EMPLOYEE INVOLVEMENT AND
Concept and Objectives, Forms and Ethical Codes
When an organization truly wants to create a positive work environment that is based on high trust,
exceptional customer service, collaborative teamwork, operational excellence, and creative problem
solving, then the leadership team must begin to understand, invest in, and be responsive to the
needs of the group that represents the organization’s most valuable assets, and is also one of its
most important customers, the employees. The return on such nominal investments will come in the
form of higher levels of employee motivation, creativity, productivity, and commitment that will move
the organization forward with greater profitability.
A fundamental Total Quality Management precept is that employees must be involved and
History Of Employee Involvement And Participation
Employee involvement and participation have been at the heart of industrial relations since its inception,
although much of the contemporary terminology has moved away from ‘industrial democracy’ employed
by the Webbs in 1898.
The labels and terms for employee involvement and participation have expanded and varied over time,
reflecting different disciplinary bases (industrial relations, human resource management, psychology
and political science), changing socio-economic contexts, competing goals between management,
labour and government, and a variety of practices.
What is Employee Involvement
• Employee involvement is creating an environment in which people have an impact on decisions and
actions that affect their jobs.
• Employee involvement means that every employee is regarded as a unique human being, not just a cog in
a machine, and each employee is involved in helping the organization meet its goals. Each employee’s
input is solicited and valued by his/her management. Employees and management recognize that each
employee is involved in running the business.
• Intrinsic to most employee involvement processes is training in team effectiveness, communication, and
problem solving; the development of reward and recognition systems; and frequently, the sharing of gains
made through employee involvement efforts.
• Employee involvement is a process for empowering employees to participate in managerial decision-making
and improvement activities appropriate to their levels in the organization. Since McGregor’s
Theory Y first brought to managers the idea of a participative management style, employee involvement
has taken many forms, including the job design approaches and special activities such as quality of work
life (QWL) programs.
• There is at the end of the day only one thing that differentiates one company from another – its people.
Not the product, not service establishments, not the process, not secret ingredients; ultimately any of
these can be duplicated.
• The Japanese have always recognized this and it is one of the reasons for their success in world markets –
they place tremendous value on the integration of people with organizational objectives, equipment and
Although the difference may be subtle, there is a difference between employee participation and employee
involvement. When the two phrases are used within the human resources context, it can denotes two
separate company policies and levels of employee company interaction. However, both processes can yield a
more productive work force.
When an employee participates in a business activity, it means he shares the activity with others. These
others form one team with the employee and the team is responsible for completion of a goal or project. The
team provides the forum where the employee can suggest ideas to make the item more efficiently and make
decisions about his portion of the team's project. Whether the level of the employees' involvement is major or
minor, all team members are encouraged to participate.
Combining both management styles can yield a work force that is more motivated and employees who
enjoy their jobs more as they feel part of the process.
It can lead to longer employment periods with the same employees, requiring fewer new employee hires
and reducing company turnaround.
The projects can be completed and implemented faster and more efficiently given that the workers are
more aware of the methods to streamline the process than management, as the employees are
responsible for the daily maintenance.
The keys to involvement are several and complex:
Share ownership and profit distribution plans can help to foster an interest in a company’s affairs at the
competitive level which is often hard to get across in the normal day to day routine of workplace activity.
(b) Job security
Doubt as to whether you will still be with the company next week are hardly likely to encourage a sense of
belonging. Again the Japanese have recognized this rather obvious truism for many years.
In order to implement employee involvement and empowerment to an enterprise the following key
actions need to take place:
Giving employee the responsibility
Training employee to accept responsibility
Communicating and giving feedback
Giving rewards and recognition
Objectives of Participative Management
To Make Best Use of Human Capital: Participative management does not restrict organizations to exploit
only physical capital of employees. Rather it makes the best use of human intellectual and emotional
capital. It gives employees an opportunity to contribute their ideas and suggestions to improve business
processes and create a better working environment.
