economic and industrial democracy cooperative and expectations: a case study of an indian worker...

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Democracy Economic and Industrial

DOI: 10.1177/0143831X07073033 2007; 28; 140 Economic and Industrial Democracy

George Mathew Kandathil and Rahul Varman

Cooperativeand Expectations: A Case Study of an Indian Worker Contradictions of Employee Involvement, Information Sharing

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Contradictions of Employee Involvement,Information Sharing and Expectations:

A Case Study of an Indian WorkerCooperative

. . . in a society permeat

of domination and subo

examine our contradictio

out the political implica

examination we may thin

alternative. (Kleinman, 19

comme© 2007 Department of Economic

httpDownloaded from

George Mathew KandathilCornell University

Rahul VarmanIndian Institute of Technology, Kanpur

Employee involvement is an evolving process replete with

uncertainties even given the best of preconditions – worker

ownership. This case study of the largest Indian worker cooperative

focuses on the processes of employee involvement over a decade.

The authors argue that employee involvement is contingent upon the

feeling that the information that the employees consider critical is

shared with them. While for the management, information sharing is

an instrument in eliciting involvement, for the employees it is a matter

of trust. The authors propose that as the management expectation of

information sharing goes through an instrumental loop, the worker

expectation of information sharing goes through an institutional,

trust-based loop. This mismatch in expectations around information

critically influences employee involvement.

Keywords: employee involvement, information sharing, trust, worker ownership,

worker participation

ed by inequalities, we can’t get rid of the patterns

rdination we participate in unless we continuously

ns. And we find these contradictions by tracing

tions of our moral identities. Without such self-

k ourselves as progressive, but fail to build a better

96: 140)

Economic and Industrial Democracy & 2007 Arbetslivinstitutet, Vol. 28(1): 140–174.DOI: 10.1177/0143831X07073033www.sagepublications.com

rcial use or unauthorized distribution.History, Uppsala University, Sweden. All rights reserved. Not for

at CORNELL UNIV on July 28, 2008 ://eid.sagepub.com


Worker Ownership and Employee Involvement

Though worker ownership remains among the ‘most promisingdevices’ of institutionalizing workplace democracy (Paton, 1989;Russell et al., 1979), evidence suggests that employee ownershipby itself does not automatically lead to ‘psychological ownership’(Gunderson et al., 1995; Pierce et al., 1991), especially in organiza-tions where workers, unions and/or management have turned toworker ownership as a last resort, primarily to save their jobs(Cornforth et al., 1988). If an organization continues to work inthe same manner as when it was owned by an individual/ family/shareholders, if the same structure and culture prevails, it will notmake a difference to a typical owner-worker, who now owns just afew shares in the organization even though collectively workers/employees may have the majority stake. For instance, in a study con-ducted eight months after the transfer of ownership in a furniturefactory, where no formal mechanisms for institutionalizing partici-pation had been put in place, worker-owners in general consideredthe management as the true owners of the firm and did not see them-selves as partners (Hammer and Stern, 1980).

Worker ownership can at best be only a favorable precondition,but worker involvement and commitment require specific mechan-isms, structures and institutions through which employees canparticipate and therefore learn to participate and function in ademocratic set-up (Pateman, 1970; Rhodes and Steers, 1981).Authority-based organizations do not offer much help on how tofunction in a set-up where fiat is not the primary mechanism toensure that employees fulfill their expected roles. This is particularlytrue for those organizations that have been functioning in a ‘hier-archical’ manner until the change of ownership took place forsome expedient reasons (Swidler, 1979). The transition may createexpectations (French and Rosenstein, 1984), and yet, there is everypossibility that an organization will continue to work in the sameold manner if conscious attempts are not made to institutionalizefundamentally different mechanisms and structure. Thus, therelationship that we posit is as shown in Figure 1.

At times, though fundamentally different mechanisms forparticipation are instituted in organizations, such participatorymechanisms per se may not lead to enhanced worker participation.In a comprehensive literature review, Dachler and Wilpert (1978)argue that participation is a multidimensional and dynamic social

Kandathil and Varman: Employee Involvement – Expectations, Contradictions 141




phenomenon. Long (1981) examined the possible effects of the intro-duction of formal employee participation in ownership and decision-making on patterns of organizational influence using longitudinaldata obtained before and after conversion of an electronics firm topartial employee ownership. Although numerous formal participa-tion mechanisms were introduced, including employee board repre-sentation, an employee council and quarterly shareholder meetings,little change was found in perceived worker participation at anydecision level. Employee ownership seemed neither to enhance thedesire for worker influence among managers or non-managers, norto affect significantly the total amount and distribution of influencewithin the organization. In another study, it was observed thatdissatisfaction with financial performance might increase effortsby employee owners to influence decision-making (French, 1987).In a review of some European research on indirect participation,Lammers (1967) found that the more attention that the jointdecision-making committees paid to the promotion of specificwork-related issues like working conditions, the more attentionthey simultaneously paid to the problems of the enterprise as awhole.In an interesting case study conducted in a small hi-tech plant in

Canada, which was bought over by the employees in an agreementwith the parent organization, Long (1982) brought out the centralityof participative mechanisms in realizing the positive effects ofemployee ownership. In spite of the workforce being highly educatedand enthusiastic about their ownership and the company also doingvery well, employees’ enthusiasm and actual participation in variousforums rapidly declined. He asserts that the mere implementation ofa variety of simple participation mechanisms will not necessarilyproduce increased worker influence unless the management is willing

142 Economic and Industrial Democracy 28(1)

Employeeownership

Organizationcommitment

and involvement

Intervening institutions for participation

FIGURE 1

Employee Ownership, Participation and Organization Commitment




to integrate these mechanisms into the mainstream of the organiza-tional decision-making. The study also brought out the significanceof employee expectations. When the workers realized that theirraised expectations were not being fulfilled, their participationquickly declined. Moreover, this led the workers to even questionthe ‘fairness’ of the management. The question that emerges fromthe preceding discussion is: what can be the possible nature of theintervening participatory institutions so that they are effective insustaining employee involvement?

Methodology

This article is based on the qualitative case study of a jute mill,New Central Jute Mills (NCJM), an undertaking of an employeecooperative credit society in Kolkata, India. It is one of the largestemployee-owned cooperatives in the private sector in India. Outof about 70001 employees, almost 60 percent are migrants fromthe rural and economically backward states of Bihar and UttarPradesh. Most of the employees have been living in the companypremises or environs2 for more than 10 years.

Participation is a ‘social learning process’ (Hall, 1993) and essen-tially a phenomenon of the collective; hence any discussion that doesnot bring out the collective processes is inherently incomplete. A casestudy provides a fuller contextual sense of the studied phenomenonand is best suited for exploring ‘social processes as they unfold inorganisations’ (Hartley, 1994). The first author collected dataduring the first quarter of 1999. Documents like clippings from thelocal dailies, articles, letters, personal diaries, reports, minutes ofmeetings and joint memoranda3 were studied, though inferencesfrom documents were treated only as clues (Yin, 1984). The mostimportant source of data was 105 face-to-face unstructured/semi-structured interviews, varying in duration from one to four hours,with organizational members from different hierarchical levels outof which 50 were with workers. Observations, conversations, infor-mal discussions and participation in some meetings were also impor-tant sources of data gathering. The researcher conducted a fewgroup discussions among workers in the worker colony4 and alsowith union officials at their residences and union offices. We haveprovided some of the details of the sample and a brief discussionon issues involved in data collection in Appendix 1.





