Wednesday, June 10, 2009

Explain the concept and forms of industrial democracy.

Explain the concept and forms of industrial democracy. Discuss how industrial democracy is practiced in your organisation or an organisation you are familiar with. Briefly describe the organisation you are referring to.


Answer. Industrial Democracy is an economic arrangement which involves workers making decisions, sharing responsibility and authority in the workplace. Although industrial democracy generally refers to the organization model in which workplaces are run directly by the people who work in them in place of private or state ownership of the means of production, there are also representative forms of industrial democracy. Representative industrial democracy includes decision making structures such as the formation of committees and consultative bodies to facilitate communication between management, unions, and staff.

Benefits of Industrial Democracy
· Less industrial disputes resulting from better communication between management and staff.
· Improved decision making processes resulting in higher quality decisions.
· Increased creativity, enthusiasm and commitment to Corporate objectives.
· Lowered stress and increased wellbeing.
· Better use of time and resources.
· Improved productivity including service delivery.
· Increased job satisfaction resulting in reduced absenteeism.
· Improved personal fulfillment and self-esteem.

Scope and ways of participation: - There are three groups of managerial decision which have a direct impact on the worker's of any industrial establishment. They are social, personnel and economic decisions. Economic decision include financial aspects- manufacturing, automation, lay­ off etc.
Personnel decision refers to recruitment, selection, promotion, transfer, grievance handling & so on. Social decision refers to hours of work, welfare measure, work rule and conduct of individual. Participate in social, personal, & economic. On school of thought is of the opinion that the workers at various levels. The first view could lead to the workers actual participation in the decision making safety, health, sanitation and noise level. The workers must have a say in the decision on the issues mentioned above. But there is difference of opinion about the scope and the extent to which workers or the trade unions should on parity basis, sit with the management as equal partner, and make joint managerial decisions on all matters. The other school propound the view that the workers should only be given an opportunity through their representations, to influence managerial decision making process of the management, while the second aspect will work out to be consultation of workers in managerial decisions.
In practice, the factors affecting the workers participation can be shown as:



(I). Participation at the Board Level: - The board of directors is the apex body in the administration of a corporate establishment. A representation of workers on the board would, it is believed, usher in industrial democracy, ensure improved employer-employee relationship and guarantee better productivity. The workers participation at board of directors can safe guard workers interest, serve as a control system, guide to management, guidance on matter of investment. The participation of workers are top-level management is not without problems. The board of any enterprise is primarily concerned with problems like fund raising, utilization of resource etc. personal matters do not receive equal attention at the board level but taken at the lower levels of management.
In these circumstances, the appointment of workers representative at the board does not substantially enhance the role of workers in the management of an industry. Secondly due to workers alienation and board's unacceptability the worker director may not be able to play constructive role. Thirdly the power, status and privileges enjoyed by the workers director are not acceptable to RO.D. Fourth the nomination of one or two women representative put them feel in minority, Where as the decision at RO.D are arrived on the basis of majority vote.

(2) Participation through ownership: Workers may be more involved in industries by making them share holders of the company. This is done by inducing them to buy equity shares. The management may promote the scheme by allowing the workers to make payments in installments, For example 60% share of Otto India, Calcutta are held by it's employees. Under share scheme, the shares are revalued and priced every year. Participation through ownership has the distinct advantage of making the workers committed to the job and to the organisation.

(3) Participation through complete control: Workers acquire the complete control of the management through elected boards. It gives complete control to workers to manage directly all aspects of industries through their representation. The system of' complete control ensures the identification of the workers with their organisation. Industrial dispute disappears when workers ­develop loyalty to an organisation.
(4) Participation through staff or works councils: Staff or works council's are bodies on which the representation is entirely of the employees. There can be one council or hierarchy of the council at shop floor or board level. The members of the councils are elected by the employees of the respective sections. This is a right step in the direction of industrial democracy.
(5) Participation through joint councils and committees: Joint councils are bodies comprising representative of employers and employees. The function of these bodies may range from decision ­making on some issues and advising the management as consultative bodies but it's suggestions are not binding on, the management. These councils serve no useful purpose. These councils provide a plate form to vent both employers-employee complaints and grievances.

(6) Participation through collective bargaining: The principle of collective bargaining confers on the management and the workers the right, through collective agreement, to lay down certain rules for the formulation and termination of the control of employment as well as service conditions. These agreements are binding in right spirit without taking undue advantages.

(7) Participation through JOB enlargement and Job enrichment: Job enlargement means expanding the job content - adding task elements. Job enrichment means addition of motivations to job so that it is more rewarding. The purpose of job enlargement and job enrichment to relieve the boredom of the worker. These contribute to workers participation by providing freedom and scope to them to uses their judgement.

(8) Participation through suggestion schemes: Employees view on such matters as machine utilization, waste management, energy conservation and safety measures are invited and reward is given for the best suggestion. This procedure enables the management to arouse and maintain the employees interest in the problems of their concern and it's management.

