Workers’ Councils: a strategy to win through people

K A I Kalyanaratne-Manager, Training and Publications, Postgraduate Institute of Management (PIM)

The impact of developmental activities, population expansion and the resultant demand for enhanced services and products, invariably compelled the national economies to expand their production and service levels. More specifically the labour intensive enterprises including transport and communication services became the forerunners of the expansion strategies.

The expansion of the human resource base of these enterprises witnessed a widening gap between the relatively limited managerial layers and the expanding trends in the lower strata of these organizations.

The CTB and Workers Councils of the pre-1977 era

The Ceylon Transport Board reaching monolithic proportions in the pre-1977 era, mainly due to its monopolistic nature, and the inability and geographic limitations of the railway transport system, compelled the public bus passenger transport industry (PBPTI) to resort to extraordinary means to supplement the more structured managerial strategies to ensure stability, sustainability and growth of the organization. The crux of the issue was the demand on the resource base as it had to be managed productively.

It is obvious that uncontrolled expansion of physical and human resources would eat into the productivity of any organization.

A further factor was the widening gap between the continued broadening of the human resource base at shop-floor and operational levels, and the comparatively thin managerial layers. This phenomenon would, under normal circumstance, result in controversy, conflict and labour unrest.

The Employees’ Councils Act No. 32 of 1979 and that of 1997

It is in this backdrop the then management of the CTB introduced the Workers’ Council concept. In fact, workers’ councils thus formed were given official recognition by formalizing their creation and existence through procedural means.

The Employees’ Councils Act No. 32 of 1979 came to the statute only after the concept was initially experimented and proved to provide an invaluable service to the PBPTI. However, there was not much headway made on the establishment of employees’ councils in 1979, and thereafter, as the political leadership in power was not that keen in introducing systems that appeared to have overridden the established management structures.

However, since the change of the political climate in 1997, to project a worker-friendly approach to governance by the government that came to power, the concept was revived, with a Presidential Circular issued under former President Chandrika Kumaratunga’s hand to establish Employees’ Councils.

Much publicity was given to the activity, and although there was much fanfare at the initial stages, it died a natural death mainly due to ineffective regulatory mechanisms and the unhealthy political biases that prevailed in the conduct of elections for appointing employees’ council members. The whole activity was ill-planned and ill-executed.

A basic principle to be followed in introducing such unfamiliar concepts is the need to lay the appropriate foundation by changing the mindset of employees through well-conceived attitudinal and behavioural changes.

Workers’ Councils under the CTB

As stated earlier, having realized the efficacy of Workers’ Councils in bringing about the managerial changes within the monolithic structure that existed in the CTB, late Anil Moonesinghe introduced the concept countrywide in every work unity ranging from the Head Office, Werahera Stores and Engineering Complex, Regional Offices, Depots and Regional Work-Shops.

A secretariat was established to coordinate, implement and regulate the operation. As the establishment of units was done on a democratic basis by conducting elections periodically within the respective work-units, the secretariat so established was assigned wide powers to fix dates for calling of nominations and conducting elections. These, in fact, had to be executed error-free, as well as in a transparent manner, without leaving room for criticism. The system adopted in the CTB was that followed in Yugoslavia, and hence, it was referred to as the Yugoslav model of workers’ councils.

Workers’ Councils in functionally different scenarios

Literature on workers’ council reveals that different countries had adopted different nomenclatures to suit the specific purposes and objectives for which the concept had been used. Under the broad concept of workers’ councils the CTB had referred to this phenomenon more often as Employees’ Councils. This term was adopted, namely, to use the technique to bridge the gaps that existed among different employee-layers, and tap their expertise to shed light on issues from varied perspectives, helping ultimately to arrive at sound and consensual decisions. Workers’ Committees also helped create an environment of participative management. In Germany these units have been referred to as Works Councils. A further development found in Germany has been the appointment of works council representatives to the Boards of Directors in companies. Literature also reveals that in Germany these units primarily exist to reduce workplace conflict by improving and systematizing communication channels; to increase bargaining power of workers at the expense of owners by means of legislation; and to correct market failures by means of public policy.

Similar to the German model, European Works Councils (EWCs) were created partly as a response to increased transnational restructuring brought about by the Single European Act. They give representatives of workers from all European countries in big multinational companies a direct line of communication to top management. They also make sure that workers in different countries are all told the same thing at the same time about transnational policies and plans.

Nexus of Workers’ Councils with the Japanese management concepts

Some see a relationship between workers’/employees councils and some Japanese management concepts like Kaizen and Work Improvement Teams. Kaizen is an umbrella concept which has within its fold a number of management techniques and approaches whose common objective is continuous improvement through gradual and incremental steps. According to Masaaki Imai, author of ‘KAIZEN, The Key to Japan’s Competitive Success’, “KAIZEN is the single most important concept in Japanese management - the key to Japanese competitive success.”

