CAIIB Human Resources Management Module D Unit 4 : Worker’s Participation in Management

15/05/2024

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CAIIB Human Resources Management Module D Unit 4 : Worker’s Participation in Management (New Syllabus)

IIBF has released the New Syllabus Exam Pattern for CAIIB Exam 2024. Following the format of the current exam, CAIIB 2024 will have now four papers. The CAIIB Rural Banking includes an important topic called “ Worker’s Participation in Management ”. Every candidate who are appearing for the CAIIB Certification Examination 2024 must understand each unit included in the syllabus.

In this article, we are going to cover all the necessary details of CAIIB Human Resources Management Module D Unit 4 : Worker’s Participation in Management , Aspirants must go through this article to better understand the topic, Worker’s Participation in Management and practice using our Online Mock Test Series to strengthen their knowledge of Worker’s Participation in Management. Unit 4 : Worker’s Participation in Management

Worker Participation

Worker Participation implies arrangements designed to involve workers in the enterprises decision making process. This allows for workers’ involvement in the initiation, formulation and implementation of decisions within the organisation which strives to reach its goals through people.
Workers participation in management is considered as a crystallization of the notion of the industrial democracy. It is an expression of the employer’s desire to bind his employees into a team working together toward a common objective.
In India, a state sponsored experiment started in the year 1957-58 when the Indian Labour Conference accepted the recommendation of a working group to set up the Joint Management Councils. Prior to this, the Industrial Disputes Act, 1947 stipulated constitution of Works Committee consisting of representatives of employers and workmen in the industrial establishments in which 100 or more workmen are employed.

‘Participation’: Concept & Definition, Types

Three groups of managerial decisions affect the workers of any industrial establishment.

Economic decisions – methods of manufacturing, automation, shutdown, lay-offs, mergers.
Personnel decisions – recruitment and selection, promotions, demotions, transfers, grievance settlement, work distribution.
Social decisions – hours of work, welfare measures, questions affecting work rules and conduct of individual worker’s safety, health, sanitation and noise control.

The level of participation, in practice, ranges as under:

Informative participation: refers basically to information sharing concerning the balance sheet, production schedules, etc.
Consultative participation: in which a joint council is constituted which considers matters such as welfare programmes, safety procedures, etc. However, the decision making power rests with the management.
Associative participation: Here, the role of the joint council is not limited to advisory body. The council’s recommendations in the defined areas are implemented by the management.
Administrative participation: Where the decision comes to the council with alternatives to select from for implementation. Still there is no participation in the decision-making process but there is a choice to be made from a few alternatives and the alternative chosen jointly will be accepted for implementation.
Decisive participation: Here, the decisions are taken jointly on matters relating to production, welfare, etc.

Benefits of Participation

The confrontation or the level of resistance and resistance to change comes down.
It ensures free communication and the channel for upward communication opens up. It helps in reducing the distortion or failure of communication and consequently implemented decisions become more effective.
Joint decision-making reduces the conflicting situations and therefore the disputes. The productivity of the unit increases.
Workers’ Participation in Management (WPM) helps eliminating industrial disputes.
It increases efficiency of employees.
It prevents outside intervention and misleading by outsiders.
It promotes an atmosphere of creativity among rank and file.

Methods of Participation

Work Committees

The Industrial Disputes Act, 1947 provides for constitution of works committees in units employing 100 or more workmen. It has equal number of representatives of workmen and management. However, the total number of members in the Works Committee should not be more than 20.
The workers’ representatives are to be chosen in consultation with the registered trade unions and from among the employees of the organisation. The works committees are constituted to promote measures of amity and good relations between the employer and workmen.
The works committee is intended to smooth away friction that might arise between the workers and management at the shop floor or department level.
An evaluation of works committees, however, indicates that they are not very effective. This may be due to the fact that they function essentially in advisory capacity. There is also inter-union rivalry. Another reason for failure is that works committees are perceived by the employees to be indirectly conflicting with the objectives of trade unions. This may be the major reason for the works committee being not very effective.

Joint Management Councils

While constituting works committees is a requirement as per the Industrial Disputes Act, Joint Management Council is a voluntary attempt to promote workers’ participation in management. Joint Management Councils are established especially plant level in units employing 500 or more workmen. There are equal number of representatives from workers and management. However, the total number of members in the council not to exceed 12.
The Council functions as a consultative forum, where the management shares information with it.
Certain administrative responsibilities are also given to the Joint Management Council. The joint management councils are expected to work at the policy level (policy framing and implementation) without encroaching upon the functions of works committees. While evaluating, however, it is to be admitted that the Joint Management Councils do not seem to be getting adequate support. It may be due to the fact that these Councils basically are only at a level of consultative participation stage.