To Meet the Psychological Needs of Employees: When employees have a say in decision making
process, it gives them a psychological satisfaction. It is a simple force that drives them to improve their
performance, create a proper channel of communication and find practical solutions to design better
To Retain the Best Talent: Participatory management is one of the most effective strategies to retain the
best talent in the industry. It gives employees a sense of pride to have a say in organizational decision
making process. Once they are valued by their seniors, they stick to the organization and become
management’s partners in meeting specific goals and achieving success.
To Increase Industrial Productivity: In today’s competitive world, motivation, job security and high pay
packages are not enough to increase industrial productivity. Leadership, flexibility, delegation of authority,
industrial democracy and employee say in decision making are important to increase annual turnover of any
To Establish Harmonious Industrial Relationship: Participatory from of management is an unbeatable tact to
establish and maintain cordial relationships with employees and workers union. The success of an
organization depends on its human resources. Employee empowerment acts as a strong force to bind the
employees and motivate to give them their best to the organization.
To Maintain a Proper Flow of Communication: Two-way communication plays an important role in the
success of any organization. Employee participation in decision making ensures proper flow of
communication in the organization. Everyone contributes their best and tries to strengthen the organization
by contributing their best to improve business processes.
Methods/Ways of Participation of Employees in Decision-
Participation at the Board Level: Representation of employees at the board level is known as industrial
democracy. This can play an important role in protecting the interests of employees.
Participation through Ownership: The other way of ensuring workers’ participation in organizational
decision making is making them shareholders of the company. Inducing them to buy equity shares,
advancing loans, giving financial assistance to enable them to buy equity shares are some of the ways to
keep them involved in decision-making.
Participation through Collective Bargaining: This refers to the participation of workers through collective
agreements and by deciding and following certain rules and regulations. This is considered as an ideal way
to ensure employee participation in managerial processes. It should be well controlled otherwise each party
tries to take an advantage of the other.
Participation through Suggestion Schemes: Encouraging your employees to come up with unique ideas
can work wonders especially on matters such as cost cutting, waste management, safety measures, reward
system, etc. Developing a full-fledged procedure can add value to the organizational functions and create a
healthy environment and work culture. For instance, Satyam is known to have introduced an amazing
country-wide suggestion scheme, the Idea Junction. It receives over 5,000 ideas per year from its employees
and company accepts almost one-fifth of them.
Participation through Complete Control: This is called the system of self management where workers
union acts as management. Through elected boards, they acquire full control of the management. In this
style, workers directly deal with all aspects of management or industrial issues through their representatives.
Participation through Job Enrichment: Expanding the job content and adding additional motivators and
rewards to the existing job profile is a fine way to keep workers involved in managerial decision-making. Job
enrichment offers freedom to employees to exploit their wisdom and use their judgment while handling day-to-
day business problems.
Participation through Quality Circles: A quality circle is a group of five to ten people who are experts in a
particular work area. They meet regularly to identify, analyze and solve the problems arising in their area of
Examples of Employee Involvement Programs
The old-fashioned suggestion box that is rarely opened, let alone utilized, will not do much for company morale,
however, a suggestion box with a kick will involve employees from throughout the company.
Reducing accidents can reduce your liability and improve attendance and productivity. Implementing safety
committees at your business can help you achieve this goal. Each committee member should serve a one-year
term. Provide a place for monthly safety meetings and make sure a member of management attends to consider
any safety suggestions.
Placing dry-erase boards in each department and promoting an "ideas campaign" will help keep employees
involved. When employees come up with new ideas to make the business run more smoothly, they can put them
on the board.
Peer Picking Program
Regardless of a resume, references or other factors, employees ultimately have to work with new hires. An
Participative Schemes In India
The introduction of works committees through the Industrial Disputes Act in 1947 was hailed by many as an
encouraging measure for participation. The works committee was envisaged as an industrial relations (IR)
tool to resolve or reduce differences between managements and labour.
The National Commission on Labour, 1969, recommended that the recognized union be given the right to
nominate worker representatives to the works committee.