While attempting to understand the substantive issues aroundparticipation in the cooperative through observations, group dis-cussions and interviews, we were seeking ‘data driven theory’ (Eisen-hardt, 1989). In the first iteration of data analysis during the courseof data collection, issues of disciplining process, functioning of aconsultative committee and the process of workload change emergedas substantive enough to reflect the complexities and finer aspectsof variations in employee involvement over time; hence they werestudied in depth. In further analysis, information and informationsharing emerged as a key theme that provided insights regardingemployee involvement in NCJM.

Background to the Case: Industrial Relations and Worker

Involvement at NCJM

Formation of the Cooperative

The cooperative was formed out of a family-owned company,primarily to save the jobs of the employees5 (see Appendix 2 forsome of the background details of NCJM and its formation). InApril 1986, the then owners declared a lockout citing reasons of‘labour unrest’6 and subsequently withdrew leaving assets worthRs.710 million and liability worth Rs.400 million. The lockoutcontinued for over a year and the locality was marked by heavyunemployment and a deteriorating socioeconomic situation, sincemost of the jute mills – the main business in the area – were in amiserable state. In this context, the managing director (MD) ofthe company, together with the local government and politicalleaders, had protracted discussions with the trade unions (14 TUsin total8) at the company on the future course of action. Finally,they came up with the idea of taking over the company by formingan employee cooperative. Subsequently, the unions held meetingswith the workers who remained in the plant premises (around2500 workers), the remaining (around 4000 workers) having leftfor their native homes. The workers, like the staff, agreed to contri-bute Rs.40 per week per worker (about 13 percent of their wages)toward buying the company shares till the amount reachedRs.3000 per employee. Thus, in April 1987, a year after the closure,the employees took over and the company resumed its operations.





On the basis of the variations in employee involvement, particu-larly worker involvement in their work and in other organizationalissues, the decade (1987–98) can be broadly divided into fourperiods: (1) the formative period (1987–91), (2) the stable period(1991–4), (3) the turbulent period (1994–6) and (4) the new leader-ship period (1996–8).

The Formative Period (1987–91)

Even though operations resumed in 1987, a majority of theemployees who had left for their native villages did not return towork until 1989, as they had not been given much informationabout developments in the meantime. During 1987–9 the MD,along with the TUs, was intensely involved in untangling the legalcomplexities.9 This required numerous meetings with financiers,government agencies, local government, etc. As a practice, beforeparticipating in any such meeting, the MD would have an internalmeeting with the trade union representatives (URs), which waslater formalized as the All Union Advisory Committee (AUAC).Although the legal formalities were got over, the employees,especially those who came later, were yet to internalize the newsystem. The workers were skeptical about the idea of a cooperative,which they took as a ‘ploy’ by the unions along with the manage-ment to take their money. When some workers could not sell offtheir shares, as the shares were non-transferable, it increased theirsuspicion. The TUs could not allay workers’ doubts, especiallyregarding financial matters, while the MD made no such attemptsince the workers, he assumed, could ‘not comprehend thesematters’.

Plant-Level Consultative Committee (PLCC) and other channels of

communication In this context, workers continuously complainedto theMD that the URs were not aware of the shopfloor10 problems.In a bid ‘to enhance workers’ interest in their work’, theMD felt thatit would be useful ‘to give workers a chance to influence plant-leveldecisions and to air their problems to the management’. Thus, aPlant-Level Consultative Committee (PLCC) was constituted in1989 as a ‘democratic decision-making system . . . with a view tocreate a sense of belonging and confidence among the employeesin the functioning of the company . . . to remove misunderstanding





between the shopfloor management and the workers’. Besides thePLCC, the company attempted other measures, like union meetings,works committee and gate meetings,11 in order to open multiplechannels of communication between the management, union mem-bers, committee members and the rank-and-file, though some ofthese channels existed formally even in the family ownership days.

Changes in the disciplinary process Discipline was one of the pro-minent issues of dispute between the unions and the managementduring the pre-cooperative period. Depending on the politicalpower of the union, ‘the bargaining’ (as labor officers called it) attimes ended in work disruptions or strikes. Workers were not evenpresent during the discussions between the UR and the labor officer.But during the cooperative period, disciplinary cases were notreferred to the labor office; instead, they were settled in the plantitself, through consultation between the respective URs, the accusedand the accuser. But this change did not last for long, as a new TU,Shramik Samiti, took the cooperative by storm.

Shramik Samiti (SS) and its impact Contrary to the expectations ofthe workers, the cooperative could neither disburse full wages andsalaries of the employees consistently nor could it pay up all theinterest on old liabilities. The TUs and some staff tried to explainthe financial difficulties to the workers, explaining that the coopera-tive was short of funds, but the latter were not ready to accept thisreason. They rejected this reason all the more since they observedthat the URs and some staff were given travel allowance and leaveof absence for attending meetings. Because of the high frequencyof such meetings (two or three in a week), many URs would notoften be at work in the plant. Some URs exploited this situationand brought up various excuses to stay away from the plant. Mean-while, a rumor went around that the cooperative was a ploy of themanagement in collusion with the TUs to embezzle workers’money. Incidentally, at the same time, the management proposedrunning additional production lines through outside contractors asan alternative means of generating revenue. Work-level (but notfinancial) implications were debated in the AUAC and later in thePLCC, but prior to these discussions some workers came to knowabout it at the proposal stage itself through the grapevine. Giventhe atmosphere of distrust, these workers, mainly casual workers,12

felt that their ‘jobs were in danger’13 and they formed a new union,





Shramik Samiti (SS). Many permanent workers joined forces withthem and the union gained momentum quickly.

SS accused both the management and the existing unions of sell-ing off jobs to the prospective contractors14 without the consentof the existing workers. When the new contract workers appearedfor work, there was an open confrontation with SS members. TheSS leader put forth a number of accusations and conducted a gatemeeting, which was attended by a large number of workers. Atthis meeting, he provocatively invoked a change in the plansduring the formation of the cooperative to accuse the managementof an ulterior motive (on this change, see Appendix 2). The reasonfor delay in the sanctioning of funds by the financial institutions,he argued, was that the management, in collusion with the unions,had already spent these funds without any consideration for theworkers. He further pointed out in a note distributed to the workersthat ‘the management and the unions do not believe in labor parti-cipation and mistrust workers’ and therefore kept ‘critical informa-tion like details about allotment and usage of funds, purchase andsale of assets, etc. secret’. Many workers agreed with these argu-ments as they could not believe that the earlier owners ‘flew away’leaving behind so many of the assets. They also were not convincedof the existence of such a huge liability for the cooperative. Eventhough the existing unions distributed a joint memorandum,explaining the reasons for delay in sanctioning of funds and dis-cussed it in union meetings and gate meetings, the workers dismissedsuch explanations as ‘phoney’ and ‘big lies’. Many workers came outof their unions and joined SS, which made a significant impact onworker involvement, the first blow being to discipline at work.Workers started opposing the unions’ role in disciplining anddemanded resolution directly with the staff concerned. The MDsent a note complaining that ‘workers are not willing to maintaindiscipline as they did in the beginning’. The issue of indisciplinecame up in the PLCC, but many URs did not pay much attentionto it.

