all the matters affectingworkers including economic matters, credit policy, education,etc. In addition, protection of minority interests and promotionof welfare 'schemes will be their major responsibility. So far aswage negotiations are concerned, they will remain with the tradeunions provided they can get the support of the enterprise wor-kers and this will make them work harder to win over theworking class.

Another major role trade union could play is to educateand guide the members of workers' councils so that they canplay much more meaningful role in the participative manage-ment. With the changing environment, this education processwill be a continuous one carying out for a trade union a per-manent and important role to play in this sphere. The tradeunions may help themselves with aid from the government andacademic institutions and organise training programmes for va-rious levels of workers. The government has to give the financialsupport for such activities depending upon the interest workersevince in their own education; even some cess could be leviedon the organisation to support educational activities of the wor-kers, workers' council members and the trade unions.

NATIONAL AND REGIONAL INSTITUTES

It has been emphasised that training has to play an import-ant role for effective working of the participative machinery. Itis proposed that a separate training institution for participativemanagement could be created having regional office in all thestate and local levels, wherever necessary. This local institutionshould be an autonomous body and be supported with the fundsbased on the cess to be levied in all the larger enterprises. It isimportant that these institutes are managed by professional aca-demics, educationists or managers having industrial background.Such a position should not be given to bureaucrats who arenormally transferred from one department to another having verylittle commitment to such a cause.

Workers' Participation in Management

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