(9) Participation through quality circles: A quality circles (QC) consists of 7-10 people from the same work area who meet regularly to define, analyze and solve quality and related problems in their: area. Membership is strictly voluntary, and meetings are usually held once a week for an hour. During the groups initial meetings, members are trained in problem solving techniques, quality control etc. Quality circles are credited with producing quick concrete and impressive results when correctly implemented.
(10) Empowered Teams: - Empowering refers to passing on authority and responsibility. Empowerment occurs when power goes to employees, who can experience a sense of ownership and control over their jobs. Empowered individuals know that their jobs belong to them, Given a say on how things are done, employees feel more responsible, Empowerment is facilitated by a combination of factors like values, leadership actions, job structure and rewards system.
(11) Financial Participation: - Financial participation differs from, other forms of employee involvement in that it is less likely to involve employees in consultation or decision processes. The general purpose of financial participation is to enhance the organizational performance through workers commitment. There are various financial participation schemes like profit-linked pay, profit sharing and ESOP, workers cooperation, pension fund participation and wage earner profits etc.

I am familiar with The Australian Institute of Marine Science (AIMS). It was established by the Commonwealth government in 1972 to generate and transfer the knowledge needed for the sustainable use and protection of the marine environment through innovative, world-class scientific and technological research.
Our organization has supported the industrial democracy principles and participative management practices outlined in the industrial democracy plan. Consultation with the union occurs at both the national and local level through formal consultative committees and through consultative forums established within program areas.

The Organization’s agency bargaining implementation committee continues to be the peak forum for management and union consultation and has also emerged as the principle forum for consultation and negotiation with the union on national staffing strategies and policy issues.

Participative management practices have been encouraged in our organization through staff development programs for managers, including training on occupational health and safety. Managers are encouraged to hold regular meetings with staff and to foster the free flow of information to staff at all levels.

Explain the relationship between motivation and rewards.

Explain the relationship between motivation and rewards. Bring out the different reward systems in an organisational setting. Describe the role of financial and non-financial reward system in improving organisational performance with reference to your organisation or an organisation you are familiar with. Briefly describe the organisation you are referring to.

The concept of motivation occupies a central place in the discipline of Organizational Behaviour. It is a concept, which has received the maximum attention from the academicians and researchers alike. Since a motivated employee is highly productive and highly quality oriented, the managers are also interested the concept of motivation.

Most people understand the concept of intrinsic satisfaction or intrinsic motivation, i.e. when an activity is satisfying or pleasurable in and of itself. Naturally, these activities are things we like and want to do. For most of us, intrinsically enjoyable activities are things like eating, resting, laughing, playing games, winning, creating, seeing and hearing beautiful things and people, being held lovingly, having sex, and so on. To do these things we don't need to be paid, applauded, cheered, thanked, respected, or anything--commonly we do them for the good feelings we automatically and naturally get from the activity. Intrinsic rewards also involve pleasurable internal feelings or thoughts, like feeling proud or having a sense of mastery following studying hard and succeeding in a class.
Many, maybe most, activities are not intrinsically satisfying enough to get most of us to do them consistently, so extrinsic motivation needs to be applied in the form of rewards (positive reinforcements), incentives, or as a way to avoid some unpleasant condition ("negative reinforcement" or punishment). Examples: You work doing an ordinary job for pay. You study for good grades or to avoid failing or to prepare for a good future. You do housework to get a clean, organized house and/or a spouse's appreciation or to avoid her/his disapproval. A teenager comes home from a date on time in order to avoid being grounded. These are all activities that are commonly sustained by external pay offs, not because you love working, studying, cleaning, and coming home early.

Are rewards, particularly money rewards, really motivators? The answer to this question is YES and NO.

Money is understood to be powerful motivator for more than one reason. In the first place, money is fundamental for completion of a task. The employee takes pay as the reward for his or her work, and the employer views it as the price for using the services of the employee. Second, as a medium of exchange. Third, money is one of the hygiene factors, and improving maintenance factors is the first step in efforts directed towards motivation. Fourth, money also performs the function of a score card by which employees assess the value that the organization places on their services and by which employees can compare their values to others. Fifth, reinforcement and expectancy theories attest to the value of money as a motivator. Sixth, money acts as a punctuation in one’s life. It is an attention getting and effect producing mechanism. Money, has therefore tremendous importance in influencing employee behaviour. Seventh, money is easily vulnerable to manipulation. Finally, money will be a powerful motivator for a person who is tense and anxious about lack o money. But behavioural scientists think otherwise. They downgrade monetary rewards as a motivator. They prefer, instead, other techniques such as challenging jobs, goals, participation in decision-making and other non-monetary rewards for motivating employees.


Types of Reward Systems

The financial rewards are basically of three types:

· profit sharing;
· job evaluation; and
· merit rating.

