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Federal Publications Key Workplace Documents

3-14-1994

Worker Participation in Management DecisionMaking

Haruo ShimadaKeio University

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Worker Participation in Management Decision Making

Disciplines

Human Resources Management

Comments

Dra Presented to International Evidence: Worker-Management Institutions and Economic PerformanceConference, U.S. Commission on the Future of Worker-Management Relations

Suggested Citation

Shimada, H. (1994). Worker participation in management decision making(Dra presented to InternationalEvidence: Worker-Management Institutions and Economic Performance Conference, U.S. Commission onthe Future of Worker-Management Relations). Retrieved [insert date], from Cornell University, School ofIndustrial and Labor Relations site: hp://digitalcommons.ilr.cornell.edu/key_workplace/427

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Ih r To/if

Worker Participation in Management Decision MakingA draft prepared forConference on International EvidenceCommission on the Future of Worker-Management Relations

prepared byHaruo ShimadaProfessor, Keio UniversityTokyo,JapanFebruary 6, 994

I. IntroductionThis draft paper explains the structure and types of workerparticipation in Japanese industry and corporations briefly anddiscusses benefits of such a system to workers, management,industry, and economy as a whole.

II. The structure of worker participationWorker participation in Japanese companies is practiced mostvisibly and formally through the scheme of joint consultation.This is the system where representatives of both employees(usually union representatives) and management participate. Themain objective of the joint consultation system is to shareinformation between workers and management on a relatively broadrange of issues relating to corporate management and workingconditions. This is the place to share information and discussissues and not the place for bargaining.The joint consultation system is instituted in manycompanies. In fact, the majority, more than 70 percent, ofJapanese companies are said to have this system in some form orother. The system is spontaneous, and neither required orprescribed by the law. This system coexists in many companiesside by side with collective bargaining. The frequency of thissystem tends to vary with the size of the firm: the larger thefirm the greater the likelihood of joint consultation. Thecoverage of this system seems to be greater than the collectivebargaining system. Even in small companies, where no unionexists, this system tends to exist although in a somewhatinformal form of worker representation.The joint consultation system (JC) is organized at variouslevels of corporate organization, and beyond to the industrylevel. In a large corporation which has a number of plants, theJC is organized at the corporate level, plant level, and workshoplevel. At the workshop there usually are informal groups, whichalso perform de facto function of worker participation in aninformal way. Beyond the level of individual corporations, thereoften exist some form of joint consultation for industry andeconomy, often involving the government.


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The historical background of the JC may deserve attention.The JC was proposed in 1950s, most notably by some progressivelabor scholars and more systematically the Japan ProductivityCenter,which started in 1955. Japanese labor managementrelations in the previous period, the decade in the wake of theend of World War II, was highly conflictive and adversarial.Most major companies suffered from bitter labor strife and lossesdue to strikes.Labor movements in those days were dominated by militantleaders who were encouraged by the liberal policy of theoccupation authority led by General Douglas MacAthur in the firstplace, and later by the influence of Communists. Labormanagement relations were regulated by the Trade Union Law, andLabor Management Relations Adjustment Law, both of which weremodeled after the Wagner Act.Having suffered from bitter struggles, both management andsome union leaders sought to create some form of communicationand information sharing between labor and management, aside fromthe system of collective bargaining. Professor FujubayashiKeizo,of Keio University, a pioneering scholar of labor-management relations, described that the JC represents acooperative aspect of labor-management relations, whilecollective bargaining represents a confrontational aspect oflabor-management relations. The Japan Productivity Centerpromoted this system because they thought that productivityimprovement could be attained most effectively on the basis ofbetter mutual understanding of the goal and methodology ofproductivity improvement by labor and management.

III.Types of worker participationThere are as many types of worker participation asorganizational levels where worker participation is practiced insome form. Let me explain first three basic forms of jointconsultation system within a typical large manufacturing firm,and then proceed to explain more informal systems of de factoworker participation at the workshop, and a formal jointconsultation at industry or economy level.Corporate level worker participation: In a large Japanesecorporation, there usually exists a formal system of jointconsultation, where union leaders and top corporate executivesparticipate and discuss a broad range of issues relating economy,

industry, and management prospects sharing relevant information.The JC is held regularly, say monthly or several times a year.Plant level worker participation: The system and the way itoperates are basically comparable to the one at the corporatelevel,except that in this case, representatives of both labor

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and management are from within the plant, and the scope of issuesdiscussed is more geared to plant specific topics.Workshop level worker participation: The system of work erparticipation tends to be less formal, but more closely relatedto issues of the workshop. Topics to be discussed are more

closely tied to day-to-day problems such as transfer, jobassignment, training, holidays, shift systems, etc. Workshopunion committee men and first-line supervisors play criticalroles in resolving workshop issues through de facto jointconsultation.There are more informal forms of worker participation at theworkshop. Workers voices are heard and reflected in day-to-daydecision making at the workshop. This kind of function is playedthrough a variety of channels: sometimes through informal grou ps,other times through QC (Quality Circle) activities, and stillother occasions through interactions among workers, first-lineirregular small meetings and personal consultations at the

workshop. Through such activities, many problems-ranging fromworking conditions to production methods which directly affectindividual workers are consulted, discussed, and resolved.On the other side of the organizational ladder, namely, atthe level of the industry or economy, there often existrelatively formal schemes of joint consultation or workerparticipation. Industry association representatives often meetlabor union representatives to discuss various matters relatingto industry performance, prospects, and policy issues. Thegovernment offices in charge of particular industries oftenorganize formal meetings where both management and laborrepresentatives attend and discuss various issues of common

interest. This kind of conference or meetings are also organizedat the level of total industry or economy, either with or withoutgovernment representatives. They discuss and share informationon more macro economic and industry issues and also macro laborconditions.IV. Benefits

Productivity and quality improvements: Worker participationof various forms at various levels as described above hascontributed greatly to promote productivity and qualityimprovements at the workshop, company and industry. Productivityimprovement has been attained through both cost cutting andintroducing new technologies. Quality improvement has beenattained by increasing care and control of workers and alsoimplementing new production methods. In either case, the mostcritical was the understanding, sharing of goals, and active andresponsible involvement of workers. Increased productivity andimproved quality of products contributed not only to management

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but also to workers in the form of higher wages and security ofemployment.

Labor adjustment: With changes in business conditions,changes in production structure, and introduction of newtechnology, work loads and work assignments need to be altered.The consequent labor adjustment may require transfer of workersto new jobs,new workshops or to new plants somewhere else, ifnot dismissals. Such labor adjustment plans are normallydiscussed first at the table of joint consultation beforeactually put into practice. Usually, the total plan ofadjustment is presented and discussed at the corporate leveljoint consultation, and after reaching agreement, broken downplans more specific to plants or workshops are discussed at jointconsultation of relevant levels. These adjustment plans areoften negotiated at collective bargaining. However, these plansare almost always disclosed, explained and discussed at jointconsultation tables prior to be picked up at collectivebargaining. Through this process, relevant information is sharedsomewhat more in advance and more in detail also with contextualinformation so that both workers and employers can prepare andadjust for changes more smoothly.

Adaptation to economic changes: The complex system ofworker participation and information sharing of various forms andat various levels, as described above, has served the purpose ofmoderating shocks of economic changes and provided more room forboth management and workers to prepare to adapt such changes.With cooperation of workers, companies, and industries have beenable to adjust wages and working hours more flexibly, therebymaintain employment more stably. This has been beneficial bothto industry and economy with a long-term perspective, and toworkers in the sense of assuring them employment security.

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