M 4 PARTICIPATIVE MANAGEMENT
AND CO-OWNERSHIP
PRODUCTIVE BARGAINING
AND GAIN SHARING
Participative Management
• A technique of motivation
• High productivity / high wage economy requires new labour – management relationships, including ways to share gains and organise work that utilize the skill, knowledge and motivate more
• It is a Innovative management philosophy, i.e., part of Strategic Human Resource Management (SHRM) • Helps in finding practical solutions, better
designing to improve business practices • Offers relationship between organisation,
employees and stakeholders and enhance sense of pride
Contd…
• Mostly organisations identify one or two major issues – wages, working condition etc. and work on them, usually getting short term result
• Later they raise their hands in frustrations and
justify by saying ‘this is the cost of doing business’ • An old proverb ‘divided we fall, united we stand’
is the mantra for participative management
• In case of disagreement both sides tend to loose • Decisions are taken after consultations and
Why participative Management
• Increased Productivity (Greater performance) • Better problem solving and decision
• Greater commitment • Employee morale
• Encouraged to contribute Creativity and innovation
• Increases result oriented thinking • Encourage better communication
Employee Value proposition
• When there is ‘tell – tale’ sign of all is not well • While organisations are trying to project an
image of being the ‘best – in – the – class’ but is not successful
• When organisations are not able to attract talent • This is the time to visit Employee Value
Proposition, here’s how we can marry the
employer’s brand with the employee’s brand • Creation of an EVP that will ensure our brand
ambassadors are in for long haul
Aspects to Improve EVP – Employee
Participation
• Review every job description (whether you offer the kind of environment that excites worker)
• Plan your approach to creating your employees signature experience (special work, unique
process that makes your company stand out in people’s mind
• Have a look at your vision, mission and values (are they supported by behaviour)
• Do your reward and recognition policies support your signature experience
• Have you analysed your exit interview data with a view to future change vs past rationale (to win
Contd…
• How does your recruitment process contribute to the ambassador’s view of company
• Is your HR team fully engaged in the process • Use a change mechanism to engage all
employees in creating ambassadors and signature experiences
• Identify and weed out poor managers
• Use of tangible reporting format and tabulate the results and comments
• Result – employee believes in signature
experience, brand ambassador, they will remain motivated and perform
New Logic of Management
Old logic principle
• Bureaucracy is the most effective source of control • Top management or Experts
should add most of the Value • Organisations are designed
around functions
• Effective managers are key to organisational effectiveness • Hierarchical processes are
key to organisational effectiveness
New Logic Principle
• Involvement of all is most effective source of control • All employees must add
significant value
• Organisations should be designed around products and customers
• Effective leadership is the key to organisational
effectiveness
• Lateral processes are key to organisational effectiveness
Benefits of Participative Management
• Less resistance to new changes in methods resulting in innovations
• Attraction and retention of employees
• Greater staffing flexibility (cross-training and teamwork)
• Increased service and product quality • Reduced supervision requirements
• Reduced number of grievance, more effective conflict resolution
• Better decisions making process
• Better communication between management and worker
Continuous Improvement
• The 5 S concept – Japanese concept which believes in total quality management
• The PDCA concept – Japanese firms use this concept for improving organisational
effectiveness
• The PPHP approach – Economic success of Japan and Europe is attributed to this concept on sound labour – management relations
• The we vs them against we vs the outside world attitude
Disadvantages
• Costs of additional training and salary
(developing new skills and responsibilities at lower-level participants)
• Costs of additional support system (new
programme create need support personnel) • Expectations for personal growth and
development opportunities
• Resistance by middle management and support staff
• Loss of time (participation can slow down
decision making because number of workers have to understand and accept it)
Prerequisites of Participative
Management
• Overall Climate
• Sufficient time to participation • Ability of workers or its union
• Effective system of communication • Authority is not threatened
• Financial costs
• Within the framework of overall policies and Procedures of the enterprise
Co - Ownership
• Worker’s Participation in management in financial terms • Varieties of Employee Ownership – Three primary ways • Employee ownership is not new concept, Tisco (Tata iron
and steel) applied it in 1982
• Organisation point of view – aligns interest of employees closely with those of organisation
• Employees point of view – rewards which workers can benefit directly from improved company performance • Economy point – co-ownership can contribute to
favourable macro economic outcomes, lower
unemployment, reduced inflation and higher economic growth
Collective Bargaining
• Lead is taken by Union • Demands higher wages,
allowances, benefits, better working condition
• Parties more or less settle by compromise on demands raised and conceded
• Normally the Unions and workers continue working as before
• Creates inflationary conditions • Parties behave as if they are at an auction, finding the highest point employer will go and lowest point below which trade unions will not go
Productive Bargaining
• Lead is taken by Employer • Wage increase is linked with
productivity increase, performance
• Parties settle for removal of restrictive practices,
redevelopment of labour in different skill, increased effort and responsibility
• Objective to improve basic efficiency of operations while answering Union needs
• Takes care of Customer
interest in terms of reduced or steady price levels keeping
Productive Bargaining
• It is applied in the wider sense than in narrower sense of just greater effort through increased earnings (a way of improving efficiency and reducing cost)
• It refers to negotiations and agreements which incorporate increase in productivity through
re-organisation of work-force, changes in work-practices and working conditions in return for improvements in pay and conditions of service
• Worker cost is one of the limited number of factors in total cost over which this can exercise an influence • Mutual acceptance of organisational goals giving
Gain Sharing
• Sharing is done on specific increase in productivity (unit to unit basis)
• Sharing between parties has to be on the basis of certain agreed formula
• Sharing of gains shall have no bearing on the existing level of wages (similarly there will be no sharing if increase in revenue is due to other factors)
• Sharing can be done only when gains have materialised and not on assumption
• Sharing of gains with workers should be uniformly applicable 9no serious dis-satisfaction among non benefitting workers
• Sharing should be equal and logical (proportion should have reasonable relationship with extent of