CHAPTER 18

Workers’ Participation and Empowerment

CHAPTER OBJECTIVES

After reading this chapter, you should be able to:

1. Enumerate the objectives, features and levels of workers’ participation in management
2. List the essential prerequisites for an effective workers’ participation in management
3. Explain the obstacles faced by effective workers’ participation in management
4. List the steps in the employee empowerment process
5. Explain the importance of employee empowerment
6. Understand the barriers to employee empowerment

Western Coalfield Limited is one of the subsidiaries of Coal India limited and is classified as a mini-ratna category-one public sector company in the coal industry. It has a workforce of over 66,000 employees and accounted for nearly 9.5 per cent of the total coal production in the country during 2007–08. It keeps all-round employee welfare measures as one of its mission.

As a unique practice, the company prepares a revenue welfare budget every year to provide welfare facilities to the employees. This budget focuses, among others, on medical services, school and education, residential or colony maintenance, upkeep, sports, recreation and cultural activities, Mahila Mandal, water supply, canteen, and community development. The welfare activities of the company are monitored by a welfare board comprising representatives from different unions and management. Besides, welfare committees are established on similar lines at the local levels for suitably monitoring and smoothly executing the welfare plans of the company. In addition, the company also has a steering committee at the top level of the organization comprising senior leaders of central trade unions and management representatives.

The company conducts a unique programme called samanvay sammelan (community gatherings) to popularize the concept of participative management in the organization. These meetings are conducted every year and 100 delegates from different areas participate and deliberate on the rationalization of manpower, the gainful engagement of employees and the ways to improve production, productivity and safety. In the course of the deliberations, both the problem and the solution are identified, and the participants accept the responsibility for the implementation of the decisions.

These practices illustrate the relevance of workers’ participation and employee empowerment for effective management and we shall discuss various aspects of these in detail in this chapter.

Introduction

Workers’ participation in management (WPM) is an attempt to make use of workers’ creativity and skill in the managerial decision-making process. It helps in improving the efficiency, quality and competitiveness of the organization. The workers can understand the problems of the organization better and play their role in solving its problems. Their participation may involve periodic meetings of a committee comprising the employees or their representatives and management. They may review matters relating to production, safety, health, welfare, environment, and employee motivation. An organization may constitute participative forums at its different levels. For instance, it may constitute an apex committee at the organizational level. Additionally, it may constitute committees at lower levels like those of the shop floor and plant.

The Constitution of India favours WPM strongly as Section 43A of the Constitution stipulates that “the State shall take steps, by suitable legislation or in any other way, to secure the participation of workers in the management of undertakings, establishments or other organizations engaged in any industry.” Similarly, the Industrial Disputes Act of 1947 speaks about the constitution of works committees in organizations and the Fifteenth Indian Labour Conference in 1957 refers to the formation of joint management councils. In fact, the concept of WPM has become so useful for the organizations that they no longer discuss about its relevance (whether required or not) but only about its implementation (how).¹ Box 18.1 lists some of the definitions of the term workers’ participation.

We may define workers’ participation in management as a practice that facilitates workers’ contribution and influence in the decisions of the organization at various levels.

Features of WPM

Based on these definitions, the following features of WPM have been derived:

Formal Involvement of Members

WPM involves official and proper involvement of workers in the managerial activity.

Participation in Decision Making

Participation in management actually refers to involving the employees in the decision-making process that usually affects them. Participative decision involves deciding the future course of action in consultation with the employees.

Consequence Sharing

When employees participate in the decision-making process, it means that they agree to bear the consequence of the decision reached in the participative management jointly.

Application of Upward Control

The concept of WPM is a process of allowing the employees exert upward control over the actions of the organization.

Joint and Continuous Process

WPM is a not a one-time activity but a continuous process whereby the employees or their representatives and the management take a decision jointly on a sustained basis. Unlike collective bargaining, participative management operates inside the organization and avoids the subjects normally covered by the collective bargaining process.

Objectives of WPM

The primary objective of WPM is to broaden the decision-making process of the organization by including the employees or their representatives in that process. Several other objectives are also served by participative management. We shall now see these objectives.

Greater Employee Satisfaction

Participative management aims at enhancing the satisfaction of the employees by fulfilling their desire for participation in the decision-making process, especially on the matters affecting them.

Greater Responsibility

Making the employees accept a greater responsibility for the decisions of the organization is another objective of participative management. The aim of the organization is to improve the involvement of the employees in its affairs.

Enhanced Cooperation

WPM strives to achieve mutually beneficial cooperation between the employees and the management in improving organizational efficiency and employee productivity. It also aims at achieving cordiality in labour–management relations prevailing in the organization.

Enhanced Democracy

Ensuring democracy at every level of the organization is another objective of WPM. The purpose of democracy is to involve everyone in the decision-making process, which, in turn, ensures equal rights for everyone in the organization.

Developing a Communication System

Through participative management, organizations aim at developing an upward communication channel through which the management can get to know the opinions, ideas and suggestions of the employees on different matters.

Facilitating Changes

Organizations look to improve the efficiency of change management process through continuous information sharing and a collective decision-making process. When the employees are aware of the real situation and the true intent of the organization in introducing changes, they accept the changes without much resistance and cooperate better in their implementation.

