Page 173 - DMGT106_MANAGING_HUMAN_ELEMENTS_AT_WORK

Unit 7: Industrial Relations

this principle; and whether the principle and/or means should be enshrined in legislation, Notes
or should be the subject of bipartite negotiation, or should be at the employer’s initiative.
There can hardly be any debate on the principle i.e. the value and need for consultation and
communication in an age when it is accepted that information sharing and consultation are
important to enterprise performance, productivity and employee motivation. Effective
corporate strategies can no longer be developed by top management without information
inputs from, and relying on the knowledge of, frontline employees. Indeed, communication
skills are today an essential attribute of leadership. Consultation and communication
mechanisms introduced voluntarily after consultation with employees is likely to be seen
as part of an organization’s culture, rather than as ones imposed and reluctantly accepted.

There is no ideal model of communication and consultation because, to be effective, it must
fit the purpose, the type of organization, and cultural requirements if any. For instance, it
is useful to inquire whether in some societies consultation through formal meetings is
adequate due to the reluctance to be seen as challenging management’s views, and whether
such a procedure should be reinforced by parallel unstructured communication between
superiors and subordinates. However, the value of models is that they underscore the need
for such systems and provide useful guidelines which can be adapted to suit national and
enterprise conditions.
The worker participation model that gives unions the most influence at enterprise level in
the West is probably the co-determination and works council system in Germany.
Co-determination takes the form of equal representation of management and workers on
the supervisory boards of limited liability companies employing more than 2,000 employees.
Though made more widely applicable by the Co-determination Acts of 1976, the system has
been in vogue since 1951 in the steel and coal industries. Further, German law requires the
establishment of a Works Council in undertakings employing a minimum of five persons.
Though in a legal sense these councils are independent of union and management, and are
expected to represent the interests of the entire workforce and take account of the interests
of the enterprise as well, most members of such councils are union members. Co-determination
represents a method of worker participation at a very high level in an enterprise. The powers
of works councils are reflected in their rights of Co-decision making on personnel matters
such as welfare, accident prevention, leave arrangements and hours of work. They also have
a strong influence on decisions relating to recruitment, termination of employment and
training, and have the right to receive information pertaining to social and economic issues
in regard to which they are entitled to be consulted.
Few countries favour the German model of Co-determination, even if it works well in
Germany. It is perceived as providing scope for participation by unions rather than by
employees. In any event, in countries with much lower union rates, participation on the
German model will not necessarily mean that the employees are adequately represented.
Therefore, various other forms of employee involvement are gaining recognition.
With increasing acceptance of the fact that the crucial competitive weapon will be the skills
and performance of the workforce, emphasis is being placed on greater involvement of
employees in matters affecting their work and jobs, through consultation, information
sharing and two-way communication procedures. This is all the more necessary in activities
requiring the use of skills and knowledge. Greater worker involvement is likely to occur
in the future for the following reasons:

(i) Employees at all levels are acquiring higher educational qualifications and skills. As
such, they will be less amenable to management through control and commands, and
will instead respond better to more participative forms of management.
(ii) Quality and productivity tend to increase when employees are more involved in
arriving at decisions at the point of production.

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