9. Employee Involvement

9. Employee Involvement as a Strategic Device of IR Strategy Professor Debi S. Saini ([email protected]) Management Development Institute, Gurgaon

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HRM and Employee Involvement Objectives of this session are to discuss the following: •EI and EP: Historical development & meaning and Aims • Types of EI: Downward & Upward • EI as an instrument of employee engagement • Company newsletter as a form of downward EI • Team Briefing: Nature–merits–determinants of Success • Team working/suggestion scheme/attitude surveys & EI • QCs: Nature––merits––prerequisites; TQM: Nature––features––themes •EI scheme at Delta airlines • Working of EI at global level:

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What is Noticeable in People Mgt. Today? • Shift from Taylorism: i.e. indl. revolution model of HR mgt.

• Taylorism reflects: Control—Discipline—Sanctions—Direction

• As in music, even in business there is a Shift to involvement/teams

• EI intertwines trust and responsibility

• The idea: Help & take others along with you

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Employee Participation and Involvement: Historical

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Michael Salamon’s Distinctions • Industrial Democracy: Worker control • Employee Participation: Influences decision making

• EI: Engagement, understanding, commitment & contribution 5

EP & EI: Shift from Former to Latter •

Thatcherism—Globalization—Comptt.

•

Japanization in HRM used for cooperation

•

Shift from Collective bargaining to HRM —Also from EP to EI as a key SHRM theme

•

HRM/New IR aim to Build employee commitment 6

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How is EI Linked to Japanese Mgt. Practices • Japan exemplary in employee participatory practices • Impact of Confucius: A leadership theorist, stressed ––Cooperation and harmony ––Social hierarchy through benevolent leader

Confucius 551 to 479 B.C.

––Leader to act in interest of followers: Young to respect sr.

• Export of Japanization to other countries esp. UK ––Used partly to water down pluralist UK attitude ––Most EI issues relate to small shop-floor concerns 7

HRM philosophy & Employee Involvement • HRM/excellence movement in 1980s: EI ––Tom Peters: “People are most valuable asset”

• HRM: Mgrl. aversion to EP in general —But EI helps

• EI reflects: managerial strategies for productivity ––Not for building a participatory society 8

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Nature of Employee Involvement

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Meaning of EI and EP Employee Participation: Refers to •

state or collective-employee initiatives in promoting collective representation of employees

in organizational decision-making possibly in face of employer resistance (Hyman & Mason, 1995)

EP includes financial participation & profit sharing 10

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Meaning of EI and EP Employee Involvement •

EI is a strategic device used by management in promoting employee commitment & the cooperation of the workforce through information given directly (not representatives) 11

Levels of Employee Participation/Involvement

High

High involvement: Complete decision making power with employees

Medium

Full consultation: Employees offer recommendations (e.g., QC, Work organization)

Low

Selective consultation: Employees give information, but don’t know the problem 12

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Employee Involvement & Engagement: What Does Research Say?

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EI and Productivity Improved Communication and Coordination

Employee Involvement Intervention

Improved Productivity Improved Motivation

Improved Capabilities

Cummings & Worley, 8e (c)2005 Thomson/South-Western

15-14

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Types of Employee Involvement

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Types of Employee Involvement Downward communication––top-down I. In-house journals/company newsletters II. Team-briefing sessions

Upwards problem-solving forms

Communication is key

III. Team Working IV. Suggestion schemes & problem-solving groups V. Attitude surveys VI. QCs The synergy of team

VII. TQM

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I. Company Magazine

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A. Downward Communication (DC) The company magazine •

Common methods of DC in past 20 yrs.

•

First used by Lever UK (in 1898)

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Range: Amateur desk-top by WM to Glossy production

•

Levers found it helpful in new programs e.g.