Levels of WPM

Depending upon the purpose for which participative management is introduced, it can be classified within different categories. For instance, the workers’ participation may be introduced for power sharing or information sharing. In case of power-sharing participation, the employees are involved in the decision-making process on matters relevant to them. On the other hand, the information-sharing participation provides for just information sharing and nothing more. Based on the degree of information and power shared by the management with the employees, participative management can be classified into three levels: lowest level, medium level and highest level.⁵ These levels have been explained here briefly.

Lowest Level of Participative Management

At this level, the management does not usually share any information with the employees. It makes decisions regarding changes and schemes without involving the workers even if the decisions affect their interest. As such, the management does not encourage WPM.

Medium Level of Participative Management

At this level, the employees are provided with necessary information about the plans of the organization but their opinions are not considered seriously. For instance, the management may use corporate policies, HR policies, circulars, formal or informal discussions, briefings, meetings and in-house journals to share information with the employees. At this level, the management looks for general ideas and responses only and not any specific or concrete suggestions from the workers.

Highest Level of Participative Management

At this level, the management not only provides information to the employees about the situation and change required but also consults them in the decision-making process. In fact, in this type of participation, the management and the employees work as a group, make collective decisions and accept joint responsibility for the decisions.

WPM Methods

WPM can be achieved in two ways. These are: direct participation and indirect participation. We shall now discuss these two methods

Direct Participation

This method provides for the direct participation of employees in the committees established to facilitate WPM. In this method, the employees get involved directly in the activities of the committees functioning normally at the shop-floor levels of the organization. Direct participation can be ensured through autonomous work groups, suggestion-box schemes, open-door policy, performance evaluation interviews, petitions, and satisfaction or opinion surveys. This method is usually adopted when the decisions are related to the work to be performed by the employees. However, the involvement of all employees in the decision-making process is practically impossible.⁶

Indirect Participation

In this method, organizations look to achieve WPM through the more practical way of indirect participation by the employees through their representatives in the board, committees and councils. The employees are usually represented in the participative management by their trade unions or elected representatives. As far as India is concerned, the constitution of joint consultative committees in the form of work committees with representation from employees is a statutory requirement. The Industrial Dispute Act of 1947 makes it compulsory for organizations employing 100 or more workers to form work committees comprising the representatives of workers and the management.

Achieving WPM

Forming joint consultation committees is a popular form of WPM. In this form of participation, the management and the trade unions, which represent the employees, work together and decide on matters pertaining to working conditions, tasks, labour rights and other worker-centred issues. These committees work along with the collective bargaining system and are not its replacement. However, the major difference between collective bargaining and joint consultation committees is that there is no bargaining as such on any matters discussed in the consultative committees. Besides, the decisions of the consultative committees are not binding on the management under any circumstances. Depending upon the size and policies of the organization, the consultative committees can be established at different levels. In case of large organizations, committees are largely formed at corporate and workshop levels. As illustrated in Figure 18.1, corporate-level committees that function at the top levels of the management facilitate the indirect participation by workers in decision making. In contrast, direct participation in management is achieved through workshop-level committees that are normally formed at the lower levels of the organizational structure. We shall now discuss the different forms of WPM.

Corporate-level Committees

The corporate-level committee usually consists of top leaders representing the management and the trade unions. The purpose of forming this committee is to make the employees the stakeholders and true partners of the organization. The leaders of the unions may or may not be from the same organization. The committee of this level and nature normally discusses the general state of affairs of the organization, industry and even the economy. The members, after careful deliberation, decide on the actions to be taken in the future. However, the decisions of this committee are purely of advisory nature and not binding on the management. The corporate-level committees enable employees to understand the real positions and problems of the employees from a closer distance. They also help the organization in creating a sense of belonging among its employees by keeping their representatives on the apex forum. A few popular forms of corporate-level committees have been explained as follows.

Worker-Director It is a kind of corporate-level committee in which the workers’ representatives are nominated to the executive levels of the organization. The primary purpose of including a worker on the company board as the director is to know the workers’ perspectives on all issues discussed in the board and, more so, on issues affecting their interests. Besides, the concept of the worker-director enables the management to effectively involve the employees in matters like wage fixation, training determination, grievance handling and disciplinary action. The worker-directors are usually elected by the employees for a specific tenure. However, an organization can also have nominated worker-directors on their boards. In some countries, the practice of including employees as directors on the board is known as co-determination. The merit of this method is that the worker-directors are able to raise the demands and the grievances of the employees at the highest level and bring it to the direct attention of the top management. However, the worker-directors often find themselves in conflicting roles by being loyal both to the employees and to the board of directors, and are highly stressed.⁷

Joint Management Council The joint management council usually functions at a level lower than the board of directors. The council is represented by the representatives of both the management and the unions. The purpose of keeping the joint management council a step below the board of directors is to preserve the freedom of decision making for the management. Normally, the members of a joint management council are allowed to have access to management information but are not involved in decision making. Employees’ representatives in these councils perform the role of advisors and not decision makers. The joint management councils function at the plant level, which is above the shop-floor level but below the board of directors.

