industrial democracy

industrial democracy

the participation of the workforce in the government of organizations. Various approaches to industrial democracy provide employees or their representatives with varying degrees of power to influence decision-making processes in their organization. All, however, involve the creation of institutions and mechanisms to permit transmission of employee interests and objectives into these processes.

Industrial democracy can take a number of forms:

1. workers' control, where the workforce is the sole source of authority within the organization, even though the organization might be actually owned by another (i.e. the state), and managers are required to operate to policy determined by the collectivity. This can be said to be direct form of democracy in that potentially all workers are deeply involved in the formulation of policy;
2. workers' cooperative, where the organization is actually owned by the employees, and where the management (selected by and possibly from the workforce) acts in accordance with policies formulated by or sanctioned by the workforce. See WORKERS' COOPERATIVE;
3. worker directors, who are representatives of the workforce who sit on the BOARD OF DIRECTORS and are involved in determining broad company policy. In contrast to other forms of industrial democracy it is not anticipated that worker representatives will have a close involvement in operational decisions. However, in the CO-DETERMINATION system in Germany, worker directors operate in tandem with works councils, which have a more substantial involvement in these areas of management. See WORKER DIRECTOR;
4. collective bargaining which is a form of industrial democracy in that it involves management formally relinquishing the right to take all decisions in the organization. See COLLECTIVE BARGAINING.

These various forms of industrial democracy can be contrasted with EMPLOYEE PARTICIPATION and EMPLOYEE INVOLVEMENT, where employee involvement is often confined to immediate job issues and where employees or their representatives have few formal rights in decision-making. See BULLOCK REPORT, SOCIAL CHAPTER.

Collins Dictionary of Business, 3rd ed. © 2002, 2005 C Pass, B Lowes, A Pendleton, L Chadwick, D O’Reilly and M Afferson

industrial democracy

the participation of the workforce in the corporate decision- making process alongside management. See WORKER PARTICIPATION, TRADE UNION, EMPLOYEE SHARE OWNERSHIP PLAN.

Collins Dictionary of Economics, 4th ed. © C. Pass, B. Lowes, L. Davies 2005