Unilever House, London

––Used (in 1950) for acceptance of work measurement scheme ––Used (in 1953) for job evaluation scheme ––In 1990s they used it for flexible & harmonious working 18

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II. Team Briefing

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II. Team Briefing (TB) Concept of TB A device to involve everyone in the organization level by level in face to face meetings organized by line managers to present, receive, discuss information approved by top management on a regular basis by providing a two-way communication A Team-briefing session

• •

Aimed to replace casualism, & inject order in system It was viewed as productivity breakthrough of 1990s (Fortune magazine)

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II. Team Briefing (TB)

contd…

• TB seen as a key ingredient of the new IR and HRM • Changed focus ––In 1980s: bad news to convey; Now: maintain initiative • Organization: ––Covers all levels ––between 4 to 15 in each gr. ––run by immediate leader of group at each level ––leader be properly trained and briefed

II. Team Briefing (TB) Subjects:

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contd…

––Explains new and changed policies––Explaining co. plans ––Telling progress in aspects of organizational functioning ––People: appointments, personnel matters ––Feed back to top––Provides for two-way communication

Timing & duration: • At least once a month for incharges ––Once in 2 months for others

• But meet only if something to say––Duration be about 20-30 Mnts. 22

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III. Team Working

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B. Upward Forms of Communication III. Team Working [originated in Japan] •

Focuses on problem-solving in a Gr-working situation

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Teams vary in size: 7-10

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It is a recent initiative in EI

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Not as widespread as TQM: but its influence spreading

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It requires task flexibility & job rotation

•

Training in: team culture/inter-personal skills/communication 24

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IV. Suggestion Schemes

Creative ideas needed

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IV. Suggestion Schemes Concept: A method

providing established procedure

for submitting and evaluating ideas with the aim to recognize those giving meritorious ideas without discouraging those whose ideas are not accepted Products of creative ideas26

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IV. Suggestion Schemes contd… Features • Suggestion boxes used: Idea is to involve WM in co. progress —Mgrs/team leaders also encouraged to give suggestions

• Going to individual for details of suggestion • Often committee of mgt./WM reviews suggestions

—It decides size of award —Often has final power to accept/reject suggestions 27

Employee Suggestion Scheme at Maruti-Suzuki •Maruti-Suzuki has an employee suggestion scheme • Received about 229,000 suggestions in 2010-11 • Saved about Rs 1.6 B. in 2010-11 by implementing it • Saved Rs 2 B. in 2009-10 • It claims use of transparency at all levels 28

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V. Attitude Surveys

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V. Attitude Surveys (AS) What is an attitude survey? It is a questionnaire survey of employees On a one-off or regular basis Which is designed to discover their views About a variety of factors connected with work • AS postulates that WM want their views implemented 30

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V. Attitude Surveys (AS)

contd…

• Opinions are taken on a wide range of issues ––Job satisfaction––job specification––Co. org. & mgt.

• Used by large no. of orgs. ––Some use them very regularly: IBM

• Enlightened orgs. make imp. changes in policy ––Cussons (UK, soap mfrs.) introduced equal opportunity policy ––Also, it did training program to tackle employee harassment 31

I. Quality Circles

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VI. Quality Circles What is a QC: A voluntary group of employees holding meetings to search solutions for work-related problems 33

VI. Quality Circles Members usually are from a single deptt., similar work ––Usually 6-12 members + supervisor • Member trained in various skills: ––Meeting––team bldg.––presentation skills

• A QC may be a part of the TQM programme • QC implements its recommendation where practicable ––When implemented, QC monitors the process 34

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VI. Quality Circles

contd…

– Popular in the 1980’s, not as much today – Potentially positive impact on productivity – But incidentally, little effect on satisfaction

Many Problems led to Dilution of Their effectiveness • • • •

Inadequate training Not truly voluntary Indifference of management QCs are not really empowered to make decisions

35 Source: www.freequality.org/beta%20freequal/fq%20web%20site/Training/ Classes%20Spring%202002/Quality%20Circles.ppt

VII. Total Quality Management

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Definition of Total Quality Management

contd…

A total company wide effort that includes employees, suppliers & customers that seeks continuously to improve quality of products and processes to meet needs and expectations of customers (Dean & Evans, 1994)

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What TQM is: • Total = Quality involves everyone & all activities in the company. Quality = Conformance to Requirements (Meeting Customer needs) Management = Quality can and must be managed. • It is a process for managing quality, a philosophy of perpetual improvement in everything we do. It is a method by which mgt. & employees can become involved in the continuous improvement of production (of goods/services) It is a combination of quality & mgt. tools aimed at increasing business & reducing losses due to wasteful practices. • Some who are known to have implemented TQM: •

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Ford Motor Company––Phillips Semiconductor, Motorola––Toyota Motor Company.