Workshop-level Committee

The workshop-level committees are more informal than the other kinds of committees functioning in an organization. The members of these committees normally belong to the same department or workshop. They often discuss the matters relating to their own workshop. For instance, they may discuss workshop-level matters like job assignment, shift system, inter-personnel problems, and training requirements for employees. Usually, the issues affecting the workshop are discussed and, if possible, solved at this level first before being taken to the higher levels. The first-line supervisors conduct the meetings of these committees. We shall now see the specific methods under this category.

The Autonomous Work Group Method The practice of allowing the employees to meet to discuss the issues affecting their workplace is called the autonomous work group method.⁸ It is basically a self-managed team with voluntary participation by the employees. The uniqueness of the autonomous group is that its activities are managed by the group itself. The group usually comprises members from the same department. They meet regularly during the working hours to discuss the matters pertaining to their department. The group manages its own activities by planning its actions and executing them. The union representation in an autonomous work group is normally restricted as the employees directly participate in the deliberations of these groups.

The Suggestion-box Scheme It is a kind of scheme which provides employees with the option to share their opinions, ideas and suggestions directly with the management. Suggestion boxes are kept in the prominent places of the plant and the employees can drop their written suggestions in such boxes. This scheme thus facilitates participation of the employees in the management decision-making process. The purpose of the suggestion box is to include the employees in a continuous improvement process. The employees’ suggestions are given serious consideration and, if found acceptable, implemented by the management. This makes the employees feel that they are a part of the management. In fact, the suggestion-box schemes create a sense of belonging among the employees and improve their involvement and commitment. Generally, all employees are allowed to participate in this scheme but such participation is purely voluntary. Box 18.2 outlines the utility of the suggestion-box scheme as an element of WPM.

The Quality-circle Scheme The quality-circle scheme is a popular form of workers’ participation. It is established at the workshop levels with voluntary participation from the employees. An ideal circle may consist of six to ten members belonging to the same department or workshop with common interests. The members of a quality circle meet periodically to discuss the issues relating to the quality aspects of the job. It is a process without any mone tary benefits but with the intention of involving the employees at the grass-roots level in the decision-making process.

Open-door Policy Many organizations adopt open-door policies to encourage the employees to share their views, grievances, ideas and suggestions with their superiors. In organizations following open-door policies, the employees who want to share their suggestions or grievances, can meet the managers in their offices to do so. In a full-fledged open-door policy, the employees do not need to have an appointment with the manager and can meet him at any time during the office hours. The open-door policy as a form of participatory management can enhance communication between the management and the employees. It is a simple and effective method available to the management to become aware of the concerns of the employees early and solve them quickly.

Profit-sharing Plans Including Employee Stock Ownership Plans

This is another mode of employee participation in management. In this method, the employees get a share in the profit of the organization in the form of bonus. A share in the profit is a form of participation of workers in the management of the organization. This is because the business risk and the rewards are jointly shared by the employees and the employers. Another form of profit sharing is the employee stock ownership plan (ESOP), in which the employees get equity shares of the company as an incentive for their performance. ESOP makes the employees part owners of the organization and, thus, facilitates WPM.

Collective Bargaining

Collective bargaining is another form of WPM since it provides a forum for a formal discussion between the management and the employees. In collective bargaining, the employees’ interests are represented by the trade unions, while the management is represented by its representatives, or by the employers’ association in industry-level bargaining. Through collective bargaining, critical issues relating to the organization or industry are discussed and decisions reached. Since unions are involved in the decision-making process, it becomes the joint responsibility of both the employers and the unions to implement the decisions. Due to collective bargaining, the role of unions changed from being the challengers of decisions to becoming the co-determinants of decisions.⁹

Essential Prerequisites for Effective WPM

An effective participative management is a boon to both the employer and the employees of an organization. Through workers’ participation, the management gets to know about the employees’ creative ideas and suggestions and employs them effectively for the benefit of the entire organization. On the other hand, an effective participative management enables the employees to influence the decision-making process of the management and, thus, protects their welfare and future. It also enhances the ownership interest of the employees in the organization. However, an effective participative management must fulfil the following conditions.

Support from the Top Management

The top management must have faith in the concept of WPM. It must provide the necessary support and encouragement for the participative style of management. The decisions arrived at the meetings of the committees must be considered seriously and acted upon.

Clarity in Participative Goals, Policies and Practices

The corporate policies and philosophies regarding WPM must be spelt out clearly. Similarly, the goals and the process of workers’ participation should also be stated unambiguously.

Fair and Equal Treatment to Employees

All the members in the committees or councils, including the workers’ representatives, must be treated fairly and equally. In case of board of directors, the worker-director must have all the rights and privileges on a par with other directors of the board.

Adequate Access to Management Information

The workers participating in the committees must have access to all relevant information to make a meaningful contribution to the quality of discussion and decision making. Thus, the information sharing must be proper, timely and adequate.

Assurance against Victimization

The management, through its words and deeds, should reassure the workers’ representatives in the committees that there would be no victimization of the workers for freely expressing their views about the management or its actions in the meeting. However, malicious comments with ulterior motives must be avoided by the members.

Respect for the Union’s Strength

Organizations must realize the importance of involving the truly representative and strong unions in the participative process. These unions alone can convince the employees and obtain their support for the decisions of the committees or board.