Profit Sharing
Profit sharing could be on a macro basis or on a micro basis. The former relates to the entire company as a whole and the latter to a particular section or group dealing with a particular activity and/or product. On a macro level, it would be difficult to identify and reward outstanding performance. This is possible on a micro level by treating the particular activity as a cost and profit center by itself. This is easier said than done, since overheads and other common services have to be charged and this cannot be done completely objectively. The cost allocation in such cases is somewhat arbitrary and the profit will therefore not be a true reflection of the performance of that particular group or activity.

Job Evaluation
In case of job evaluation, the various component factors have to be isolated and evaluated for purposes of inter-job comparison. Each factor is assigned a rating on the basis of a scale agreed beforehand by the union and the management joint committee. The total rating for each job then forms the basis of wage structure. However, there must be a base level, representing, in effect, the 'minimum wage', depending on the nature of work and the geographical area. In some cases and in some countries these are stipulated by law. A typical, though somewhat broad, list of job factors is as follows:

· working environment;
· physical characteristics;
· mental characteristics;
· extent of responsibility;
· training and experience.

In case of managers, the factors are:

· responsibility;
· expertise;
· human relations.

Merit Rating
Merit rating has been used as an indicator of performance. Each employee is rated, typically as excellent, good, average or poor, in respect of the following abilities:

· communication;
· human relations, including leadership and motivation;
· intelligence;
· judgment;
· knowledge.
The rating, unfortunately, tends to be carried out purely mechanically and it carries a heavy bias of the rater who may be too lenient, may not be objective and may also have favorites or otherwise in the group being rated.

I am familiar with Nesco Ltd. Nesco is a leading producer of gas in Italy. At Nesco the following are used to improve organizational performance.

Financial Rewards
These rewards in organizations help employees to be more committed and motivated to their job and working environment:
· System rewards are automatically given to all employees for merely being members of their organisation. System rewards can be defined as being the basic wage rates.
· Individual rewards are given to employees based on the quality and quantity of their performance. Performance related pay (PRP) is seen as an individual reward policy, where pay is rewarded in relation to the volume of output. PRP can cause divisions amongst workers, where employees become more worried about the fact that their colleagues are being paid more than them.
· Growth rewards are received by employees for job innovation, learning and improvement.

The key to managing performance through rewards is linking the desired performance with the appropriate reward.

Non-financial Rewards
In an ever more competitive environment, the aim of organizations must now be to focus on increasing the added value of their employees. This is achieved, by encouraging employees to increase their effort and performance higher than the average standards. This has been carried out using employee appraisals and motivational methods.

Employers have become increasingly aware of the rich potential for good constructive ideas that exist from the employees on the job experiences. One method for using this knowledge is through suggestion schemes, these are becoming highly recognized, as they allow for improvements in all areas of work. These schemes are very flexible and can be readily adapted to meet all kinds of working conditions. Suggestion schemes can be seen as a means of increasing profit and worker participation.

Suggestion schemes aim to improve employee attitudes by directing their attention to the positive and progressive aspects of their jobs. This helps to boost employee morale and increase job satisfaction. It can be identified that if an employee is unhappy in his/her job it reflects on a negative attitude on his/her performance and also with other people.

Experience in many companies has shown low employee morale reflects on low productivity and increasing costly errors. Suggestion schemes play a useful role in increasing and maintaining morale.

Another method which is not related to pay is the performance appraisal system. This method is used as a means of raising individual performance and identifying development needs. Appraisal systems today are becoming part of the management culture, where managers feel it necessary to appraise and be appraised.

Self Rating, this is a form of appraisal where the employee takes a look at themselves, avoiding any negative feedback from traditional appraisals. Self rating is an effective way of trying to get the employee to look at what their roles are in relation to business needs.

It is fair to state that employees are not motivated by money alone. Paying different wage rates to employees doing the same jobs can cause more problems than benefits.

There are other incentives to reward employees, other than financial such as appraisals. Appraisals can prove to be an effective means for looking at human resources, as they allow us to:

· Ensure that the abilities and energies of individuals are being used effectively.
· Allow employers to identify better uses of individuals talents and experience.
· Training needs can also be identified.
· Future decision making as data of abilities can be kept on file for future reference.

Other examples of incentives/motivators include:

· Team briefings - Management tell sub-ordinates what needs to be achieved, this opens up the lines of communication, and makes everyone aware of what needs to be done.
· Team buildings - Employees are taken on outings to pursue some systematic group exercises led by a trainer or time spent on social activities. The logic is to enthuse a team working ethic.
· Quality circles - Regular meeting sessions where a group of employees discuss quality related issues.

It can be said that if managers are to be successful, they must focus on strategies that improve the overall performance of the business by using employees as a vital resource which needs to be nurtured and not just developing and implementing control systems to fix short term problems.
Answer. Motivation in simple words may be understood as the set of forces that cause people to behave in certain ways. It is a process that starts with a physiological deficiency or need that activities behaviour or a drive that is aimed at a goal or an incentive.