1

1

9. Employee Involvement as a Strategic Device of

IR Strategy

Professor Debi S. Saini(debisaini@mdi.ac.in)

Management Development Institute, Gurgaon

2

HRM and Employee InvolvementObjectives 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:

2

3

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

4

Employee Participationand

Involvement: Historical

3

5

Michael Salamon’s Distinctions

• Industrial Democracy: Worker control

• Employee Participation: Influences decision making

• EI: Engagement, understanding, commitment & contribution

6

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

4

7

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

––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

Confucius551 to 479 B.C.

8

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

5

9

Natureof

Employee Involvement

10

Meaning of EI and EPEmployee 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

6

11

Meaning of EI and EP

Employee Involvement

• EI is a strategic device used by management

in promoting employee commitment

& the cooperationof the workforce

through information given directly(not representatives)

12

High

Medium

Low

Levels of Employee Participation/Involvement

High involvement: Complete decision making power with employees

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

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

7

13

Employee Involvement&

Engagement:What Does Research Say?

Cummings & Worley, 8e (c)2005 Thomson/South-Western 15-14

EI and Productivity

EmployeeInvolvementIntervention

ImprovedCommunicationand Coordination

ImprovedMotivation

ImprovedCapabilities

ImprovedProductivity

8

15

Types of Employee Involvement

16

Types of Employee InvolvementDownward communication––top-down

I. In-house journals/company newsletters

II. Team-briefing sessions

Upwards problem-solving formsIII. Team Working

IV. Suggestion schemes & problem-solving groups

V. Attitude surveys

VI. QCs

VII. TQM

Communication is key

The synergy of team

9

17

I. Company Magazine

18

A. Downward Communication (DC)

The company magazine

• Common methods of DC in past 20 yrs.

• First used by Lever UK (in 1898)

• Range: Amateur desk-top by WM to Glossy production

• Levers found it helpful in new programs e.g.

––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

Unilever House, London

10

19

II. Team Briefing

20

II. Team Briefing (TB)Concept of TB

A device to involve everyone in the organizationlevel by level in face to face meetingsorganized by line managersto present, receive, discuss informationapproved by top managementon a regular basis by providing a two-way communication

• Aimed to replace casualism, & inject order in system

• It was viewed as productivity breakthrough of 1990s(Fortune magazine)

A Team-briefing session

11

21

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:

––Coversall levels––between 4 to 15 in each gr.––run by immediate leader of group at each level––leader be properly trained and briefed

22

II. Team Briefing (TB) contd…

Subjects:––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.

12

23

III. Team Working

24

B. Upward Forms of Communication

III. Team Working [originated in Japan]

• Focuses onproblem-solving in a Gr-working situation

• Teams vary in size: 7-10

• It is a recent initiative in EI

• Not as widespread as TQM: but its influence spreading

• It requires task flexibility & job rotation

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

13

25

IV. Suggestion Schemes

Creative ideas needed

26

IV. Suggestion SchemesConcept: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 ideas

14

27

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

Employee Suggestion Scheme at Maruti-Suzuki

28

•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

15

29

V. Attitude Surveys

30

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

16

31

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

32

I. Quality Circles

17

33

VI. Quality Circles

What is a QC:

A voluntary group of employees

holding meetings

to search solutions

for work-related problems

34

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

18

35

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

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

36

VII. Total Quality

Management

19

37

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)

38

What TQM is: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 involvedin the continuous improvement of production (of goods/services)It is a combination of quality & mgt. toolsaimed at increasing business & reducing lossesdue to wasteful practices.

• Some who are known to have implemented TQM:• –

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

20

39

What does TQM Pre-suppose?

• It is a concept that presupposes thatEveryone in organization understands

The expectations of the customerAnd they meet customers’ expectations

Every time

Based on Presumption of two Achievable Results

• Lower the cost of operations

• Improve the quality delivered

And thus attract the customer

40

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

21

41

Working of Employee Involvement

42

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

22

43

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

44

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

23

45

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

46

Employee InvolvementIn

Delta Airlines

24

47

Delta Airlines

• A successful US airline

• Has high level EI programs

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

48

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

25

49

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

50

Delta EI Program: Structure

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

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

3. Lower-Level: Base councils (Many)

26

51

Delta EI Program: StructureTop-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

52

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

27

53

EI Program contd.

Lower-Level: Base councils

• Elected representatives

• Handle base level issues

• They form Continuous Improvement Teams

54

Costs Invloved

• Employee/Management Time

• Slower/Constrained Decision Making

• Higher Labor Cost

• A kind of Unintended Collective Bargaining

28

55

Benefits• Energizes the Employees

• Organizational Alignment/Coordination

• ProductionEfficiency/Quality

• Communication/ Information Flow

• Organizational Change

• Management/Employee Development

• A proactive way of managing employee relations

56

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

29

57

EI at Delta: Features & Impact contd…

• Management Commitment

• Early Bumps

• Training as part of corrective measures

• Cooperative ER and Union Avoidance