Recognition of the Employee’s Contribution

Organizations must develop a process to recognize the contributions of the employees or their representatives in the participative forums. For instance, the management may introduce gain-sharing and profit-sharing schemes for any improvement achieved in quality, cost reduction, and organization and individual performance.

Training and Orientation for Members

To improve the quality of discussion and decisions of the participative forums, the management can provide necessary orientation to the newly elected or nominated workers’ representatives and training to all the employees.

Fulfilling Statutory Requirements

Organizations must give due consideration to the various acts that deal with WPM. All the actions of the organization related to workers’ participation must comply with the existing provisions of the relevant laws.

Constant Review of Performance

Organizations must view WPM as a continuous process and not as a rare activity. They must effect necessary changes in the participative process after gathering the views of the different stakeholders like workers, frontline supervisors and managers.

Significance of WPM

The central government has carried out several amendments in the provisions of the Industrial Disputes act, 1947 and the Factories Act, 1948 for the establishment of work committees and joint management councils to facilitate the process of WPM. However, many organizations in India introduced a participative style of management at their different levels out of their own willingness after they realized its wide and varied uses. We shall now see the importance of WPM.

Increase in Productivity and Performance

Since the major focus of discussion in many of the participative forums is on efficiency enhancement through cost cutting, and process and technology improvements, workers’ participation improves employee productivity and organization performance. As such, the increase in employee productivity would be mutually beneficial to the employees and the organization. The employees would be gaining increased financial incentives while the management would get increased profits.

Improves Employee Involvement and Participation

The workers’ access to management information and their participation in managerial decisions make them feel important to the organization. This, in turn, develops a sense of belonging and oneness among the employees. Thus, participative management facilitates better involvement of workers in the activities of the organization.

Better Workforce Flexibility

Organizations cannot avoid changes in the environment and, therefore, they must accept these changes as inevitable. The changes in the external environment normally bring about corresponding changes in the technology, process, structure and job characteristics of the organization. Typically, these changes cannot be implemented smoothly without the cooperation and consent of the employees. Organizations can use participative forums effectively to discuss the developments in the external environment and their implications for the organization. Once the management succeeds in persuading the employees to accept the changes and their consequences for them, the implementation process becomes simple and easy.

Promotes Cordiality in Industrial Relations

The primary reason for a misunderstanding between the employer and the employees is the absence of adequate information sharing. This misunderstanding and mistrust causes strain in their relationship and affects organizational peace. For instance, the unions which depend more on informal channels like grapevine for gathering management information, normally develop suspicion and animosity towards the management. In contrast, the participative forums enable the employees or their representatives to have a direct access to the management information and also offer required clarifications. Adequate information sharing on a continuous basis not only prevents mistrust but also enhances the understanding between the employers and the employees.

Establishes Goodwill and Public Image

WPM as a concept helps the organization in learning and respecting the employees’ feelings, ideas, opinions and suggestions. Organizations which respect the feeling of the employees would certainly enjoy a better image among the existing employees. They would also earn the goodwill of the prospective candidates in the labour markets.

Obstacles faced by Effective WPM

Although WPM is mutually beneficial to the organization and its employees both, it so far has had only limited success. This is due to the presence of a number of limiting factors in the organization. These factors may be listed as follows:

The Management’s Attitude

The attitude of the management is critical to the success of WPM. However, the managements with traditional approach often undermine the employees’ calibre and creativity and never feel the need to hear their views on organizational issues. Thus, such employers’ orthodox and negative attitude becomes a stumbling-block to participative management initiatives. Similarly, a weak and unenlightened management may perceive the presence of empowered employees in the organization as a direct threat to its authority. Such a management may not evince keen interest in really empowering its employees.

Role Ambiguity and Conflict

In participative management, the workers’ representatives often have role ambiguity due to the lack of clarity about their role in committees, councils or boards. While working at the higher levels of the management, they need to consider the interests not only of the workers but also of the management. Due to this sensitive nature of work, the actions of the workers’ representatives often come under close scrutiny and are viewed with suspicion by the fellow workers. Consequently, they are forced to adopt a negative approach towards the management just to prove their credibility among the workers.

Absence of Mutual Faith

The essence of WPM is the mutual faith and confidence of the employers and the employees. They must also have faith in the usefulness of participative management. However, organizations often view the employees’ suggestions in the participative forum as interference in their right to decide and administer. Consequently, they undermine the importance of such a forum and adopt a unilateral approach in decision making. Again, the employees on their part view the participative forum as a platform to make unreasonable demands on the management. Besides, the presence or absence of a favourable climate also plays an important role in the success of WPM. When the prevailing climate of the organization is filled with mutual distrust and animosity, it can seriously affect the efficacy and eventual success of WPM.

Non-implementation of Decisions

Since the employees’ suggestions in the committees are merely advisory in nature and not binding on the organization, the management never takes the employees’ views seriously. In the long run, this makes the employees lose faith in the system of participative management and collective decision making. Naturally, they begin to adopt a confrontationist approach towards the management.

Absence of Strong Unions

The presence of a few but strong unions is another important element for the success of participative management. However, industrial organizations in India often have multiple unions with limited membership, which makes it difficult for the management to determine the composition of the different committees. The presence of too many unions with divergent backgrounds also affects the employees’ bargaining power and the fairness of the outcome of the participative forums.

