Worker Participation and Productivity Change

By Werneke, Diane; Levitan, Sar A. | Monthly Labor Review, September 1984 | Go to article overview

Worker Participation and Productivity Change

Werneke, Diane, Levitan, Sar A., Monthly Labor Review

In the past several years, there has been increasing speculation that the decisionmaking patterns of foreign business firms hold the key to improving U.S. productivity performance, reflecting greater recognition of institutional and cultural influences on productivity. In particular, the industrial practices found in West Germany and Japan, the United States' strongest competitors, have been cited as models to be emulated to achieve optimal productivity. Pointing to the traditional relationship between U.S. management and labor as well as the failure of many business leaders to properly manager and motivate their employees, proponents of reforming the workplace have stressed the potential of raising productivity through better labor-management communications and the establishment of programs of greater worker participation.

Rejecting the prevailing U.S. economic doctrine, which tends to view the firm as a machine that maximizes short-run profits, students of organizational behavior regard an enterprise as a socail system with gaps between actual and optimum performance. An organization may be resistant or unresponsive to management goals. Jobs may be incompatibly designed, given the existing skills of employees, or they may be inappropriately meshed. Information may be lacking, thereby forestalling smooth and coordinated work processes. The consequence is deficient control over the quality and quantity of production. Management can set its goals in broad terms, but at the lower levels there is considerable room for variation both in the interpretation of goals and in the effort made to meet them. To achieve greater productivity, according to this view, management needs to share authority with workers by giving the employees a greater voice in determining production processes.

Job satisfaction may also play a major role in worker productivity. One of the principal arguments advanced in favor of worker participation is that giving employees a greater share in decisionmaking can reduce alienation and, with it, nonproductive practices such as absenteeism, turnover, and poor-quality work. Workers are viewed as being less willing to accept authoritarian decisions just because they have stepped within the factory, office, or shop.

The evidence that workers' participation plans result in greater productivity is far from conclusive, however. Generalizing on the basis of case studies is unwarranted because it is difficult to identify the nature and extent of worker participation and because it is hard to isolate the impact of workers' participation from other organizational and technological changes affecting productivity. Moreover, whatever the merits of the practices are in foreign countries, they may prove unsuitable for the American environment. Systems of industrial relations are specific to each country, reflecting the customs, attitudes, and traditions of the society, and they are not easily transferable across continents. Experiences from abroad

The West German and Japanese systems of worker participation have been touted as models for achieving organizational efficiency.

West Germany. In West Germany, participatory mechanisms have been established at two levels within the company: at the top and on the shop floor. By law, workers have equal representation with shareholders on the supervisory boards of companies employing 2,000 or more workers. These boards approve major decisions about investments, loans, and other activities affecting the company's balance sheet. In addition, they select managers responsible for day-to-day decisionmaking. Thus, in principle, West German workers' representatives share with owners the power to set policy. Also, through their right to select a labor director to sit on the management board, workers share in the day-to-day implementation of these policies. However, in practical terms, in the majority of companies, workers' representatives play little more than an advisory role, as the chairman of the board is elected by the stockholders and retains control of the board and the real authority to run the company. …

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