The broad aim of workers councils is also continuous improvement by establishing a harmonious rapport between different levels and categories of employees, and by involving in an overtly responsible process of analysis of information, reviewing and assisting in reaching consensual decisions. It is, therefore, a mutual and collaborative process of ensuring organizational growth and sustainability.

It may also be viewed as a problem solving process at the place where the problems have occurred or would occur. In that sense the process is similar to the Japanese Genchi - Genbutsu concept. Some interpret it as the mutual ownership of problems, which is also described as the Toyota Way. It consists of principles in two areas; namely continuous improvement and respect for people. The common interpretation of these two words is “Go to the source to find the facts to make correct decisions, build consensus and achieve goals at best speed”.

Workers’ Councils and teamwork

The recent managerial trends indicate that teams have emerged as a primary way in which many an organization accomplishes its work. Teams have, in fact, become a sine qua non in organizational management. The more common virtues of teams are increased productivity, quality improvements, greater innovation, employee involvement in management and decision-making, and higher overall employee satisfaction. Considered in this backdrop workers’ councils are apt to be considered as a facet of teams and teamwork. Some similarity could be established between teams and workers’ councils as the following features run parallel to each other.

The more common features are, namely,

* Both teams and workers’ councils comprise groups of people (although differently appointed. These can be either limited to a small number or they can be quite large.

* They have regular interactions, either among themselves or with different categories of staff. Differences can be functional or authority and responsibility-wise.

* Thirdly, both these units are led by performance goals. They may differ in their outcomes. But they are focused on achieving specific objectives.

* Further, each of these two categories implies a sense of shared mission and collective responsibility. Members of workers’ councils are responsible and answerable to their respective ‘electorates’ (i.e., whom they represent), and teams are responsible either to their functional unit or to the organization at large.

Training and development

The experiences gathered by the writer in the adoption, implementation and conduct of workers’ councils in the CTB (in mid 70s), and subsequently in many other organizations including the Sri Lanka Export Development Board (in 1997-78), would stress that the exercise would not have a smooth and easy progress. While the courage and the enthusiasm to do a thing should be commended, doing a thing with the desired perfection and excellence is to be commended much more, as failures would be interpreted as lapses in the system. In management most failures are due to ill-conceived timing, and procedural lapses. It is, therefore, prudent to look into all aspects of the systems and processes before launching an exercise in which success is mainly determined by/ dependent on how the human factor is moulded.

Organizational culture and Workers’ Councils

Organizational culture is how the people in a particular entity think, act, react and behave. Workers councils do not operate in a vacuum. It is, therefore, necessary to create a harmonious environment in which workers’ councils would get established and grow. The system encompasses the entire organizational structure, although ultimately only a handful of people would get directly involved in the deliberations. This demands effecting the desired behavioural and attitudinal changes among the people, while developing those directly involved in such aspects as team dynamics, decision-making, interpersonal relations, quality and productivity enhancement methods, organizational strategies, problem analysis and problem solving techniques, communication skills, work motivation, leadership development and best management practices, among a host of other factors. In fact, for members of workers’ councils there needs to be a continuous process of self-development.

Participative management and employee empowerment

Some forecast that workers’ councils or consultative management would be the launching pad for more worker-involvement in the managing of organizational affairs. Effective employee teams often unleash enormous energy and creativity. Simply being in the presence of other people has an energizing effect (Principles of Management - Richard L Daft). Participative management is not considered as an end in itself (a cul-de-sac) but a viable alternative for employee empowerment. Thus the virtues of workers councils are many. The concept has its educative, developmental and overall productivity enhancement aspects.

Workers’ Councils vis-a-vis Trade Unions

However, it is essential to draw a line between the role of trade unions and workers councils. These are two distinctly entities, serving the organizations from two different platforms. Their main roles, objectives, functions and processes differ. Trade Unions have negotiations and bargaining as their key modus operandi. Being unaware of this distinction, if each of these entities tries to do the work of the other the result would be chaos, conflicts and ultimate confusion. While workers councils are primarily productivity, performance and goal oriented, trade unions are worker welfare oriented. Both these must exist/operate in organizations, and they need to be considered as complementary. There have been numerous instances where the inability to identify their roles has ended in disunity and embarrassment both to the organization and the employees.

(The writer was a senior executive during the hey-day of the Ceylon Transport Board (CTB), under the chairmanship of late Anil Moonesinghe, functioning as area manager/area controller when the workers’ councils were adopted and implemented. Hence, he possesses first hand experience of the working of this management technique)