Lack of Follow-up

WPM is an ongoing process and requires continuous changes in its outlook and style. However, organizations hardly carry out any changes in the characteristics and compositions of the committees and councils, thereby making them outdated and insignificant in the present context. Many organizations rarely seek the employees’ opinions about the efficacy of the existing system, and even if they do so, they seldom act on such opinions.

Employee Empowerment

Employment empowerment is a technique adopted by the organizations to enable the employees to take independent decisions about the different aspects of their jobs. It liberates the employees from the coercive influence of their superiors. It enables them to plan and execute their own activities with complete responsibility for the performance and results. Thus, employee empowerment provides the employees more power to employ judgment and discretion in their job and contributes actively to the decisions relating to their work, plant and environment. The primary objective of employee empowerment is to convert the simple organization into a customer-driven one.¹⁰ Its goal is to improve employee satisfaction, motivation and productivity. It is also used as a strategy for increasing efficiency and gaining a competitive advantage in the business environment.

The empowerment of employees enables them to make quick decisions and respond promptly to the customers’ needs and concerns, which eventually brings a competitive advantage to the organization. It also develops creative thinking, independent behaviour, and greater responsibility among the employees. However, employee empowerment does not mean any abdication of responsibility on the part of the management. In contrast, it requires development of a stronger leadership at the management level, an improved communication with the employees and the enforcement of better accountability among the empowered employees. This actually means additional work and responsibility for the management as it should provide the necessary training and orientation to the employees and monitor their performance continuously.

The transfer of the decision-making power from the higher levels of an organization to its lower levels is the essence of the definitions of employee empowerment. We shall now see a few definitions of employee empowerment in Box 18.3.

Features of Employee Empowerment

Based on these definitions, the following features of employee empowerment may be extracted:

Delegation of Power Employee empowerment basically means transfer of power from the higher levels of an organization to its grassroots levels. Thus, it involves pushing authority and responsibilities downwards in the organizational structure.

Ongoing Process Empowerment is not an end but an ongoing process to achieve the predetermined goals of the organization. These goals may include improving employee motivation and organizational performance, accomplishing organizational goals, and obtaining competitive advantages. The empowerment process involves the development of goals and visions, the fixation of boundaries for authority and responsibility, the training of employees, the determination of accountability for actions, and finally, the actual transfer of authority from the superiors to the subordinates.

Self-determination of Employees Organizations often view independent decision making by employees in their job as the ultimate stage of empowerment. At this stage of empowerment, the employees begin to own the job and accept responsibility for their decisions. Obviously, their involvement and commitment levels tend to be high at this ideal level.

Authority over Organizational Resources In empowerment, the employees get freedom from domination by the superiors and also the right to exercise authority over organizational resources. The resources here include physical and human resources of the organization.

Strong Leadership The presence of strong leadership and decisiveness is an inherent element of successful employee empowerment. An effective leadership makes it explicit to the empowered employees that it is they who are solely responsible for their actions. They get reward or reprimand, depending upon the outcome of their actions.¹⁴

Not a Zero-sum Game In a zero-sum game, one person’s loss is exactly another’s gain. But employee empowerment is not a zero-sum game since the transfer of power from the superiors to the subordinates is not actually a loss of power for the former.

Steps in Employee Empowerment

Employee empowerment involves delegation and decentralization of authority and responsibility and making the employees accountable for their actions. It requires meticulous planning and careful implementation. Each organization can have its own system for practising employee empowerment. However, the employee empowerment process shown in Figure 18.2 can be adopted by any organization with suitable modifications. The steps involved in the employee empowerment process are: (i) determining the goals, (ii) orienting the employees, (iii) transferring authority, (iv) assigning responsibility, (v) ensuring accountability, (vi) maintaining communication, and (vii) follow-up and feedback. We shall now see these steps in detail.

Determining the Goals The first step in the employee empowerment process is the determination of clear-cut goals and visions to be accomplished by empowering the employees. The empowerment goals are normally derived from the corporate goals and philosophy and the mission and vision statements. The employee empowerment goals must have the complete support of the top management of the organization.

Orienting the Employees The employees identified for empowerment must be provided with adequate orientation about the different aspects of empowerment. They must also be trained in situation analysis, decision making, resources utilization and other relevant areas of the job.

Transferring Authority In the next step, authority is transferred from higher ranks of the organization to the grassroots-level employees. Now, the employees get the right to decide independently on matters relating to their jobs. The decisions may involve resource utilization, people management, customer caring and other day-to-day activities.

Assigning Responsibility Transfer of authority is meaningful only when it is accompanied by responsibility. Authority without responsibility is dangerous for the organization. The organization should spell out clearly the duties involved in the job, the boundaries of authority and responsibility, and the reporting staff for the job.

Ensuring Accountability The most crucial phase of the employee empowerment process is making the employees accountable for their actions. Since they enjoy a high level of autonomy in their operations, it is absolutely essential for the organization to fix the accountability for the outcomes of their actions and performance results. The organization must also conduct a mid-term verification of the performance of the employees to avoid misuse of authority and deviant outcomes.