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What does TQM Pre-suppose? • It is a concept that presupposes that Everyone in organization understands The expectations of the customer And they meet customers’ expectations Every time

Based on Presumption of two Achievable Results • Lower the cost of operations • Improve the quality delivered 39

And thus attract the customer

Features of TQM

contd…

• TQM requires support of all ––Senior management support to drive quality culture ––Delegation to middle mgt. project teams (cross-functional) ––WM in teams supplying zero-defect good to intl. customers ––High trust with external suppliers

•

JIT & TQM go hand in hand 40

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Working of Employee Involvement

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Factors Impacting Working of EI 1. Mgt’s willingness to concede some prerogatives 2. Training of mgrs/WM in group-working skills ––Presentation––Leadership––Assertiveness––Problem-solving

3. Provision of proper feedback mechanisms 4. Taking action to implement group decisions 5. Realize: Conflict helps developing initiative 42

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Reality of EI at Global Level: Lessons • Contradiction in mgrs’ projections & practices • Control is seen in upper realms of the hierarchy ––Resistance against power shift to WM (National Pharma) ––EP and even EI perceived as a power challenge

• Japanese practices possible if workforce is compliant ––And, also it works in situation of high-unemployment 43

How To Overcome EI Challenges? • Cultural Differences – EI works better in low power-distance cultures (e.g.Japan)

• Management Resistance – Solution: Educate/train managers to become facilitators

• Employee and Union Resistance – Unions see it as dilution of union rights/power – Solution: Promote trust and involvement

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Working of EI at Global Level: Lesson

contd…

• EI used only for efficiency of organization ––Dilemma: how much power to give for creative energy

––Undermining of managerial prerogatives not tolerated

––New technology, TQM, culture change are used for control

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Employee Involvement In Delta Airlines

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Delta Airlines • A successful US airline

• Has high level EI programs

• It has one of the most advanced EI in the world 47

Delta Air Lines: the 1980s • A “top 100” employer • A classic “high road” non-union firm • There was no EI program initially • Enlightened Paternalism & Velvet Glove Command/Control • Very high employee loyalty 48

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Delta Air Lines: the 1990s • Chaotic comptt., turbulent markets, global expansion

• New mgt. team: --Paternalism is out, business partnering in

• EI was adopted at first for non-strategic reasons

• Has grown into a strategic HRM device: EI

part of business model 49

Delta EI Program: Structure 1. Top-Level: Delta Board Council (one)

2. Middle-Level: Division Employee Councils (Five)

3. Lower-Level: Base councils (Many)

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Delta EI Program: Structure Top-Level: Delta Board Council • Consists of 7 employees: each representing a business Division • Peer selected by employees, 2-year term • DBC attends BOD meetings, meets with CEO, CFO, EVPs • Undertakes Project assignments • Preview employee-sensitive communications/policies of Delta 51

EI Program contd. Middle-Level: Five Division Employee Councils • Flight Attendant Forum • Technical Operations Council • Airport Customer Service Forum • Cargo Partnership council • Reservations Sales council • These forums consist of employee-elected representatives

• Deal with all issues affecting that division

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EI Program contd. Lower-Level: Base councils • Elected representatives

• Handle base level issues

• They form Continuous Improvement Teams 53

Costs Invloved • Employee/Management Time

• Slower/Constrained Decision Making

• Higher Labor Cost

• A kind of Unintended Collective Bargaining 54

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Benefits • Energizes the Employees • Organizational Alignment/Coordination • Production Efficiency/Quality • Communication/ Information Flow • Organizational Change • Management/Employee Development • A proactive way of managing employee relations 55

EI at Delta: Features & Impact • Impacts the Bottom Line

• Deals with core Part of Business

• Has a Long-Run Focus

• Trust and Mutual Gain

• Empowerment & Problem-Solving

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EI at Delta: Features & Impact contd… • Management Commitment

• Early Bumps

• Training as part of corrective measures

• Cooperative ER and Union Avoidance

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