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Inside the Firm Review: Part I

Work Organisation and Worker Participation

In order to understand why identical firms show up productivity differentials and why in each firm the input-output conversion is usually not optimal as is cleverly assumed in neoclassical economics, the great Harvard University economist Harvey Leibenstein theorized on the non-optimal internal decision making and implementation processes inside the firm (Leibenstein, 1987). But unproven theories are not of much help in making a difference to concrete situations. The auto industry bosses have gone in for automation as also organizational innovations in the name of Just-in-Time (JIT) production, JIT deliveries of parts and components, and Total Quality Management (TQM). However, the success in improving productivity and quality in their workplaces, using these innovations, is dependent on getting total employee involvement (TEI). In a five-part series of postings on this platform, I bring to your notice what the bosses have actually done for the sake of TEI, and the associated contradictions in relation to (a) work organization and worker participation; (b) skill formation and development; (c) remuneration and compensation; (d) job security and staffing arrangements; and (e) enterprise governance, worker organisation and labour-management relations (Bose and Sinha, 2012).

Such observations should form the basis or template for new research in developed and developing countries on whether JIT-TQM can be carried out without TEI. There has been a great variety of experiments with teamwork, employee participation in problem-solving and productivity improvements, quality circles and the use of TQM. However, the diffusion of these practices remains uneven. For example, the Japanese and Korean plants are the most advanced in terms of multiskilling whereas plants in the USA and Canada remain the most specialized in their work systems. Interestingly, those assembly plants with the most multi-skilled work systems also exhibited the lowest number of hours per vehicle, which is the indicator of productivity. In USA, Britain, Canada and Australia where there is the strongest tradition of job control by unions, some of the most profound departures from traditional work practices are observed. This is particularly the case where a new greenfield plant or worksite is established or when major technological changes are introduced.

In some situations, management has involved the unions and the employees in decisions about the introduction of workplace change, while in others a unilateral approach has been taken. In some Canadian plants, there has been strong resistance to management initiatives in the area of work redesign by the Canadian Auto Workers Union on the basis that these were particularly of an anti-union strategy. Research indicates that the greatest commitment to change tends to occur where employees and their unions are involved at appropriate points in the decision-making process. In settings where new union-management partnerships have been created, there has also been considerable work reform. However, in the non-Japanese-owned plants in North America, innovation in work organization practices is only partially diffused and often remains fragile.

This is the case in Britain and Australia, although recent years have witnessed significant reforms in Australia with a strong union and government support. Similiarly in Brazil, there has been a breakthrough in union-management relations at Mercedes Benz with an agreement on the introduction of teamwork and group technology. In countries such as Sweden and Germany, the industrial-union movement has been sufficiently strong, particularly the metal workers, to influence the direction and pace of change. The famous system of codetermination in Germany has provided a channel for participation by employees through works councils. In Sweden, there has been a long tradition of experimentation with group work and participative approaches to work design so much so that researchers talk about the “Swedish model of work organization”.

In both the countries, there is a trend toward more decentralized forms of organization; systems of work organization have been developed which rely on a highly-skilled workforce involved in decision making at the plant level. In fact, researchers have pointed to greater employee influence and autonomy in Sweden and Germany than in Japanese plants. Car manufacturers in these countries “are increasingly under pressure from international competition to reduce costs and improve quality. Consequently, the industry is currently setting more rigorous task performance standards, especially for workers on the production line. Jobs are analysed in terms of their value creation and streamlined according to the core value-creating tasks. Workers are then trained to perform according to a strictly laid out work design. This includes fixed workstations, within which assigned production line tasks have to be performed, fixed cycle times for each station, and single-step clocked jobs. The basic idea is to increase quality by making tasks and job training easier.”

The adverse impacts of this work regimen on workers are sought to be overcome, in countries such as Germany and Sweden, through job rotation (multi-functional behaviour) which lies at the heart of the teamwork process: “Production line rotation can be defined as an alternating system that schedules the deployment of employees in an organization work setting within a defined range of workstations or tasks. By switching workstations and tasks several times per day, or even per hour, physical overexertion with all its short-term and long-term health effects can be avoided, as can technical flaws due to repetitive and tedious tasks. The basic assumption is that rotation is beneficial with regard to variety, experience, the varying of physical strain, and job flexibility”. In France, where union density is low, the state took a leading role in fostering experiments with worker participation from the late 1960s onwards, which promote the expression of employee views. However, the process of work reform has been haphazard, at best. In Italy, the unions were super active in the 1980s promoting group-based work organization, but the employers preferred weaker forms of employee involvement such as quality circles. However, in the case of Fiat, there are a number of new initiatives being taken, especially in greenfield sites such as Melfi, which emphasize the importance of work organization and teams.

