Draft Presented to International Evidence: Worker-Management Institutions and Economic Performance Conference, U.S. Commission on the Future of Worker-Management Relations Suggested Citation Shimada, H. (1994).Paper_Shimada_020694.pdf: 10729 downloads, before Oct. 1, 2020

Shimada, Haruo

English

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Federal Publications Key Workplace Documents 
3-14-1994 
Worker Participation in Management Decision Making 
Haruo Shimada 
Keio University 
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Worker Participation in Management Decision Making 
Disciplines 
Human Resources Management 
Comments 
Draft Presented to International Evidence: Worker-Management Institutions and Economic Performance 
Conference, U.S. Commission on the Future of Worker-Management Relations 
Suggested Citation 
Shimada, H. (1994). Worker participation in management decision making (Draft presented to 
International Evidence: Worker-Management Institutions and Economic Performance Conference, U.S. 
Commission on the Future of Worker-Management Relations). Retrieved [insert date], from Cornell 
University, School of Industrial and Labor Relations site: http://digitalcommons.ilr.cornell.edu/
key_workplace/427 
This paper is available at DigitalCommons@ILR: https://digitalcommons.ilr.cornell.edu/key_workplace/427 
Ih-r To/if 
Worker Participation in Management Decision Making 
A draft prepared for 
Conference on International Evidence 
Commission on the Future of Worker-Management Relations 
prepared by 
Haruo Shimada 
Professor, Keio University 
Tokyo, Japan 
February 6, 994 
I. Introduction 
This draft paper explains the structure and types of worker 
participation in Japanese industry and corporations briefly and 
discusses benefits of such a system to workers, management, 
industry, and economy as a whole. 
II. The structure of worker participation 
Worker participation in Japanese companies is practiced most 
visibly and formally through the scheme of joint consultation. 
This is the system where representatives of both employees 
(usually union representatives) and management participate. The 
main objective of the joint consultation system is to share 
information between workers and management on a relatively broad 
range of issues relating to corporate management and working 
conditions. This is the place to share information and discuss 
issues and not the place for bargaining. 
The joint consultation system is instituted in many 
companies. In fact, the majority, more than 70 percent, of 
Japanese companies are said to have this system in some form or 
other. The system is spontaneous, and neither required or 
prescribed by the law. This system coexists in many companies 
side by side with collective bargaining. The frequency of this 
system tends to vary with the size of the firm: the larger the 
firm the greater the likelihood of joint consultation. The 
coverage of this system seems to be greater than the collective 
bargaining system. Even in small companies, where no union 
exists, this system tends to exist although in a somewhat 
informal form of worker representation. 
The joint consultation system (JC) is organized at various 
levels of corporate organization, and beyond to the industry 
level. In a large corporation which has a number of plants, the 
JC is organized at the corporate level, plant level, and workshop 
level. At the workshop there usually are informal groups, which 
also perform de facto function of worker participation in an 
informal way. Beyond the level of individual corporations, there 
often exist some form of joint consultation for industry and 
economy, often involving the government. 
./•> 
The historical background of the JC may deserve attention. 
The JC was proposed in 1950s, most notably by some progressive 
labor scholars and more systematically the Japan Productivity 
Center, which started in 1955. Japanese labor management 
relations in the previous period, the decade in the wake of the 
end of World War II, was highly conflictive and adversarial. 
Most major companies suffered from bitter labor strife and losses 
due to strikes. 
Labor movements in those days were dominated by militant 
leaders who were encouraged by the liberal policy of the 
occupation authority led by General Douglas MacAthur in the first 
place, and later by the influence of Communists. Labor 
management relations were regulated by the Trade Union Law, and 
Labor Management Relations Adjustment Law, both of which were 
modeled after the Wagner Act. 
Having suffered from bitter struggles, both management and 
some union leaders sought to create some form of communication 
and information sharing between labor and management, aside from 
the system of collective bargaining. Professor Fujubayashi 
Keizo, of Keio University, a pioneering scholar of labor-
management relations, described that the JC represents a 
cooperative aspect of labor-management relations, while 
collective bargaining represents a confrontational aspect of 
labor-management relations. The Japan Productivity Center 
promoted this system because they thought that productivity 
improvement could be attained most effectively on the basis of 
better mutual understanding of the goal and methodology of 
productivity improvement by labor and management. 
III. Types of worker participation 
