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M 4 PARTICIPATIVE MANAGEMENT

AND CO-OWNERSHIP
PRODUCTIVE BARGAINING
AND GAIN SHARING

Prof. Niranjan Mudliar

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
Prof. Niranjan Mudliar
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
involvement of all employees
Prof. Niranjan Mudliar

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
Reduces absenteeism and lessen hostility
Prof. Niranjan Mudliar

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, heres how we can marry the
employers brand with the employees brand
Creation of an EVP that will ensure our brand
ambassadors are in for long haul
Idea is you will give for what you expect to get
Prof. Niranjan Mudliar

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
peoples 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
the loyalty of the worker)
Prof. Niranjan Mudliar

Contd
How does your recruitment process contribute to
the ambassadors 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
Prof. Niranjan Mudliar

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

Prof. Niranjan Mudliar

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
Prof. Niranjan Mudliar

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
Prof. Niranjan Mudliar

Douglas Mcgregors theory X & Y

Prof. Niranjan Mudliar

Prof. Niranjan Mudliar

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)
Prof. Niranjan Mudliar

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
Interest of workers and management
Prof. Niranjan Mudliar

Prof. Niranjan Mudliar

Co - Ownership
Workers 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
Prof. Niranjan Mudliar

Collective Bargaining

Productive 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

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
inflation in check

Prof. Niranjan Mudliar

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 reorganisation 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
workers a sense of participation
Prof. Niranjan Mudliar

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
contribution each one has made of obtaining the gains)
Prof. Niranjan Mudliar