In 1956, the government suggested at the annual labour conference that a delegation should go to Europe
and study how the system worked in countries where many of the joint bodies were still active. The
delegation reported back to the conference and proposed that JMCs be set up in all establishments
employing 500 or more workers. The conference adopted this recommendation as a resolution in 1958.
After the JMC experience, the Government decided to make a fresh attempt at participation in public sector
units (PSUs) at least. It announced in 1971 a scheme for worker directors on PSU boards. One worker
director was made mandatory for each PSU, the representative being a nominee of the recognized union.
In 1975, one of the populist measures adopted by the Government was a 20-point programme, and
workers’ participation was one of the points. A new scheme of shop councils and joint councils was
formulated in October that year.
When the Janata Party came to power in 1977, it appointed a committee under Labour Minister Ravindra
Verma to investigate statutory imposition of participation. The Verma Committee in 1978 duly
recommended a statute on participation.
The final step in the rather prolonged introduction of participation was taken in 1990, when the new
Government drafted a Participation of Workers in Management Bill, and circulated it among chambers of
commerce and major unions for comments. The annual labour conference that year had an almost single-point
agenda – statutory participation.
CYCLES OR WAVES OF PARTICIPATION
Cycles: history of participation shows periods of development followed by
periods of decay with little/no overall change (Ramsey 1983)
Waves: interest in participation ‘ebbs & flows’ at both the micro and macro
levels (Marchington 1992)
EU INFORMATION AND CONSULTATION DIRECTIVE 2002
“This is the best opportunity ever, to reform the Irish industrial relations system.”
Prof Keith Sisson
Right to be informed and consulted on matters currently affecting their jobs and
those likely to impact on their future work life.
A CASE OF ‘GOOD’ PRACTICE
In this organisation commitment to informing and consulting employees comes from the top.
They employ multiple mechanisms for both purposes. Material is presented in good time and
is broad and deep in scope. Both direct and representative mechanisms are used. Decisions
can and do change as a result.
A CASE OF ‘POOR’ PRACTICE
There is no ‘real’ commitment to informing and consulting employees. The
organisation pays ‘lip service’ by having mechanisms in place that are not active.
Employee representatives are marginalised. The preference is for direct
mechanisms to be used for informing (at short notice). Decisions should not and
do not change.
Subpart A – General Provisions
Subpart A establishes the framework for the rest of
the regulation. It includes definitions, provides
authority for supplementation of the regulation
when necessary by individual agencies, and
encourages employees to seek advice from agency
Restates the 14 principles of ethical conduct and instructs
employees to apply them when considering situations not
specifically addressed by the regulation; and
For situations that involve appearances of conflicts, provides that
the circumstances be judged from the perspective of a reasonable
person with knowledge of the relevant facts.
SUBPART B – GIFTS FROM OUTSIDE SOURCES
Subpart B prohibits employees from soliciting or accepting gifts from
prohibited sources or gifts given because of their official position. The term
“prohibited source” includes anyone seeking business with or official action by
an employee’s agency and anyone substantially affected by the performance
of the employee’s duties. For example, a company bidding for an agency
contract or a person seeking an agency grant would be a prohibited source of
gifts to employees of that agency.
The term “gift” is defined to include nearly anything of market value. However,
it does not include items that clearly are not gifts, such as publicly available
discounts and commercial loans and it does not include certain
inconsequential items, such as coffee, donuts, greeting cards, and certificates.
SUBPART C – GIFTS BETWEEN EMPLOYEES
Subpart C prohibits employees from:
Giving or soliciting for a gift to another employee who is an official superior;
Accepting a gift from a lower-paid employee, unless the two employees are
personal friends who are not in a superior-subordinate relationship.
The following are among the exceptions to these prohibitions:
On an occasional basis, employees may give and accept items aggregating $10 or less per
occasion, food and refreshments shared in the office, or personal hospitality at a residence.
This exception can be used for birthdays and those holidays when gifts are traditionally
On infrequent occasions of personal significance, such as marriage, and on occasions that
terminate the superior-subordinate relationship, such as retirement, employees may give and
accept gifts appropriate to the occasion and they may make or solicit voluntary contributions
of nominal value for group gifts.
