What price workers' participation?
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What are the acceptable limits of the now fashionable trend towards workers' participation? Some guide-lines for managers are suggested by Sir Reay Geddes, chairman of Dunlop. Are there lessons in this for transport managers?
ALTHOUGH Mrs. Barbara Castle is no longer directly concerned with transport her more publicized remarks continue to be noted in road transport circles. At conferences and training seminars her recent remark to the Institute of Directors that "power now resides on the shop floor" is often quoted. Most road transport training sessions now include case studies on labour relations and some typical problems posed by lecturers cannot be answered satisfactorily using the old-fashioned criteria of the managerial prerogative. But that is not to say that there is an agreed consensus of opinion as to the merits of "participation".
A useful pamphlet by Sir Reay Geddes, Industry and Worker Participation (Industrial Educational and Research Foundation, Room 18-11, Portland House, Stag Place, London, SW1, price 5s) ventilates the issues from a management standpoint. Sir Reay Geddes is chairman of the Dunlop Rubber Company and serves on the governing body of the London Graduate School of Business Studies. His views will certainly command the respect of many very senior managers though they are unlikely to be publicly endorsed by Mr. Jack Jones, of the Transport and General Workers' Union.
The 'in' word Participation is a slogan word meaning different things to different people. In itself it means "to have a share in"— hence its popularity, not only across the whole field of industry and transport but in student and local government affairs.
In each case, Sir Reay points out, there is a difference of emphasis, although common to each appears to be the desire for a greater sense of involvement. "Yet this poses two fundamental questions. Is it only a right to information and to express an opinion: or does it carry responsibility, too? If so, how?"
Sir Reay's paper is very topical on the eve of Parliamentary discussion of the Industrial Relations Bill and talk of a new Companies Bill. He stressed at the outset that he was concerned to discuss the demand for worker participation at all levels of management, even to board level, and he quoted a recent phrase of the Prime Minister: "More and more we have to find means of making a reality of involvement and participation by workers in industry." Although the subject is by no means new, current concern arises, in Sir Reay's view, from a mixture of motives: (i) From a genuine feeling by some people of the need for closer involvement with the firm and with decisions that directly affect them.
(ii) From a feeling by others that something should be done to ensure the effective and considerate use of human resources, and that a legal form was not only desirable but necessary.
Some unions saw it as a means of extending their power and influence.
(iv) By a few, as a panacea for industrial relations, and (v) By some, as a counterbalance to the power of the executive.
What was the reaction of an international company like Dunlop to the foregoing? Said Sir Reay: "The responsibility of the board is to ensure the progress and prosperity of the enterprise as a whole over the years. To this end it must ensure that Dunlop is, and is seen to be, a good place to buy from, to sell to, to invest in and, by no means least, to work in."
It is a normal and indeed major part of the board's duties to resolve satisfactorily any conflicts that may arise among various special interests and occasionally between the company and the current view of the "public interest". The board has a collective responsibility for the good of the whole; It cannot and should not become a committee of special interests. The particular problems and confused loyalties of the workerdirector in his relationships with employees whom he represents have been well documented in other places.
"But why is it suggested that present-day directors, many of whom have worked up through management from the bench, the microscope, or the sales order book, do not have regard for their fellow workers' interests and aspirations? At what point in time are they supposed to have lapsed? As soon as they become responsible for the work of one other man?"
Sir Reay went on to explain that Dunlop, with many overseas interests, had acquired long experience of a variety of company laws, board structures and procedures. In Germany the company had a supervisory board with elected employee representatives on it and with its own responsibilities separate from those of the executive. In France, until 1968 there were observers on behalf of employees at the meetings of a single board with executive powers, but with part-time as well as executive directors. Since then there had been a twotier structure in France, with worker representatives sitting on a supervisory board —the Conseil de Surveillance—appointed by the shareholders.
Co-operation In Japan and the USA no such arrangements apply, and the board structures are very similar to those in Britain. Sir Reay stressed that productivity in the Japanese and American companies was high and employee co-operation was also high.
What conclusion was arrived at? "The upshot of our experience, and of our reading," said Dunlop's chairman, "is that in no case does the legal form create the substance of good human relationships."
In Britain Dunlop employs over 55,000 workers represented by 32 trade unions. If worker directors were enjoined by law how would they be chosen? Was not one union for the company a prerequisite for truly representative selection?
Sir Reay might have discussed the difficulty of representative selection even if a single union was responsible for all employees. The election of office holders or officials is seldom arranged ideally even in a small trade union. People are often faced with the choice of voting for an unknown candidate who is reputedly a sound person or a local candidate who may not measure up to the responsibilities involved. In a diverse company with many plants it would be extraordinary if the best person—or even the best half-dozen—worker-directors were elected. But the difficulty of picking the best people is common to all democratic bodies; industry could do much to publicize the views of its potential worker-directors. In many cases the articulate worker— unless he is an arch flatterer of his existing management—is actively discouraged.