Japanese plants exhibit great flexibility and adaptability. Some researchers have questioned the degree of autonomy available to workgroups ; There is, in fact, no 'workplace democracy' in Japanese workplaces. However, most researchers allude favourably to the Japanese makers having introduced continuous improvements in productivity and quality, given extensive training to supervisors—front line managers—who play a key role in workplace change and used extensive job rotation and workgroup activities to enhance the skills of the workforce. As such, the Japanese transplants in the USA and Britain have yielded much higher productivity and quality than the local manufacturers. Indeed, some of the local ones in North America are now successfully emulating the Japanese, but the application of lean production principles by them shows modifications made to suit local circumstances resulting in varying outcomes in different settings. In seeking to understand changes in work organization, and supporting or rejecting them, scholars have created a lot of confusion in categorizing the auto workplace as mean in terms of Taylorism plus Fordism leading to “super-Taylorism” or the auto workplace as “creative” post-Fordism or epoch-making Toyotism that integrates high efficiency with flexibility and humanity. Taylorism married to Fordism means that while Taylorism decomposes tasks and assigns those tasks to individual workers, Fordism recomposes the tasks by welding the individual labouring into a human-machine.

There is no difference between American and Japanese assembly lines but the only difference between Fordism and Toyotism is that in the latter the rationality of work organization in terms of Taylorism is fully stretched. Which is to say that the Japanese, unlike the Americans, have worked on Taylor's fundamental insight that workers' knowledge is the place to begin any production reform. This insight of Taylor was forgotten in the Western context where those aspects of the Taylor system that stress tight managerial control on the shop floor have been most thoroughly accepted. The Toyota production system has a more rational character with regard to the role of human labour in the workplace, particularly that of collective workers, as compared to the Ford system. The central point is that improvement in manufacturing methods or product quality depends on collective workers' concern or desire to achieve it in the workplace. The Ford system, based on Taylorism which aimed to exploit workers through job fragmentation and the separation of conception from execution, has further promoted the separation between intellectual and manual labour through the mechanization of production. The skills of workers on the line were narrowed and equalized in order to adapt them to fragmented jobs and specialized machine operations; in this way, management emphasized the interchangeability of the workforce.

The result, however, was the diffusion of alienation among productive workers; low productivity, a decline of workers' commitment to the job due to monotonous and boring work, strikes, absenteeism and instrumental attitudes to work. Since the 1970s, there has been a big wave of job redesign ideas, such as job enrichment, job enlargement and job rotation. Underlying this trend is a concern to render work both more productive and more humane by restructuring work and work organization. Fundamental to this is a belief that improvements in productivity and quality depend on the experience and creativity of the collective worker. The Toyota work organization needs to be seen as a logical culmination of work organization innovation in high volume production. In the Toyota workplace, teams are formed by multifunctional workers. Teamwork in Japan means not only cooperation between workers but also the full use of the potential capacity of each worker.

Whereas Taylorism and Fordism lost sight of the benefits to be generated by cooperation between workers, that is, of the importance of the collective productive capacity of combined workers, the Toyota system, on the contrary, has developed a combination of job design securing the benefits of cooperation and technological design of the production process maximizing the benefits of the division of labour, achieving improvement in individual as also collective productive capacity through making each worker multifunctional. In light of this, the rise of Japanese capitalism as 'collective capitalism' that taps the gold in the head of the collective worker vis-à-vis the individualistic North American capitalism can be appreciated. So be it. But in practice, what if there is managerial failure to respond to what it is hearing from the workers? There is some evidence to this effect. This discourages the workers from providing new information, even as lack of more equitable financial sharing arrangements does not reinforce non-financial participation in terms of suggestion schemes or problem-solving groups or quality circles by convincing the employees that all benefits will flow only to the employers.

Unless the employers encourage organizational solidarity through job security and narrow pay differentials, worker participation does not take off. This is not all. That participation leads to commitment which in turn results in higher productivity and improved quality of product sounds very nice in theory. But this may not work in practice as workers fear that greater productivity will mean the loss of their jobs. Unless job security is guaranteed, worker participation will not be sustained. All these issues seem to explain much of the observed reality of the lack of proactive worker participation in the auto factories around the world. Employee involvement and commitment is sought by some large firms through financial participation in terms of employee stock ownership plans or profit-sharing. But there is research to show that such plans do not necessarily entail employee participation in decision making. The reason is that intrinsic to these plans is the so-called 1/N problem. If N is the number of participating employees, and if N is large, the reward an individual worker will obtain from added effort is small. Click here to read Part II.

By Annavajhula J.C. Bose,
PhD Department of Economics, SRCC

References

Bose, A.J.C. and Sinha, Saroj. 2012. Incentives for Workers from Motor Vehicle Assemblers: Pointers from Empirical Research. Business Analyst. Vol. 33. Issue 1. Leibenstein, Harvey. 1987. Inside the Firm: The Inefficiencies of Hierarchy. Harvard University Press.

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