Maintaining Communication The success of employee empowerment depends on the degree of openness and frequency in the communication between the reporting authority and the empowered employees. The organization must engage the employees continuously through a good communication system. Understandably, through effective communication, an organization can create mutual trust and confidence in the relationship between the superiors and the subordinates.

Following up and Feedback Employee empowerment is an ongoing process involving the management, the supervisors and the workers. The organization must review the efficacy of the existing system periodically in order to determine the improvements required in the future. Employees’ performance report, opinion surveys and employees’ interview can be used to study the strengths and weaknesses of the existing system. Based on the outcome, necessary modifications can be made in the empowerment process. Further, the evaluation report of the empowered employees must be shared with the employees concerned and their superiors. Their feedback would help the empowered employees in modifying their style of functioning and their attitude towards the concept of empowerment.

Importance of Employee Empowerment

Employee empowerment is key to achieving the desired level of employee motivation and satisfaction. This is because it relieves the employees of the necessity of depending on their superiors for everything and provides them job autonomy. For instance, empowerment facilitates the employees in the customer care department to act swiftly and effectively in attending to the complaints and concerns of the customers with alacrity. When the organization succeeds in satisfying its customers consistently, it begins to enjoy a competitive advantage over its rivals. We shall now see the importance of employee empowerment for an organization.

Achieving High Employee Satisfaction and Motivation Through employee empowerment, the employees get the freedom to make independent decisions and, thus, enjoy job autonomy. This gives the employees an intrinsic satisfaction, which, in turn, motivates them to work harder in the job and in goal accomplishment.

Developing a Customer-driven Organization Customer satisfaction and loyalty are essential for the survival and growth of an organization in the long term. An empowered employee is able to act quickly in attending to the needs of the customers when he has job autonomy. Understandably, all the activities of the empowered organizations are focused on securing customer satisfaction and trustworthiness. The ability of the employees to take prompt and independent decisions when time is of utmost importance helps the organization in achieving a competitive advantage through employee empowerment.

Higher WPM Surely, employee empowerment is one of the techniques available to the management to achieve WPM. Employee empowerment facilitates the workers even at the grassroots levels to acquire authority and participate in the decision-making process, which is one of the key functions of participative management.

Scope for Stress Reduction Inter-personal relationship is one of important stress-causing factors in an organization. Since employee empowerment lessens the dominance and interference of the superiors in the work of the subordinates, it reduces the dependence of the workers on their superiors substantially. This should, in turn, reduce the exposure of the employees to their stressful interactions with the superiors.

Development of Leadership and Analytical Skills Leadership skills are essential for the empowered employee to act independently but decisively in the critical skills. Employees develop necessary leadership skills either through experience or training. Similarly, an empowered employee must have effective analytical and decision-making skills to act smartly in a situation. Employee empowerment provides adequate opportunities to the employees to learn these skills and perform their job effectively.

Facilitating Succession Management and Career Planning Employee empowerment enables the management to assess the skills and knowledge of the employees. The performance of the empowered employees in their job helps the organization in determining their efficiency and in planning their career path. Besides, employee empowerment assists the management in identifying the successors for the executives in different levels of the management. Usually, the employees who prove themselves in critical situation are considered as effective replacement for the managerial positions of an organization.

In addition to the abovementioned importance, employee empowerment also helps the organization in improving the employees’ commitment and loyalty, risk-taking ability and entrepreneurial behaviour, enthusiastic relationship with the management, and self-interest. As a result of the efficacy of the empowered employees, organizations may also get fewer customer complaints and improved business dealings.

Barriers to Effective Employee Empowerment

Although employee empowerment is an effective technique in accomplishing several organizational and HR goals of the organization, its utility is often undermined by a few factors. The management must ensure that these factors are neutralized effectively before employee empowerment is introduced in the organization. We shall now see these factors in detail.

Supervisors’ Attitude The supervisors’ attitude towards employee empowerment is critical to the success of any empowerment programme. This is because the superiors are responsible for transferring authority to the workers. When the superior keeps a negative attitude towards employee empowerment and has no trust in the calibre and intelligence of their subordinates, the empowerment programmes are bound to fail. In many organizations, the refusal of the superiors to give up their dominance over the subordinates has proved to be a major hurdle to the effective implementation of empowerment programmes. The organizations can obtain the superiors’ cooperation and support for these programmes by enlightening them about the importance of employee empowerment programmes.

Inadequacies in the Workers’ Skill and Knowledge The next barrier to employee empowerment is inadequacies in the skill and ability of the workers to act independently and effectively in a critical situation. Obviously, a misjudgement of the situation and an incorrect decision by the employee can harm the name and fame of the organization. The fear of failure in a critical situation and its consequences for their own future often discourage the grassroots-level workers from accepting job autonomy and employee empowerment. However, through effective training and orientation programmes, organizations can instil confidence in the employees and remove their unnecessary fear. They can provide adequate leadership and decision-making skills for the employees to be empowered.

Lack of Clarity and Overlapping Since employee empowerment is not a statutory requirement for an organization, many organizations fail to keep clear-cut policies and provisions for regulating the employee empowerment programmes. Naturally, the lack of clarity in employee empowerment often blurs the boundaries of authority of the empowered employees and puts them in conflict with their own superiors and co-workers.