There was a noticeable shift in the issues discussed in the PLCC.The representatives recalled that during this time workers frequentlypressed them to take up the issue of wage payment. Meanwhile,some shopfloor workers launched a complaint that unions nomi-nated only their ‘loyal’ members to the PLCC but not the‘common shopfloor workers who know workers’ problems well’.Consequently, many unions replaced their PLCC members with





the shopfloor representatives (calledWorkerRepresentatives [WRs]).WRs took up the issue of wage payment frequently and vigorouslyin the PLCC meetings, but the chairman of the committee (usuallythe mill manager or personnel manager) objected to discussing theissue. This resulted in frequent walkouts by WRs and some URs,and finally cessation of the PLCC meetings. Coincidently, SS distur-bances reached a peak as it staged a number of demonstrations andwork disruptions. To resolve the crisis, SS was also invited to parti-cipate in the board meeting, where the ‘BIFR [a government agencysupervising the restructuring of ‘sick’15 enterprises; see Appendix 2]castigated the financiers for delay in sanctioning funds’. Workersalso had a meeting with the BIFR representatives, at the manage-ment’s initiative. In its following meetings with workers, SS sharedall that had happened in the board meeting. After these meetings,gradually, workers got back to the normal mode of functioning.This was the beginning of a ‘golden period’ in the history ofNCJM. The change in worker involvement became evident in themanner of resolving disputes.

The Stable Period (1991–4)

Resolving disputes with the management, workers reverted to theirearlier practice of asking the unions to act as moderators. Theattendance registers revealed that punctuality was restored. Manyworkers and many staff reported that, during this time, there wascollective pressure against shirking; union members and fellowworkers were even heckled if they indulged in long chats and/oravoiding work. But the state of other jute mills in the vicinity wasdrastically different. The jute industry was badly hit by continualstrikes in the wake of clashes between management and unions/workers. Closures of jute mills on the grounds of labor unrestwere common, while lack of raw material supply in the jute industrymade matters worse. At the same time, the workers and unions atNCJM decided to abstain from the industry-wide strikes in spiteof strong political pressure.16 Even on the day of Bharat bandh,17

a country-wide strike, most of the workers (90 percent) attendedtheir work as usual. The local dailies, a local researcher18 and thelocal government commended the cooperative as a ‘model’. Minutesof the various meetings suggested that the members were actively





participating in the committee activities and almost all intervieweesalso confirmed this.

Interestingly, during this period, at the request of the workerrepresentatives, the PLCC discussed some ‘critical’ financial issuesalso. For instance, in one PLCC meeting the chairman elaborated‘the disbursement details and plans for further utilization of fundsreceived from different sources under [the] BIFR scheme’. The man-agers and the unions jointly prepared a note explaining all similarissues in the vernacular and the unions distributed it to the workers.Some union members and some workers said that the top manage-ment encouraged them to discuss these issues along with otherwork-related aspects in their informal discussions after work hours.They added that the management used to receive enthusiasticallythe collective suggestions that emerged from such informal meetings.Many shopfloor workers reiterated this: ‘They started discussing ourproblems in the meetings’, though many staff members as well as thechairman maintained that the ‘discussions on financial details couldhave been avoided, since it was a higher-up matter’. Some more jointmemoranda appeared in-between. For example, one joint memoran-dum was on rationalization of employment. This memorandum,written in the native language, was distributed to workers andthey were asked to clarify their doubts with their respective unionrepresentatives. The lengthiest (and heated) discussions in thePLCC were on rationalization of employment and consequentworkload increase, and went on for nearly three months.

Workload change Under repeated instructions from the IRBI(Industrial Reconstruction Bank of India), the agency operating(on behalf of the BIFR) the restructuring scheme – the cooperativehad to reduce the number of employees and consequently increaseindividual workload.19 The URs and the staff were apprehensiveabout discussing this in the PLCC; still they took up the issue onthe MD’s insistence. Accordingly, in the PLCC meetings, theunions emphasized the dire need to increase the workload, andshared the information acquired from the AUAC discussions andmeetings with the IRBI. They extended such explanation to workersat large in gate meetings and union meetings as well as distributing ajoint memorandum. After some time, the URs informed workersthat the workload changes had been finalized, but workers opposedany such increase in workload. The MD’s note to the URs and man-agers indicated that because of ‘high pressure from the operating





agency and lack of time’ the management had gone ahead and over-ridden worker opposition. But during implementation, workersstood firm in their resistance. A shopfloor worker remarked: ‘They[the unions and the management] told us that we have to quicklyincrease production, but we did not understand the need for theworkload increase’. At this stage, the unions started holdingfrequent meetings with workers. In a memorandum distributed toworkers and in individual meetings with workers, the unionsargued how increased workload would lead to better financialhealth for the mill and emphasized the MD’s assurance of regularpayment of wages. In a bid to prove that they had already discussedwith central TU leaders all possible alternatives for increasingproduction, the union leaders also showed the discussion papersto workers. After a number of meetings and heated discussions,workers agreed to accept the changes to workload. Following this,workers appeared to take a positive interest in the issue. PLCCdocuments signify that several permanent workers even volunteeredto be transferred to new jobs with additional responsibilities. Someof them even came up with suggestions and signaled a willingness toshare new responsibilities, though there was no formal cross-functional training.

The Turbulent Period (1994–6)

Despite all these efforts, the cooperative could not make the hoped-for progress, and hence the financiers became reluctant to extendfurther support. It led to frequent delays in payment of wages andsalaries. Meantime, some workers, who were members of the politi-cally powerful unions (unions associated with ruling political partiesat central and state level), managed to get loans from the providentfund, with the MD’s approval, while the same was denied to otherson account of the poor financial health of the cooperative. Workersgot to know of such ‘secret deals’ through the grapevine and theyalleged ‘collusion’ between the management and the unions. At thesame time, rumors regarding financial mishandling and haphazardaccount keeping were also doing the rounds. The allegations grewinto conflict between workers and the unions and spilled over tothe shopfloor, where staff as well as workers now desisted fromconsulting unions on disciplinary issues.





This time, when WRs raised the issue of wage payment in thePLCC, the chairman refused to take it up, reminding them that‘the committee was not meant for discussing these issues’. Mean-while, as some PLCC members recalled during the personal inter-views, workers had started avoiding representatives who did nottake up the payment issue. A shopfloor worker commented, ‘Neitherthe management nor the leaders took any interest in our prob-lems . . . they were discussing something else [in the PLCC] and tell-ing us lies.’ Due to general work disruptions and increased frequencyof walkouts, the weekly PLCC meetings were suspended for amonth. The following PLCC meetings witnessed heated exchangeson ‘deterioration of worker trust in the unions’ (commented bystaff representatives and the chairman), an ‘alarming increase inworker indiscipline’ (commented by staff representatives) and ‘theloss of worker trust in the management’ (raised by URs andWRs). Finally, the management decided that as the PLCC hadbecome ‘a stage for fighting among workers and the unions, andthe management’, it was formally disbanded.

After the cessation of the PLCC, work disruptions becamefrequent. The situation in the jute industry as a whole had notimproved, as it continued to be hit by strikes, layoffs and closures.Unlike the earlier period, this time the cooperative (both theunions and workers) took an active part in industry-wide strikes.In response, to alleviate the problems and ‘to maintain their interestin work’, worker payment was given ‘top priority’ by the manage-ment. But even sustained payment (for four months) did not inspirethe desired worker commitment. Moreover, the next default in pay-ment of wages precipitated vigorous worker protest against theunions and management. This resulted in physical assault on someunion officials and staff, and finally in a layoff. The layoff wasrevoked after nine months20 in April 1997 with the appointmentof a new MD. He, in turn, appointed a (works) president, whichmarked the beginning of a new period.