There are as many types of worker participation as 
organizational levels where worker participation is practiced in 
some form. Let me explain first three basic forms of joint 
consultation system within a typical large manufacturing firm, 
and then proceed to explain more informal systems of de facto 
worker participation at the workshop, and a formal joint 
consultation at industry or economy level. 
Corporate level worker participation: In a large Japanese 
corporation, there usually exists a formal system of joint 
consultation, where union leaders and top corporate executives 
participate 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 it 
operates are basically comparable to the one at the corporate 
level, except that in this case, representatives of both labor 
2 
and management are from within the plant, and the scope of issues 
discussed is more geared to plant specific topics. 
Workshop level worker participation: The system of worker 
participation tends to be less formal, but more closely related 
to issues of the workshop. Topics to be discussed are more 
closely tied to day-to-day problems such as transfer, job 
assignment, training, holidays, shift systems, etc. Workshop 
union committee men and first-line supervisors play critical 
roles in resolving workshop issues through de facto joint 
consultation. 
There are more informal forms of worker participation at the 
workshop. Workers voices are heard and reflected in day-to-day 
decision making at the workshop. This kind of function is played 
through a variety of channels: sometimes through informal groups, 
other times through QC (Quality Circle) activities, and still 
other occasions through interactions among workers, first-line 
irregular small meetings and personal consultations at the 
workshop. Through such activities, many problems-ranging from 
working conditions to production methods which directly affect 
individual workers are consulted, discussed, and resolved. 
On the other side of the organizational ladder, namely, at 
the level of the industry or economy, there often exist 
relatively formal schemes of joint consultation or "worker 
participation. Industry association representatives often meet 
labor union representatives to discuss various matters relating 
to industry performance, prospects, and policy issues. The 
government offices in charge of particular industries often 
organize formal meetings where both management and labor 
representatives attend and discuss various issues of common 
interest. This kind of conference or meetings are also organized 
at the level of total industry or economy, either with or without 
government representatives. They discuss and share information 
on more macro economic and industry issues and also macro labor 
conditions. 
IV. Benefits 
Productivity and quality improvements: Worker participation 
of various forms at various levels as described above has 
contributed greatly to promote productivity and quality 
improvements at the workshop, company and industry. Productivity 
improvement has been attained through both cost cutting and 
introducing new technologies. Quality improvement has been 
attained by increasing care and control of workers and also 
implementing new production methods. In either case, the most 
critical was the understanding, sharing of goals, and active and 
responsible involvement of workers. Increased productivity and 
improved quality of products contributed not only to management 
3 
but also to workers in the form of higher wages and security of 
employment. 
Labor adjustment: With changes in business conditions, 
changes in production structure, and introduction of new 
technology, work loads and work assignments need to be altered. 
The consequent labor adjustment may require transfer of workers 
to new jobs, new workshops or to new plants somewhere else, if 
not dismissals. Such labor adjustment plans are normally 
discussed first at the table of joint consultation before 
actually put into practice. Usually, the total plan of 
adjustment is presented and discussed at the corporate level 
joint consultation, and after reaching agreement, broken down 
plans more specific to plants or workshops are discussed at joint 
consultation of relevant levels. These adjustment plans are 
often negotiated at collective bargaining. However, these plans 
are almost always disclosed, explained and discussed at joint 
consultation tables prior to be picked up at collective 
bargaining. Through this process, relevant information is shared 
somewhat more in advance and more in detail also with contextual 
information so that both workers and employers can prepare and 
adjust for changes more smoothly. 
Adaptation to economic changes: The complex system of 
worker participation and information sharing of various forms and 
at various levels, as described above, has served the purpose of 
moderating shocks of economic changes and provided more room for 
both management and workers to prepare to adapt such changes. 
With cooperation of workers, companies, and industries have been 
able to adjust wages and working hours more flexibly, thereby 
maintain employment more stably. This has been beneficial both 
to industry and economy with a long-term perspective, and to 
workers in the sense of assuring them employment security. 
4 


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