Absence of a Favourable Climate An organization must foster a climate of mutual trust and companionship at all its levels for an effective implementation of employee empowerment. Incidentally, the role of the top management is critical for employee empowerment. It must lend the required patronage to employee empowerment programmes and create a favourable climate for their successful execution. In practice, the conflicting interests of the employers and the employees over profit sharing often affect the cordiality of the relationship between them and foster a negative climate within the organization.

Lack of Recognition, Appreciation and Reward In many organizations, simply no incentive of any kind is available for improvements in the performance of the employees in an empowered situation. The superiors are often threatened by the effective performance of the empowered employees. Consequently, instead of appreciating their empowered subordinates, the superiors often find fault with them. This makes the employees gradually lose interest in the empowerment programmes and they prefer to return to the old system.

Summary

1. Workers’ participation in management (WPM) is a practice that facilitates the workers’ contribution and influence in the decisions of the organization at various levels.
2. The features of WPM are the formal involvement of members, participation in decision making, consequence sharing, application of upward control, and a joint and continuous process.
3. The objectives of WPM are greater employee satisfaction, greater responsibility, mutual cooperation, establishing democracy, developing a communication system, and facilitating changes.
4. The methods of indirect participation by the employees in management are joint consultation committees in the form of corporate-level committees, which include worker-director and joint management council, profit-sharing plans, including employee stock ownership plans (ESOP), and collective bargaining.
5. The methods of direct participation by the employees in WPM are the autonomous work group policy, the suggestion-box scheme, quality-circle scheme and open-door policy.
6. The essential prerequisites for an effective WPM are the patronage of the top management, clarity in participative goals, policies and practices, fair and equal treatment to employees, adequate access to management information, assurance against victimization, respecting the union’s strength, recognizing and rewarding the employee’s contribution, training and orientation to members, fulfilling statutory requirements, and constant review of performance.
7. The significance of WPM lies in increasing the productivity and performance, improving employee involvement and participation, better workforce flexibility, promoting cordiality in industrial relations and establishing goodwill and public image.
8. The hurdles to an effective WPM are the orthodox attitude of management, role ambiguity and conflict, the absence of mutual faith, non-implementation of decisions, the absence of strong unions, and lack of follow-up.
9. Employee empowerment involves relocation of powers from the owners and managers of an organization to the lower level, rank-and-file workers.
10. The features of employment empowerment are delegation of power, empowerment being a process, self-determination being the goal, authority over organizational resources, a stronger leadership, and empowerment not being a zero-sum game.
11. The steps in employee empowerment are (i) determining the goals, (ii) orienting the employees, (iii) transferring authority, (iv) assigning responsibility, (v) ensuring accountability, (vi) maintaining communication, and (vii) following up and feedback.
12. The importance of employee empowerment lies in achieving high employee satisfaction and motivation, developing a customer-driven organization, higher workers’ participation in management, scope for stress reduction, development of leadership and analytical skills, and facilitating succession management and career planning.
13. The barriers to an effective employee empowerment are the superiors’ attitude, inadequacies in the workers’ skills and knowledge, lack of clarity and overlapping, the absence of a favourable climate, and lack of recognition, appreciation and reward.

Review Questions

Essay-type questions

1. Evaluate critically the different types of indirect participation by the employees in management.
2. Discuss the various types of direct participation by workers in management.
3. Evaluate the essential prerequisites for an effective workers’ participation in management critically.
4. Evaluate the steps in the employee empowerment process critically.
5. Describe the meaning, importance and limitations of workers’ participation in management.
6. Trace the hurdles to an effective implementation of workers’ participation in management. Also state your suggestions to overcome these hurdles.
7. Explain the meaning, features, merits and limitations of employee empowerment.
8. Evaluate the barriers to an effective employee empowerment process and suggest appropriate measures to overcome them.

Skill-development Exercise

Objective – The purpose of this exercise is to show you how to establish committees at various levels and decide their duties and responsibilities as part of WPM.

Procedure Note – The class is divided into groups. Each group has (1) an HR manager, (2) two HR team members, (3) two senior leaders of the trade unions, and (4) two observers of the meetings. The role of the observer is to observe the different aspects of the role-playing sessions and provide their feedback.

Situation

HLR Private Limited is a fast-growing textile mill in the country. It has been producing Multi-Filament Nylon, Tyre Cord Fabric and R. F. L. Treated Fabric. Around 7,200 people are employed by the company to carry out its operations. It has one trade union, in which nearly 70 per cent of its employees are members.

Only recently, HLR Private Limited gave recognition to this solitary union of the organization. As part of the agreement signed with the union, the company decided to establish committees at different levels to allow workers’ representatives in all these committees to have access to management information. However, it agreed to permit only the members of the joint management council constituted at the apex level to participate in the decision-making process. The management also settled for a three-month time period for setting up these committees and making them fully operational. It has now instructed the HR department of the company to do the needful for establishing the committees within the specified time period. The HR manager has begun his activities earnestly.

 

Steps in skill-development exercise

 

There are three steps in the exercise:

Step 1: The HR manager meets the trade union leaders to discuss the modalities for establishing committees at different levels.

Step 2: The HR manager conducts his departmental meeting to decide the duties and responsibilities of the committees and their members. He then sends the report to the management for approval.