The New Leadership Period (1996–8)

The new president had been working as a manager in a manufactur-ing cooperative prior to joining NCJM. Immediately on joining heheld a series of meetings with all the employees, including theunions, andmade himself accessible. Whenever the president entered





any department, he made a point of speaking at least to a fewworkers, asking their opinions and for suggestions. At the sametime, with regard to discipline, he was as tough with active21

union members and staff as with workers. He frequently movedaround the plant and issued warnings publicly to whoever camelate, without any discrimination. He also uncovered an act of for-gery committed by a union member and took disciplinary actionagainst him as per the rules. He also suspended a worker on disci-plinary grounds. Many workers, while narrating these incidents,praised the president’s capability and sincerity. Gradually, workersdeveloped an interest in maintaining discipline. The researcheroften observed that when some workers and even union members(including leaders) wasted time on non-work activities, otherswould pull them back to work, and at times some workers wouldheckle their recalcitrant colleagues, ‘it is our cooperative, and youalso should work for it’.In due course, the board forced the president to increase the work-

load further and the management finalized an implementation plan.Before implementation, the president directly addressed the work-force at a gate meeting and explained the need for the workloadincrease and its benefits. In this meeting he also spoke of thedeterioration of the cooperative’s financial health, reasons for theproblems and the possible implications for regular wage payment.He managed to elicit worker consent to the plan through a showof hands. Suggestions cum complaint boxes were installed and coop-eration from workers was remarkable, as many suggestions as wellas complaints were posted. For instance, some workers suggestedredeployment from the machine manufacturing division (MMD)to the production side, since there was less work at the MMD.These workers themselves sought consent from MMD workers forthe transfer. At a later date, however, the president was removedas he unilaterally suspended several staff members, which evokedstrong protests. These developments cannot be elaborated heredue to lack of space.This brief but eventful history provides an overview of the fluctua-

tions in industrial relations and employee involvement at work andin other organizational issues, such as workplace disciplining, thePLCC and workload change. In the early days of the cooperative(during 1988–9), employees seemed to be enthusiastic about theirwork and the cooperative, though this enthusiasm could not besustained. As employees, specifically workers, tried to make sense





of the cooperative’s functioning they had numerous doubts and theirinvolvement declined. With the rise of the Shramik Samiti, as thingsstabilized, employee involvement picked up but it dipped againduring the following turbulent period as economic conditions inthe jute industry deteriorated. There was a rise again in employeeinvolvement, as workers seemed to place their faith in the newleadership. In attempting to make sense of the dynamic nature ofemployee involvement across the four periods at NCJM, it seemsthat information and information sharing, and changing workerexpectations and the mismatch with management expectations arethe key sources of tension behind the evolving reality. We analyzethis tension further in the following section.

Discussion

Contested Terrain of Information Sharing

During the formative period, workers were left to themselves tounderstand the ‘new way’ of functioning. The ‘codified’ (Batstone,1979) nature of the legal and financial intricacies involved in thetransformation of a family-owned company into a cooperativeundertaking and the mistrust-laden sociopolitical situation prevail-ing in the industry resulted in confusion and skepticism. Althoughboth the management and unions shared information with workers,even the information that workers were seeking, it did not evoketheir interest in work. On the contrary, it seems that doubts as tothe veracity of management and union explanations took the formof SS activism and work disruptions. This further led to manage-ment reluctance in sharing ‘sensitive’ information. In contrast,during the ‘stable period’, even while conditions in the jute industryas a whole remained precarious, NCJM was commended as a‘model’ of employee involvement. Compared to the previousperiod, the significant difference observable during this phase wasin the manner of information sharing among the management,unions and workers; the management was more sensitive to workers’needs for specific, simplified and open information. The explanatorynotes on how the funds that the cooperative got from various finan-cial institutions were utilized, joint memoranda addressing work-related and other organizational issues, etc., in vernacular, weredistributed among the workers. The management even encouraged





the discussion of such issues through informal channels like after-work discussions in the worker colony. But the rumors of financialmishandling and the behavior of some of the union activists againraised doubts about the functioning of the cooperative in theworkers’ minds. This was reflected in the arguments, the frequentwalk outs from PLCC meetings and the subsequent work dis-ruptions. Prima facie information sharing seems to be a ‘contestedterrain’ (Edwards, 1979) around which the waxing and waning ofemployee involvement at NCJM took place.

Literature on information sharing and worker involvement One cen-tral element of participative institutions is the sharing of information(Cornforth et al., 1988; Lawler, 1989). Authors have advocated‘open book management’ (Davis, 1997), i.e. sharing the state ofthe financial health of even conventional enterprises, for enhancingorganization commitment (Case, 1997). It is suggested that whileauthority-based organizations thrive on limiting the flow of infor-mation for ‘efficiency’ purposes, democratic organizations can func-tion only if information is freely available, especially informationabout the activities of the management (Pendleton et al., 1998;Pierce et al., 1991; Varman, 1999). Based on a large sample in37 employee stock ownership plan (ESOP) companies, Klein(1987) found that communication to employees regarding ESOP isone of the main factors leading to worker satisfaction. When reluc-tant managers in Belgium works councils withheld management-level information from the workers after the Second World War,workers withdrew from further attempts at participation, and thesystem essentially died (Potvin, 1958). Bernstein (1982) stresses shar-ing management-level information as one of the essential compo-nents to sustain participation.Information helps build up the larger perspective of the employees,

in the sense that they get a wider view of the organization. Strauss(1989) highlights that the management in a sample of US firmsoffered information to unions even at the time of adversity. More-over, this practice also has the potential of keeping in check theactivities of the management and holding them accountable to theowners of the company, i.e. the employees in general. Yet a fearhas sometimes been voiced that too much information may lead toinefficiency, in the sense that workers may end up wasting theirtime in analyzing the information. Moreover, they may not evenhave the ability to make sense of all the technicalities involved





(Cornforth et al., 1988). It may also lead to the leaking of ‘companysecrets’! Lengndre (1983) discusses the mismatch between informa-tion expected by Parisian office workers and that provided by thelower management. Batstone (1979) highlights the power-ladennature of experts and expertise and argues that the whole discourseof experts may be such that it, in fact, may lead to greater concentra-tion of power in their hands as the structures are democratized. Hestresses that certain expertise may need to be ‘decodified’ and madeamenable to lay people for implementing true democracy.

Rothschild and Whitt (1986) explore the ‘organizational dilem-mas’ that democracy brings to a ‘collectivist organization’ asopposed to a bureaucratic organization, which has fundamentallydifferent standards. Based on case studies of five cooperative work-places, they present nine structural conditions that facilitate ‘collec-tivist-democratic modes’ of organization, and yet each of themrepresents a significant organizational predicament. They emphasizethe role of mutual criticism in curbing political inequalities andbuilding morale as well as the role of diffusion of technical knowl-edge. According to these authors, information sharing leads tocommon understanding and facilitates building loyalty to thegroup and commitment to carrying out the organization’s objec-tives. They also stress that collectivist organizations and democracycan be promoted by demystification and diffusion of knowledge atthe workplace as well as in society at large.

The point that emerges from the literature and which the casestudy also indicates is that information sharing is a crucial issue inthe process of building the organization commitment of employeeseven in a worker-owned enterprise, as depicted in Figure 2. Yetthe moot point remains, what should the nature and content of thisinformation be and how should it be shared to sustain continuousemployee involvement?

Our case analysis suggests that the evolving expectations of theemployees is the missing link in understanding the relationshipbetween information sharing and employee involvement. It is notthat information sharing was not occurring during the later turbu-lent period. The information channels were in place and were livewith discussions on issues like employing contract labor, utilizationof funds, workload change and so forth. But the nature and contentof information sharing and the expectation of the employees regard-ing such information sharing was different from that of the earlierperiods. It seems that there were considerable disparities in the





expectations vis-a-vis information sharing between the managementand the employees. Our primary contention here is that the expecta-tions are dynamic by their very nature and there occurred a mis-match or gap between the management’s expectations of workersthrough information sharing and workers’ expectations of informa-tion sharing during the course of time at NCJM.