Company structure 1 he Dunlop board consists of executive directors immersed in the business and part-time directors chosen for independence of judgment and performance. "We would see disadvantages in separating them into a special supervisory board and from changing the unity of approach by all board members to their work", says Sir Reay.
It is commonly argued that the present company structure offers little check on the firm's executive. When profits are satis factory what has been described as "the amorphous democracy of a shareholders' meeting" can by no stretch of the imagination be said to be effective in influencing, still less determining, policy.
Sir Reay Geddes thinks the argument for employee participation at supervisory board level stems from the view that, because of the complexity of the modern business and its influence on the economy and on society as a whole, some form of "audit" would help to check on the conduct of the business. He reveals that Dunlop has considered with consultants and others whether such a regular form of "audit" could be evolved with properly defined criteria, "but neither we nor our advisers can find a useful proposal for us as a company competing for custom and resources around the world against international competitors".
The role of the board in a large company, particularly an international company like Dunlop, is often misunderstood. Such a board lays down policy or broad guide lines against which progress is checked, but the conduct of each operating unit, and particularly its personnel and industrial relations, is largely delegated. Working conditions, amenities, and wage rates are the subject of frequent consultation, negotiation and decision locally. This delegation promotes efficiency and it is in the interests of employees that decisions affecting them should be taken by their local managers.
Promoting enthusiasm Dunlop's conclusion, more correctly the conclusion of Sir Reay and his board, for there is no evidence that the firm's employees of all grades have been consulted on the matter—is that "the real interests of all workers directors, managers, technologists and the semi-skilled—are best served by fastening clear responsibility on to those at all levels whose task it is to make the company prosper and to promote the enthusiasm of those whose work they supervise. Those who can share the responsibility should be encouraged and trained to do so; then let them inform, consult and negotiate with men of equal authority and training, acting for unions which have effective influence over their members. Then we can use established procedures to check each year on our progress."
Sir Reay continues: "True participation, we believe, is the right to timely consultation about effects of business decisions on employees. We believe in it and are practising and extending it all the time to the extent that the responses of our employees and their trade unions permit us. It can help in promoting change, efficiency, understanding and enthusiasm, and reduces, and even removes, the fear of what management will do next." He concedes that with full employment, and extended education, present and future managers, as well as many individual employees, expect it.
This acceptance of the need for participation is a challenge to management. "It requires from managers an endless series of acts of faith, met equally constructively by those who are interested in it. It will be a long and difficult road along which there are no easy short cuts, for it needs to be a joint endeavour if it is to achieve the prosperity and well-being of the company on which all individuals depend."
Communication Sir Reay comes to the nub of his case for clearly defining the scope for participation when he says: ". . . if participation means a sharing of responsibility over business decisions themselves, this will blur responsibilities and can all too easily involve the right to delay or negotiate those decisions. If it is used to base a claim for the union to argue that changes on the statute book would become the sole channel of communication with its members, denying management a direct and human contact, it will wither. And if it were ever to become the first step backwards towards syndicalism, as seems to be the aim of the Institute for Workers' Control, then it will surely die."
Of course, Sir Reay may be right in hinting that a combination of changing work patterns and increasing affluence may reduce the interest and involvement of many people in their firm's organization and management. Creative leisure may, or may not, inspire creative attitudes at work or in the trade union branch. Dunlop is probably right to not help, though I sometimes wonder whether our present climate of industrial relations would be much healthier if the extensive system of joint consultation in industry during the 1939-45 war had been made a permanent feature by legislation. Exhortation, as we know, failed to persuade more than a minority of firms to continue joint consultative committees.
Dunlop Plans to extend its joint consultative systems which have operated for over 40 years. In places where the committee has been restricted to consultation between management and process workers other grades—craftsmen, supervisors, engineers, clerical staff and managers—will be brought in to make a comprehensive Works Council.
(This is a belated move indeed, for some of the best joint consultative committees 20 years or more ago provided for this wide spread of representation. It is particularly important in road transport that all the staff and supervisory functions are associated actively with joint consultation. If the dialogue is confined to management/driver discussions, as is all too common, the indifference and frustration of the excluded grades is understandable.) I welcome Dunlop's decision to extend the scope of subject matter of its Works Councils to include the economic environment in which the company as a whole and its individual units are operating, its profitability and future trading prospects. Unnaturally limited terms of reference have in my view frustrated the development of joint consukation in many transport organizations in past decades.
It is also pleasing to note that there is to be an extension of regular communication talks by senior managers in the operating companies whereby each manager can impart a regular flow of information to those directly responsible to him. This will work both down to and up from the working group, more communication leading to more informed consultation. By encouraging and stimulating the interest of individual employees in the prosperity of their firm Dunlop is setting a good example to the transport and other industries it serves.
It may be that in a few years' time Sir Reay Geddes' careful line-drawing could be extended. Worker-directors may become internationally fashionable. If the unions play along with Dunlop's new initiative and other large companies follow suit, labour relations in the Seventies should be more tuneful.