Step 3: The observers analyse the performance of the members in the role-playing sessions and give their feedback.

Case Study

Karunya Fertilizers and Chemicals Ltd is a medium-sized company engaged in the production and distribution of chemicals. The company caters to the requirements of several large and medium-sized industrial customer companies. Its core policies are uncompromising quality, consistent efficiency and speedy delivery. It has a largely unionized workforce of 9,500 employees. At present, its HR department is headed by the Director (HR), Mr Ashok Verma. In fact, the young and vibrant Mr Verma took up the HR responsibility of the company just a few months back.

After assuming office, Mr Verma conducted several rounds of discussion with the trade unions and found a major grievance among all the unions of the organization. All the unions in the company felt unanimously that they were not given adequate representation in the management and the concept of WPM was hardly practised in the organization. Mr Verma also learnt reliably from different sources that the unions resorted to several agitation tactics in the past to get their demand regarding participative management accepted by the management. However, their tactics like go-slow-in-production, non-cooperation, sit-in strikes and other forms of protests did not yield the desired results. This is because the management was never convinced of the benefits of WPM. They never had any real need to consult the employees in decision making or share any information with the workers.

However, Mr Verma differed from the overall perception of the management and greatly felt the need to establish necessary committees or councils at different levels of the organization with due representation for the trade unions. Personally, he also favoured the nomination of worker-directors on the board of the organization. Mr Verma brought this matter repeatedly to the notice of the top management and enlightened them constantly about the mutual benefits of participative management. With the help of his knowledgeable presentation and convincing arguments, Mr Verma finally managed to convince the board of directors about the necessity of WPM and made them provide due representation to the workers and their representatives. In the subsequent management–union meeting, the management agreed to establish councils at three levels of the organization: a council at corporate level, one at the plant level and a necessary number of councils at various shop-floor levels. It also agreed to include an elected worker-director at the board level.

During the initial phase of the establishment of the councils, the unions cooperated with the organization. Council meetings were also progressing well and bonhomie was evident in the attitude and behaviour of the workers’ representatives on the board and in the councils. However, things began to change for the management and took a turn for worse after some time as the workers’ representatives began to resist and even stall all the important and justifiable decisions of the management. After investigating the matter, the worried management found out that the workers’ representatives began to oppose the decisions after they were accused of conniving with the management for pecuniary benefits and bartering away the future and rights of the employees. These charges were made by the rival unions, which had lost the elections for these memberships. Consequently, the union leaders instructed their representatives in the committees to adopt tough postures in the meetings and exhibit a negative attitude towards the management proposals just to retain the credibility of the union and to preserve the membership of the organization.

The management was simply stunned by the developments and began to worry about the undue delay in the decisions of the organization and also about the need and future role of these councils in the organization. It now looked toward the HR director to provide solutions to this vexatious issue and its settlement at the earliest.

 

Questions for discussion

1. How do you assess the entire situation at Karunya Fertilizers and Chemicals Ltd?
2. Do you agree with the stand of Mr Verma towards workers’ participation in management?
3. If you were the HR director, how would you solve the present crisis of the organization?

Notes

1. Mohammad Abdul Mannan, Workers’ Participation in Managerial Decision-Making: A Study in a Developing Country (New Delhi: Daya Books, 1987), p. 5.
2. Richard D. Rosenberg and Eliezer Rosenstein, “Participation and Productivity: An Empirical Study,” Industrial and Labor Relations Review, (April 1980): 355–367.
3. T. D. Wall and J. A. Lischeron, Worker Participation: A Critique of the Literature and Some Fresh Evidence (New York : McGraw-Hill, 1977), pp. 36–41.
4. David Guest and Derek Fatchett, Worker participation: Individual Control and Performance, (London: Institute of Personnel Management, 1974), pp. 9–12.
5. Rensis Likert, New Patterns of Management, (New York, McGraw-Hill, 1961), p. 243.
6. Sonia Bendix, Industrial Relations in South Africa (Claremont, Cape Town: Juta and Company Limited, 2001), p. 657.
7. Peter W. F. Davies (ed.), Current Issues in Business Ethics (London: Routledge, 1997), p. 180.
8. Casey Ichniowski, Craig Olson et al. (ed.), The American Workplace: Skills, Compensation, and Employee Involvement (New York: Cambridge University Press, 2000), p. 87.
9. Sonia Bendix, Industrial Relations in South Africa (Claremont, Cape Town: Juta and Company Limited, 2001), p. 658.
10. Jonathan T. Scott, The Concise Handbook of Management: A Practitioner’s Approach (New York: Haworth Press, 2005), p. 49.
11. Thomas A. Porterfield, The Business of Employee Empowerment: Democracy and Ideology in the Workplace (Westport, CT: Greenwood Publishing Group, 1999), p. 2.
12. J. Gandz, “The Employee Empowerment Era,” Business Quarterly, 55, no. 2, (1990): 74.
13. J. A. Conger and R. N. Kanungo, “The Empowerment Process: Integrating Theory and Practice,” Academy of Management Review, 13, no. 3 (1988): 471.
14. Thomas A. Porterfield, The Business of Employee Empowerment: Democracy and Ideology in the Workplace. (Westport, CT: Greenwood Publishing Group, 1999): p 80.