SUBPART D – CONFLICTING FINANCIAL INTERESTS
Subpart D contains two provisions designed to deal with financial interests that conflict with
employees’ official duties.
The first provision, entitled “Disqualifying financial interests,” prohibits an employee from
participating in an official government capacity in a matter in which he has a financial interest
or in which his spouse, minor child, employer, or any one of several other specified persons has
a financial interest. For example, an agency purchasing agent could not place an agency order
for computer software with a company owned by his wife. The provision includes alternatives
to nonparticipation, which may involve selling or giving up the conflicting interest or obtaining
a statutory waiver that will permit the employee to continue to perform specific official duties.
The second provision, entitled “Prohibited financial interests,”
contains authority by which agencies may prohibit employee from
acquiring or retaining certain financial interests.
Employees required by Subpart D to sell financial interests may be
eligible to defer the tax consequences of that divestiture.
SUBPART E – IMPARTIALITY IN PERFORMING OFFICIAL DUTIES
There may be circumstances other than those covered by Subpart D in which
employees should not perform official duties in order to avoid an appearance
of loss of impartiality. Subpart E contains two disqualification provisions
addressing those appearance issues.
The first provision, entitle “Personal and business relationships,” states that
employees should obtain specific authorization before participating in certain
Government matters where their impartiality is likely to be questioned. The
matters specifically covered by this standard include those:
Involving specific parties, such as contracts, grants, or investigations, that are
likely to affect the financial interests of members of employees’ households; or
In which persons with whom employees have specific relationships are parties
or represent parties. This would include, for example, matters involving recent
employers, employers of spouses or minor children, or anyone with whom the
employees have or seek a business or financial relationship.
SUBPART F – SEEKING OTHER EMPLOYMENT
Subpart F prohibits an employee from participating in their official capacities in particular
matters that have a direct and predictable effect on the financial interests of person with
whom they are “seeking employment” or with whom they have an arrangement concerning
The term “seeking employment” encompasses actual employment negotiations as well as
more preliminary efforts to obtain employment, such as sending an unsolicited resume. It
does not include:
Sending an unsolicited resume, for example, to someone only affected by the
employee’s work on general rulemaking;
Requesting a job application or rejecting an unsolicited employment overture.
An employee generally continues to be “seeking employment” until the
employee or the prospective employer rejects the possibility of employment
and all discussions end. However, an employee is no longer “seeking
employment” with the recipient of an unsolicited resume after two months
have passed with no response.
SUBPART G – MISUSE OF POSITION
Subpart G contains four provisions designed to ensure that employee do not
misuse their official positions. These include:
A prohibition against employees using public office for their own private gain
for the private gain of friends, relatives, or persons with whom they are
affiliated in a non-Government capacity, or for the endorsement or any
product, service, or enterprise;
A prohibition against engaging in financial transactions using nonpublic
information, or allowing the improper use of nonpublic information to further
An affirmative duty to protect and conserve Government property and to use
Government property only for authorized purposes; and
A prohibition against using official time other than in an honest effort to
perform official duties and a prohibition against encouraging or requesting a
subordinate to use official time to perform unauthorized activities.
SUBPART H – OUTSIDE ACTIVITIES
Subpart H contains provisions governing employees’ involvement in outside activities
including outside employment. These provisions are in addition to the provisions set out in
other parts of the regulation. The provisions in Subpart H include:
Synopses of statutes and a constitutional provision that may limit certain outside activities;
A prohibition against engaging in outside activities that conflict with employees’ official
Authority by which individual agencies may require employees to obtain approval before
engaging in outside activities;An outside earned income ban applicable to certain Presidential
appointees and certain non-career employees;
The notion of employee participation and involvement to foster the growth of business
organizations is one that is only a few decades old. Sceptics initially feared that such an
approach would be doomed to devolve into chaos, similar to a bus driver who allows multiple
passengers to steer simultaneously. However, when used effectively, employee participation
can lead to greater workplace satisfaction, increased profitability and faster growth.