Management’s expectations of information sharing The manage-ment perceived the committees and meetings as a platform for shar-ing information, so as to enhance worker interest in their work.During the formation of the PLCC, theMD had asked the personnelmanager and one of the mill managers to make a quick study oninstituting participatory mechanisms. The managers suggested that‘such participatory forums would serve as a tool to promoteworker interest in their work and other issues, if utilized judiciously’,which ‘in turn will help increase the production of the cooperativeand thus the business’. Based on these ‘primary grounds’, they advo-cated instituting participatory mechanisms ‘for exchange of infor-mation between the management and workers’ and to ‘redresstheir [the workers’] grievances’. Most of the staff articulated theexpectation that the changed form of disciplining from the earliertimes of disciplinary action without discussion with workers, to con-sultation with workers and convincing them of the disciplinaryactions, would be reflected in ‘an increased worker interest inwork’. Again, a similar ‘management-oriented’ approach is evidentin handling the issue of workload increase. The unions feared thatdiscussing such an issue with workers at an early stage wouldinvoke protest. But the management thought that unless workerswere convinced about this issue, they would resist it and further dis-turb the work set-up, and hence asked the unions to hold frequent


Employeeownership

Organizationcommitment

and involvement

Information sharing

FIGURE 2

Role of Information Sharing in the Process of Organization Commitment




meetings with workers. It appears that the management took infor-mation sharing primarily as an instrument to elicit worker involve-ment. The following conversation with the personnel manager (PM)is an illustration of such instrumental thinking on participation atNCJM:

You see, now [meaning during the cooperative period] the unions, as well as

workers are a part of the management as owners. So naturally they have to

change. Of course, the discussion forums like the PLCC are the key . . . the

unions and workers get to know about the problems in managing the co-

operative and the emergent need of increased production. So participation,

discussion and thus a say in the meetings help them [to be] responsible as

owners, . . . not resorting to work disruptions, as they were doing earlier . . .

since we openly discuss even the financial issues with them [workers], to that

extent at least they should cooperate with us, if not as owners. (Emphasis added)

Contrary to these expectations, the management often found that‘workers . . . are not willing to take up their responsibility forincreasing the production’, though even ‘higher-up matters’ werebeing shared with them. Why did worker involvement not sustainitself at a level that the management expected, even when the man-agement shared information with workers? To answer this question,we look at the workers’ expectations of information sharing.

Workers’ expectations of information sharing In the beginning, gatemeetings and worker participation in the disciplinary process helpedcreate the requisite atmosphere for positive engagement, in spite ofinitial suspicions. According to most of the workers that we inter-viewed and as the PLCC minutes confirm, when workers began par-ticipating in the PLCC, they hoped not only to get ‘more clarityabout the functioning of the cooperative’, but more importantly,they expected the management to be willing to openly share thereal problems regarding employees’ investments, cash flow, wagepayments, etc. This expectation was not met, as the managementwas not willing to discuss these issues. The disappointment mani-fested itself in the form of protests and work disturbances culminat-ing in the formation of SS. The following is part of a discussion thatthe researcher had with the SS leader:

Look brother, it all started like this. When we felt that our union brothers were

not discussing with us all that we wanted to know, especially about our work

future, wages, etc., we asked for PLCC [meeting]. We [suspected] that the





unions and even the management were not discussing all the facts with us.

Instead, they were plotting special arrangements behind our backs, like

employing contract labor, which would have affected our lives. So we

formed SS to protect ourselves . . . we then realized that they neither believed

in worker participation nor did they trust workers. You tell me brother, when

you don’t believe your friend, will you tell him all your business? (Emphasis

added)

As expressed in the interviews and group discussions, and as theminutes of the various meetings indicate, initially, many workerstook the willingness of the management to form the PLCC with apromise to share plant-level information as a sign of the manage-ment’s ‘trust in workers’.22 But, when WRs put forth issues likewage payment for discussion, the management did not want finan-cial aspects to be discussed. Matters got compounded due to the pre-vailing situation, where the unions and staff members were gettingfinancial allowances for attending meetings and some of themwere not regularly attending to their work on the shopfloor.Though the management and the unions later attempted to retrievethe situation by sharing information regarding financial issues withthe workers, the latter took them to be ‘telling lies’. Here followspart of a discussion that the researcher had with a group of workers.After some noisy discussions and debate, one worker raised his

voice over the rest and started talking:

Worker: Listen, I will tell [you]. Our unions discussed many matters with us.

Right brothers? (others nodded their heads). But when our brother [SS

leader] explained to us that the unions and the management were cheating

us, we believed it.

Researcher: Meaning?

Worker: They were not telling us everything. What we got was some colored

half truths! Perhaps, many of us had some doubts about unions’ explanations

(‘right, right’: other workers chipped in). So we joined SS.

As most of the workers related in interviews and group discus-sions, it was only after the cooptation of SS and briefing by BIFRrepresentatives and the SS leader that the workers were reassuredabout what was happening at the higher levels. This again wasvitiated due to workload changes and problems in wages paymentthat led to the appointment of a new MD and the implementationof suggestion/complaint boxes.





Thus we see that the management–union–worker informationsystemhas gone throughprogressively newmechanisms and channelsin order to deal with the changing situation and expectations. Itbegan with gate meetings by the unions, taking workers into con-fidence in the disciplinary process, the beginning of the PLCC, theformation and cooptation of SS into the AUAC/PLCC systemand the suggestion/complaint box initiated by the new president.Yet they were clearly inadequate factors in eliciting continuousworker involvement. This was basically due to the mismatchbetween workers’ expectations of information vis-a-vis the manage-ment’s expectations of information sharing. We propose that theinformation sharing–expectation chain can possibly go throughtwo different loops for the management and the workers respec-tively, as depicted in Figure 3.


INSTRUMENTAL

LOOP

Repeat/generalinformation sharing

Time for informationprocessing and sense-making/testing of trustworthiness

Gradual build-up oftrust/trust-based ties

Contradictorysignals

Further informationwithheld

Expectation ofinvolvement/efficiency

Lack of workerinvolvement/workerinterest

Information sharingby management

INSTITUTIONAL

L O O P

Acceptance as agesture of trust on workers

Culture of information sharing

Selective information sharing

Beginning of a sincereparticipation/involvement Breakdown of

communication/participation

FIGURE 3

Contested Terrain of Information Sharing between the Management and the Workers

at NCJM




Information Sharing–Expectation Loops for Management andWorkers

The management expects the sharing of information to lead togreater worker involvement in organizational issues and to resultin enhanced productivity and quality at work. This is reflected inthe remarks made by the mill managers and personnel manager,which the generalmanager endorsed in his note toURs: sinceworkerswere given the chance ‘to influence plant-level decisions’ and to have‘free discussions’ with the management and staff, the managementexpected that ‘workers would take up their responsibilities asowners to increase throughput’. Thus, the management haveimmediate expectations from the information that they share. Butthe experience at NCJM indicates that this may not happen inquick succession.Information sharingmay encounter apathy on the part of workers,

as indeed happened during the initial phase of workload changeand during the SS disturbances. Although the implications and themodalities of the proposal to employ contract labor in the textiledivision were discussed a priori with theWRs as well as with workers,the latter still did not take any interest either in the issue per se or intheir own work; instead, they joined SS and took part in the subse-quent work disruptions. As Welsh et al. (1993: 73–4) pointed out:‘even though workers had been afforded opportunities to expressthemselves in the past . . . these workers may have been frustratedby what they perceived as a facade of participation, and they reactednegatively when again submitted to an intervention that asked forparticipative input’. Hence, information sharing per se may notact as a quick incentive to increase worker involvement. Rather,even if information is shared, workers may still simply continuewith their old style of functioning. Or, as pointed out by a shopfloorworker, it may be that the workers ‘did not get the need for increas-ing workload itself ’, even though the management and the unionsdiscussed the ‘compelling need’ with the workers. Workers mayfeel inefficacy in processing information and making sense of it(Pateman, 1970) or simply not trust the information provided(Fox, 1974).Workers may also be testing whether the management is consis-