Workers’ Participation on the Board

Another notable effort towards workers’ participation in management at the level of decision making, is nomination of workers’ representative on the Board of Directors of the company.
In nationalized banks, the workmen directors are appointed under the provisions of Nationalized Banks (Management and Miscellaneous Provisions) Scheme, 1970/1980, a Scheme made by the Central govt. The said scheme provides the procedure to identify the representative union for the purpose of appointing workmen director on the Board of Directors.
The workmen director attends all the meetings of the Board and enjoys the same kind of rights as any other director has on the Board. The workers’ participation is thus ensured at the highest level.
Due to multiplicity of unions, this appointment becomes a matter of controversy and confrontation with the other union challenging the appointment, challenging the membership number of the selected union and even challenging the membership verification process.

Joint Consultative Committees

In 1975, the government introduced this particular form of workers’ participation in management. In the first stage the scheme was introduced in manufacturing and mining industries in units employing 500 or more workers.
The scheme has a two-tier participation model, viz. shop councils for the shop-floor level, and joint councils at the enterprise level. Joint councils are constituted for each department with equal representation of employers and workers. The total representation is restricted to 12.
The shop council works for increase in production, overall efficiency, elimination of wastage, etc. It identifies areas of low productivity, absenteeism and even takes corrective steps.

Participation through Collective Bargaining (CB)

Through the process of CB, management and workers may reach collective agreement regarding rules for the formulation and termination of the contract of employment, as well as conditions of service in an establishment
For collective bargaining to work, the workers’ and the employers’ representatives need to bargain in the right spirit. But in practice, while bargaining, each party tries to take advantage of the other. This process of CB cannot be called worker participation in its strongest sense as in reality; CB is based on the crude concept of exercising power for the benefit of one party.

Participation through Suggestion Schemes

Employees’ views are invited and reward is given for the best suggestion. With this scheme, the employees’ interest in the problems of the organisation is aroused and maintained.
Suggestions can come from various levels with the ideas ranging from changes in inspection procedures to design changes, process simplification, paper-work reduction and the like. Out of various suggestions, those accepted could provide marginal to substantial benefits to the company. The rewards given to the employees are in line with the benefits derived from the suggestions.

Participation through Quality Circles (QC)

The concept of QC was originated in Japan in the early 1960s and has now spread all over the world. A QC consists of seven to ten people from the same work area who meet regularly to define, analyse, and solve quality and related problems in their area. Training in problem-solving techniques is provided to the members. QCs are said to provide quick, concrete, and impressive results when correctly implemented.

Advantages of QCs

Employees become involved in decision-making, acquire communication and analytical skills and improve efficiency of the work place.
Organisation gets to enjoy higher savings-to-cost ratios. Chances of QC members to get promotions are enhanced. Technical problems got solved. Workers got to get out of their daily routine and do something challenging.

Disadvantages of QCs

Trade unions look at it as a way of overburdening workers, and an attempt to undermine their role.
These circles require a lot of time and commitment on the part of members for regular meetings, analysis, brainstorming and most QCs have a definite life cycle – one to three years.
For QCs to succeed in the long run, the management needs to show its commitment by implementing some of the suggestions of the groups and providing feedback on the disposition of all suggestions.

Employee Stock Option Plans (ESOPs)

This scheme can be implemented in any company, or public sector undertaking, whose shares have been listed on the major stock exchanges of the country.
In India, it is implemented in various Multi-National Companies (MNCs) and software companies such as Infosys, Wipro and TCS. They introduced this scheme basically to arrest the growing attrition rate which is admittedly very high in the software industry.
ESOPs are Employee Stock Option Plans under which employees receive the right to purchase a certain number of shares in the company at a predetermined price, as a reward for their performance and also as motivation for employees to keep increasing their performance. Employees typically have to wait for a certain duration known as vesting period before they can exercise the right to purchase the shares.
The main aim of giving such a plan to its employees is to give shares of the company to its employees at a discounted price to the market price at the time of exercise.

Indian Banking Experience On ‘Workers Participation In Management (WPM)’

As regards the method of participation, the banks have adopted the model of participation on the Board of Directors. One director is nominated by the government on the board of directors of the public sector banks from the workmen union. The practice is to appoint the workman director from the union enjoying majority membership of the employees of the bank. Due to multiplicity of unions, this appointment in many banks has been a contentious issue.
The banks are continuing with the model of participation at the Board level. The scheme also includes nomination of a representative of officers on the Board of Directors of the bank.
The most popular method of workers’ participation in management in banks is Collective bargaining process through periodical joint consultative meetings with representative unions.

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CAIIB HRM Module D Unit 4 (Ambitious_Baba)