tent in its actions (Neill, 1960) and whether it is willing to shareinformation, which was earlier the privilege of the management,





openly (without exceptions) and honestly (without distortions). Onemay recall that during the formative period, workers seemed to betesting the willingness of the management to share financial infor-mation. But later, when the management and the unions actuallyshared such information with them, workers dismissed it as‘phoney’. Sometimes, at workers’ request, financial matters werediscussed and explanatory notes were distributed to them. But theunion members’ behavior like deliberately shirking work in thename of meetings and striking ‘secret deals’ with the managementfed into the atmosphere of suspicion. Workers noticed the inconsis-tency between the professed intentions of the management andunions and their actions. This observation exacerbated worker dis-trust. A question23 frequently posed by workers during the groupdiscussion reveals this: ‘How could we believe their [the unions’and management’s] explanation, when some of us saw those guystaking bribes for releasing our own funds? They mishandled ourmoney, giving us . . . false reasons.’

During the later part of the turbulent period, many workersbecame suspicious even of the underlying objectives of the partici-pation forums like the PLCC: ‘[the] committees and discussionswere to increase our loads and whitewash the misuse of ourmoney’, a shopfloor worker remarked. By the end of the turbulentperiod, when the unions also took part in the work disturbancesalong with workers, a similar sentiment drove them: ‘Only latercould we realize that the top management had been manipulatingus in order to control the workers. When the top management toldus that we also are decision-makers like the management, unknow-ingly we played to its tune and distanced ourselves from workers’,a union leader said. As Handy (1995: 192) says, ‘if the individual isseen as an instrument, even an ‘‘empowered’’ instrument, he or she isthere to be used by others for their purposes, such an instrumentalcontract, no matter how well intentioned or how benevolently inter-preted, is a denial of democracy’.

Beyond such instrumental democracy, worker expectation appearsto have deeper dimensions. They are looking for the ‘trustworthi-ness’24 (Whitner, 1998; Mishra, 1996) of the management as wellas the unions. It may be noticed that the SS disturbance abatedonly after workers became convinced of the ‘truthfulness’ of theinformation that the management and the unions had shared withthem before the SS disturbance. During the new leadership period,the management created a different image in the workers’ mind





through instances like catching out acts of forgery, unbiased disci-plinary action, etc.; hence workers were willing to accept thepresident as competent, honest and fair. Such trustworthinessseems to be a key to the cultural transformation that Blasi et al.(2003) see as a prerequisite to better firm performance in the caseof employee-owned organizations. Melman (2001: 435) sees accep-tance of such trustworthiness or mutual trust – the ‘shared belief(or confidence) in the honesty, integrity, reliability and justness ofthe men and women with whom decision making is shared’ – as acore value of workplace democracy. This acceptance of trustworthi-ness is evident in the way workers responded to the president’ssuggestions and implementation of workload increase. Unlike inthe previous workload change exercise, the majority of workerswho were present at the gate meeting conceded to the workloadincrease without any resistance and many workers contributedwith their efforts even when they were informed (by the president)of the chances of irregular/delayed wage payment. They took this‘open telling’ as an expression of the president’s trustworthiness.But such trustworthiness is precarious given the prevalent hier-

archy in society and the actual power distance even within the co-operative (Fox, 1974). For workers, this trustworthiness – aconcern for understanding worker problems and expectations, sub-sequent open and honest information sharing, reinforced with con-sistent action25 – is a manifestation of the trust that the managementand the unions place on workers. Thus, for workers, as we arguedearlier, information perhaps is in the nature of a symbol, an indica-tor that the management cares about the workers and their opinions.Moreover, information has to be consistent with the actions as well,in order to elicit worker trust in the management.But, on the other hand, if management’s expectations of worker

involvement and worker productivity are not fulfilled, it may leadto the withholding of information by the management and furtherbreakdown of the positive loop that has just been initiated throughthe sharing of information. Recall that during the SS disturbanceand the later part of the turbulent period, when the ‘work disrup-tions’ and ‘lack of interest in work’ continued, even after the discus-sion of contentious issues in committees like the PLCC, themanagement became reluctant to share further details (especiallyfinancial) in the PLCC. Such situations may eventually result in adeadlock of communication between the two parties, as indeedhappened in the cancellation of discussion forums like the PLCC.





While management may accuse the workers of not responding to theinformation shared, for workers, as mentioned earlier, it is more amatter of gesture and a signal that management values their opinionand trusts them with information that earlier they were not privy to.But even if the ‘right’ signals are given, they do not necessarily resultin immediate tangible action. Given the history of suspicion and lackof trust between management and workers, and the distance in hier-archy, it may be some time before managerial gestures convert intoan actual change in worker behavior. The point is that participationhas its own ‘costs’ as well for a worker, like carrying the psycho-logical weight of the company, interpersonal conflicts, never-endingmeetings, etc. (Cornforth et al., 1988; Rothschild-Whitt, 1979).This is another reason why gestures by management may notimmediately result in corresponding positive feedback fromworkers.One of the new roles that Cornforth et al. (1988) propose for man-agers in cooperatives is that of an ‘educator’. For instance, theyrelate how the management accountant in one of the cooperativesthey studied made a lot of effort to simplify the accounts, so thatthey became comprehensible to a worker. But it was only ‘twoyears later that he was able to say: ‘‘Now people are speakingabout it [accounts] as if it is [their] second nature’’ ’ (Cornforth etal., 1988: 152).

Thus, we propose that management must take account of a lagbetween their actions in institutionalizing structures for workerinvolvement and the actual positive effect on worker behavior.Researchers into worker-owned organizations have stressed theneed for special commitment on the part management in institu-tionalizing organizational democracy (Bernstein, 1976). Varmanand Chakrabarti (2004) have discussed the need for organizationalslack in institutionalizing democratic processes. The difficulty isthat such slack is often not available to those cooperatives thathave been formed by ‘reluctant entrepreneurs’ (Paton, 1989) primar-ily to save their jobs. Yet once they are formed, and given that theymay continue to be in a difficult situation, it is important to stressthat there may be a significant change in worker expectations of themanagement. The complication is that, in spite of change in theirexpectations, workers may apparently continue to behave in thesame manner as before the transfer of ownership! One of the waysin which such organizations, who are otherwise in a tight situation,may be able to create slack is through continuous information dis-semination, even if all the information is not immediately translated





into action and even if workers are not competent to process andmake sense of it. Information disseminated may become more of asymbol that management trusts workers and may play a role inchangingworker behavior in due course.Moreover, since forworkersinformation sharing is a symbol of the trust that management has inthem, the information that workers feel to be critical assumes moreimportance. As pointed out earlier, this calls for sensitivity and con-cern on the part of management regarding worker expectations ofthe nature and content of information to be shared with them.But, this brings us back to the second aspect that this case studyexamines, the evolving nature of worker expectation.To begin with, the workers’ expectation might be only that the

cooperative runs as an economic entity, which makes ‘profits’ and‘saves’ their jobs. But, as the idea of their changed status graduallysinks in, both individually and collectively, workers may demandmore influence and more information, like ‘fund distribution’,‘details of financial handling’, etc. Yet the difficulty remains that ifthere is lack of commitment from management, then given thelimitations of worker skills and competence, frustration may quicklyset in, which may lead to mistrust and withdrawal on the part ofworkers. For instance, in NCJM, the SS disturbance was itself anoffshoot of the workers’ disappointment with the PLCC. Also,during the turbulent period, when the management did not showany interest in discussing financial issues with the workers, for thelatter it was a reflection of the management’s lack of interest in ‘con-sidering’ workers’ views and ‘discussing our [workers’] problems’.The result was ‘a growing mistrust between the workers and themanagement and the workers and the unions’.

Conclusion

Thus, we propose that trust-based ties between management andworkers can be achieved only if worker expectations can be matchedby management action, to begin with, by sharing information in asustained manner (see Figure 4). Such sustained information sharingserves as a manifestation of the ideological commitment beyondinstrumental intentions, which Melman (2001) pointed to as criticalto realize genuine worker participation. In a participant observationbased study of an alternative health organization, which otherwiseclaimed that every member was equal in the organization, Kleinman





(1996) shows the subtle ways in which gender divide and practi-tioner–office staff divide function in the organization and howsocietal norms of domination and power are reinforced. Kleinman(1996) brings out the underlying processes and dominant ideologythrough which practitioners stonewall any debate with the officestaff about bringing any change to the traditional roles, whichcarry their own notions of superiority/inferiority, competence/incompetence, etc. But then, this feeling of us vs them, the thwartingof the ambitions of the staff group either to become part-practitionersor insisting that practitioners volunteer to do some staff work as wellquickly leads to increasing mistrust on both sides, withdrawal andeven quitting the organization by valued members. Fair process,according to Kim and Mauborgne (1997), requires ‘engagement’,‘explanation’ and ‘expectation clarity’, which evidently has infor-mation sharing at its core. Once this happens, people cooperatewillingly. It is only the matching of evolving expectations with infor-mation sharing that may lead to trust-based ties between manage-ment and workers, which in turn could lead to a sustainedparticipation and involvement in a worker cooperative like NCJM.

A worker cooperative like NCJM faces tremendous odds: a bag-gage of colonialism where for generations workers have becomeused to a parent–child relationship both on the shopfloor as wellas with the union (Chakrabarty, 1996); a ‘sunset’ industry like jutethat is reeling under the onslaught of ‘manmade’ fibres; an institu-tion like a cooperative that is facing the rising tide of globalization;as well as the weight of massive enterprise size of several thousandworkers where an individual may find it hard to find his or heridentity. Yet, we emphasize, our case signifies the possibility that if


Evolving workerexpectation

Informationsharing

Trust-based ties

FIGURE 4

Expectation–Information Sharing–Trust Triangle




management can look beyond the immediate and the instrumental,there are possibilities of generating and harnessing collective energy,which happened at NCJM in patches during the course of thedecade in its history that we studied. Given that NCJM is so shortof material resources and there is no respite from ‘market forces’,information sharing and appropriate mechanisms about infor-mation sharing have the possibility of becoming the trigger foremployee involvement, which in turn may lead to the building oforganizational democracy.

Appendix 1: Data Collection

Most of the interviewees (nearly 75 percent) had been with the co-operative right from its inception. During 1988–98 about 2000 mem-bers left the cooperative and due to lack of availability, we couldonly interview two ex-members; both of them were workers andwere active in various committees/decision-making groups. Weidentified some key informants from both inside and outside thecooperative. The key informants external to the cooperative hadbeen in touch with the cooperative during 1986–98. The key infor-mants internal to the cooperative had been employees of the com-pany for the past 20 years. The choice of key informants wasmainly incidental, though their background and familiarity withthe organization and the issues we investigated were compellingreasons to select them. We attempted to minimize bias throughcross-checking. Still, there is a possibility of bias to the extent thatour sample – both the key informants and the interviewees – is aconvenience sample.There are three distinct levels in the organization: (1) top manage-

ment, which includes the MD and all other managers (20 persons),(2) middle management (360), employees in a supervisory function(160) and employees in a clerical function (200) and (3) workers(approximately 6600 [permanent workers: 6250 approximately andcasual workers: 350 approximately]). The literature suggests thateven an employee-owned organization, which is formed from theremnants of authority-based hierarchical organization, may retainits hierarchical culture. The implication is that depending on theposition in the organizational hierarchy, individuals at differentlevels may have different opinions on employee participation andmay exhibit different patterns of participatory behavior; hence the





interviewees were picked up across levels. Compared to workers, ahigher percentage of staff had to be interviewed, as the interviewwas the only instrument through which we could collect staff ’sviews. In the case of workers, we could employ other techniqueslike group discussion and participation in meetings, but the staffwere more comfortable with interviews.

Group discussion may have an inherent bias due to social confor-mity. After the group discussion, we randomly picked a few workerswho took part in the discussions and interviewed them separately tocheck for any disparity between the views they expressed in publicand the view they held personally. We randomly interviewed a fewworkers who took a minority stand during the group discussions.These attempts did not yield very different insights. As we men-tioned earlier, we collected data frommultiple sources using multipletechniques like interview, group discussion, examining archival dataand participant observation and cross-validated to minimize theoverall bias and errors of recall.

Appendix 2: The Context of the Jute Industry in Kolkata and the

Formation of the NCJM Cooperative

The New Central Jute Mills (NCJM) needs to be situated in theoverall context of the jute industry in Kolkata. Until 1970, thejute industry was prospering, but since then, due to various factors,it has been doing badly. Closures and lockouts for a few monthsevery year are endemic, extending at times to even two, three ormore years.

In 1919, the Albion and Lothian mills were established by aBritish industrialist and were sold to an Indian industrial family –the Sahu Jain Group – in the early 1950s, with their name changedto New Central Jute Mills. Under the ownership of the latter, themills acquired a reputation for technological excellence and qualityproduction. However, financial constraints led to a gradualdeterioration of the company. Various reports show that the finan-cial crisis was created largely as a result of the losses incurred by theSahu Jain Group’s chemical and fertilizer units in other states.Gradually, promoters became indifferent to investing further inthe company and the company’s performance consequently suffered.Meanwhile, the company had experienced lockouts four timesbetween 1982 and 1987 with the lockout during 1986–7 extending





to almost a year and many workers faced starvation. The local econ-omy was shaken since most of the residents in that area were depen-dent on this company in some way or other. In due course, theowners withdrew leaving some assets and huge liabilities behind.During this period, the jute industry itself was going through acrisis. It was reported in the local press that due to the lack ofprofitability of the jute industry, many jute mill owners were divest-ing, resulting in frequent closures and a general labor unrest in theindustry. A few mills even tried forming worker cooperatives butmost of them failed to take off. Rumors spread that attempts werecarried out by vested interests to crush the ‘unionism’ and theworkers’ labor power in general. Clashes between unions, workersand management were common at this time.In 1987, through their unions, the workers of NCJM approached

the state government of West Bengal and the Government of Indiato either nationalize the company or plan a takeover by the stategovernment. At this juncture, the state government asked the man-agement of the company to come up with a workable solution. Topmanagement took the help of local influential political leaders tobuild unity among the warring trade unions of different politicalideologies. Eventually, after numerous joint meetings between themanagement and unions, the idea of an industrial cooperativeemerged as the third alternative after nationalization and liquida-tion. At the time of the lockout (April 1986), the workers were upin arms against the union leaders, accusing them of colluding withmanagement. But as the lockout continued and there appearedlittle hope of reopening, workers became conciliatory to the unionleaders and were desperate for any proposal that would result inthe reopening of the mills. The union leaders, although they hadpolitical conflicts with one another, agreed to stand united, andthey jointly approached the managing director with an offer tocooperate in any plan that he thought would be viable. The firstmove to reviving NCJM was to get general approval from thestate government. Subsequently, an application was sent to theBIFR, a governmental agency, which is legally authorized to assistin legal and financial revival of sick industrial units. Simultaneously,a formal plan was sent to the local government as well.After a couple of meetings, employees, both staff and workers,

agreed to contribute to the plan by purchasing equity shares ofNCJM and to form an industrial cooperative. Subsequently, abipartite agreement was signed between the management and the





unions (representing staff and workers) and the mills were reopenedon 7 March 1987 in a phased manner. As per the BIFR procedure,reference was made to the BIFR under the Sick Industrial (SpecialProvision) Company Act, 1985 to declare the company as ‘sick’and consequently to receive sanctions for the company’s revivalscheme. The BIFR appointed the IRBI – another governmentbody – as its operating agency, to study and monitor the legal andfinancial aspects of the revival scheme that NCJM had submittedto the BIFR. After IRBI’s initial study, the BIFR declared the com-pany ‘sick’. Further, IRBI held separate meetings with workers andstaff and with all the company’s financiers. When the financiersasked for guarantors of their investment, the state governmentagreed to become a guarantor on behalf of the employees. Subse-quently, it bought 41.17 percent of the company’s stake to reducethe employees’ financial burden.

Although the initial objective was to form an industrial coopera-tive, it was found to be legally too cumbersome. Hence, the existingcooperative credit society of the mills purchased the shares of thecompany on behalf of all the employees, and thus the NCJM Co.Ltd legally became an enterprise of the existing cooperative creditsociety of the mills.


Notes

We acknowledge the sincere cooperation and contribution of the workers, union offi-

cials, staff and the management of NCJM Co. Ltd. We also appreciate the assistance

provided by some knowledgeable people outside the organization. We are thankful to

Manali Chakrabarti for her invaluable inputs and contribution towards this article.

Comments of anonymous reviewers of Economic and Industrial Democracy on an

earlier draft helped us improve it in so many ways, as has the assistance of EID associ-

ate editor, Ann-Britt Hellmark.

The names of the authors are in alphabetical order. The order does not signify their

contribution towards this paper.

1. There were 8500 (approximately) employees when the cooperative was formed

in 1988. During 1988–98, 1600 employees retired while only 100 were replaced.

2. Out of 7000 employees (approximately), 1600 employees live in the company

quarters, which include 100 family quarters that accommodate managers and clerical

and supervisory staff. The remaining employees live in their own or rented accommo-

dation, which are located close to the company premises.

3. On many occasions, all the unions jointly prepared memoranda to explain

various issues to the workers; sometimes unions and the management also got





together to prepare a memorandum jointly. Employees called all such memoranda

‘joint memoranda’.

4. Worker colony refers to the residential quarters of the company where the

workers lived.

5. In this case study the word ‘employees’ refers to all those who are working in

the cooperative, including managers, staff and workers. Similarly the word ‘staff ’

includes both supervisory staff and clerical staff but not managers. Worker indicates

the one who does manual work related to production, like jute bag production,

machine maintenance, carpet dying, etc. Workers got weekly payment (wages)

while staff and managers got monthly payment (salary).

6. Quotes cited in this article come from both oral interviews and NCJM docu-

mentation. Conversations with workers were in Hindi and have been translated here.

7. Rs.: Indian rupee, US$1 ¼ Rs.45 at the time of the data collection.

8. According to trade union law in India, any seven members can register a union.

There is no requirement to have a sole bargaining agent, hence the multiplicity of TUs.

Unlike in the US and Europe, in India many trade unions are affiliated to the political

parties. There are numerous political parties functioning at local/national level, and

all of them have their affiliated unions. In NCJM, 10 out of 14 unions were affiliates

of political parties.

9. The cooperative only came into legal existence in 1989.

10. There were only two union representatives from the shopfloor, which repre-

sented 75 percent of the workforce. Out of the 14 unions, six were worker unions

while the remaining eight belonged to the staff.

11. A public meeting at the main gate of the company.

12. Partly due to the seasonal nature of raw jute availability, a large number of

casual workers (usually up to 25 percent of the total workforce) are employed in

the jute industry. But in this cooperative, casual workers accounted for a mere 5.3 per-

cent of the workers.

13. This is a major issue that emerged from the coding of the interviews and con-

versations with the casual workers. All 10 casual workers whom the researcher inter-

viewed expressed job security as their major concern.

14. In actual practice, the principal employer (here the cooperative) has little

liability towards contract employees. The principal employer usually makes the

payment to the contractor and the contractor makes huge profits by paying his/her

workers less than the stipulated minimum wages while extracting heavy work from

them. The contract workers have no formal employment contract that can be enforced

in a court of law.

15. The company was declared ‘sick’ in 1987 by the Board for Industrial and

Financial Restructuring (BIFR) under the Sick Industrial (Special Provision) Act

1985.

16. The state of West Bengal has been ruled by a coalition headed by the Commu-

nist Party for almost 20 years. The ruling parties had formally asked the affiliated TUs

to join the strike.

17. Major political parties in the country called for a nationwide strike and, sensi-

tive to such political pressure, people were afraid not to answer such calls to industrial

action.

18. Dr Alok Bhaumik, head of the Economics Department, Rabindra Bharti Uni-

versity, Kolkata. He conducted a survey in November 1992 among the worker-owned

cooperatives in and aroundKolkata, titled ‘Workers’ Industrial Cooperative Societies





in Kolkata: Selected Indicators of Status and Performance’. In this survey, NCJMwas

described as a ‘model’ cooperative with respect to employee participation, through-

put, employee commitment, etc.

19. The net effect on the shopfloor was an increase of the man machine ratio from

1 : 1:5 to 1 : 2. Industry standard was 1 : 2 and all the machines were manually

operated.

20. Extended periods of layoff are a regular phenomenon in the Indian jute

industry.

21. Members involved in union activities might not have numbered more than 200

out of 7000 (approximately) workers.

22. ‘Management trust in workers’ emerged as a core theme.

23. The question quoted here is a representative example of the questions that

many workers posed.

24. Trustworthiness is defined as an individual or group belief that the manage-

ment can be trusted, where trust is defined as a willingness to be vulnerable to

others (Granovetter, 1985; Lewis and Weigert, 1985; Mayer et al., 1995). We con-

sidered the key dimensions of trustworthiness and trust that have been documented

in the literature, namely (1) concern for others’ interests, (2) competence, (3) openness

or honesty and (4) reliability (Hart and Saunders, 1997; Mayer et al., 1995; Mishra,

1996;Whitner, 1998). In line with this literature on trust, we expanded on these dimen-

sions, as follows: (1) concern for others’ interests: a belief that management is

concerned about workers’ interest; (2) competence: a belief that management is com-

petent to deal with varying organizational situations; (3) openness or honesty: a belief

that the management is being open and honest about what is happening in and with

the organization; (4) reliability: a belief that the management is reliable in the sense

that it will follow through with what is expected.

25. These are the properties that the workers attributed to the core category ‘trust-

worthiness’. These properties are in line with the dimensions of trustworthiness

mentioned earlier.

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George Mathew Kandathilis a doctoral student in the Department ofOrganizational Behavior at the School ofIndustrial and Labor Relations, Cornell

University, Ithaca, New York. His currentresearch interests include technology andtrust-control nexus in organizations, and

organizational democracy.

Rahul Varmanis currently a member of faculty in the

Department of Industrial and ManagementEngineering at the Indian Institute of

Technology, Kanpur, India. He works at theinterface of industrial relations and

organization theory. Current researchinterests include organizational democracy,

trust in and between organizations,restructuring and organization change and

critical management theory.


