Worker Participation in Enterprise Management for Post-Pandemic Challenges

Worker Participation in Enterprise Management for Post-Pandemic Challenges

Augusto Cocchioni

Index

1. Executive summary
2. Introduction
3. The culture of workers’ participation
4. Definitions of participation
5. Origins, evolution, and history of workers’ participation
6. Workers’ participation in the European Union
7. The situation in Italy
8. Workers’ participation in SMEs
9. Workers’ participation as a resource
10. Conclusion
11. Bibliography

Afterword

Foreword

Participation: an old idea, yet very topical in times of crisis

by Francesco Paolo Capone

Ugl General Secretary

The idea of participation, i.e. the active involvement of workers in the management of companies, is an old one. It has various facets, ranging from institutionalised information and consultation to outright co-determination, i.e. the active presence of workers’ representatives in the decision-making bodies of their company, whereby workers take part in strategic decisions and share the economic results of the firm.

Through participation, the role of workers changes: no longer are they mere executors of the decisions taken by their managers, superfluous to the management and the fate of the company, but people that are fully involved in the production process. On the one hand, workers become more protected concerning the decisions of the company as well as becoming more responsible and aware of the importance of the competitive requirements necessary for the survival and growth of the firm that employs them.

This idea has been implemented in various ways for decades, especially in Central Europe, including Germany, the Netherlands and the Czech Republic, just to cite a few examples. The European Union has also actively demonstrated an interest in participation through the creation of the European Company and the European Works Councils. However, in several EU Member States, this model has been met with a great deal of resistance, not only from employers but also from trade unions, since it presupposes a change in the employment relationship by making the employee a de facto partner in the company, thus changing the usual pattern of industrial relations between companies and workers.

In Italy, although Article 46 of our Constitution recognises “the right of workers to participate, in the manner and within the limits established by law, in the management of companies”, this model has never taken root in a significant way.

Ever since the founding of our union in 1950, then under the name Cisnal, UGL has always supported the positivity of Article 46 as a tool for both economic development and social justice.

The validity of the participatory idea has been shown ever more forcefully during the present age of globalisation. Participation is, in fact, a concept that asserts the link between business, work and local communities and is, therefore, the real antidote to company crises, relocations and social dumping, which have penalised workers in the Western world to a great extent, as it creates mutual co-responsibility between entrepreneurs and employees.

Moreover, the changes in the production processes that have taken place in recent years due to novel information and communication technologies have also contributed to overcoming the traditional dichotomy between self-employed and employed workers, thereby creating new mixed professional figures.

Today, the economic and social effects of the COVID-19 pandemic, in addition to the existing problems and innovations linked to globalisation, have made it even more necessary to spread the participatory model.

On several occasions in the past, when faced with company crises, a phenomenon known as ‘workers buyout’ has occurred, i.e. when the employees of a crisis-struck company have saved their jobs by buying shares in the company itself with their own liquidations and savings, transforming it into a cooperative and saving it from closure.

This solution has made it possible to save hundreds of companies and thousands of jobs around the world, safeguarding the continuity of production and employment while often improving the level of productivity of the companies involved. As is often the case, this practice has an Anglo-Saxon origin, since this type of initiative was carried out in the United States in times of difficulty. However, similar solutions have also been implemented in Europe and Latin America.

A workers’ buyout is nothing more than a form of participation, carried out in extremis and in the event of a crisis. It is the involvement of workers which, in its various forms – ranging from information on company strategies to co-determination and, as in this case, co-ownership of the company – represents an effective remedy from an economic and social point of view to the difficulties of firms.

There is no need, however, to wait for crises to implement participation.

The current productive, economic and social context makes it urgent to promote workers’ participation in production decisions throughout Europe, in large as well as in small and medium-sized enterprises, in order to create a system capable of holding together all the stakeholders in the value chain and giving new strength to the European Social Model, including by reformulating industrial relations.

This model has been somewhat tarnished recently, but it represents the real strength of the Old Continent, since it provides for a form of social capitalism, an alternative to the ultra-liberal one, capable of guaranteeing widespread welfare and, therefore, more resilient, in the long term, to political, economic and, as we have recently seen, also health care shocks, thereby creating a society that is stronger economically as well as more cohesive and inclusive socially.

Therefore, participation should be encouraged not only by providing more information and knowledge on the subject but also through effective tax relief measures, since it is a useful tool that should be supported in order to achieve full economic and social recovery.

If, to meet the challenges of globalisation and the COVID-19 pandemic, companies require greater commitment and involvement from their employees than in the past as well as additional motivation and a sense of belonging to the company’s future. In addition, if they have to increasingly rely on the professionalism of their staff, it is a logical consequence that they must also share with workers not only information, but also strategic choices and decisions and, ultimately, the economic results of management. A change that, as can be seen from Augusto Cocchioni’s interesting essay on the subject, is as right as it is necessary.

1. Executive summary

Over the past decades, our economic system has turned business into a tool of short-term accumulation of wealth. By merely extracting income from factors of production – rather than investing in them – we have determined an overall weakening of the economy and have created the conditions for long-term decline.

The most worrying aspect of this process is the steady increase in economic inequality that has transpired over the past few decades.

The pandemic has further accelerated and deepened this trend. Such an unbalanced system is a problem for all members of the community.

To overcome this situation, we need to find new models that manage to reconcile higher productivity with a greater respect for equality and work opportunities.

One of the main possible responses to the current crisis could be to advance a culture of workers’ participation in enterprise management. This could allow us to turn the crisis into an opportunity for the growth of both workers and businesses.

To adequately address the challenges that will be posed in the near future, we will need to create organizations and companies that are capable of integrating competitiveness, long-term sustainability, the safeguarding of jobs, and strong links with local communities.

We need to develop a business culture that promotes dialogue between companies, workers, and local communities. To do so, we must incorporate the concept of workers’ participation into training courses for both businesses and workers. Furthermore, we should foster the development of management skills that are needed to achieve workers’ participation in businesses.

We must raise a generation of managers, entrepreneurs, and workers who know and cherish the value of workers’ participation so that they can pass these values on to society as a whole, starting from their companies and workplaces.

2. Introduction

This brief paper stems from the need for an easy-to-read guide on the highly relevant issue of worker participation in business management. This work is meant to contribute to the dissemination of knowledge on a topic of great importance that is still little known to the wider public.

We will briefly analyze some of the main flaws of our present economic system and discuss how workers’ participation may be able to mitigate them. We will then review the main definitions of participation, describe its history and evolution, and go over the relevant European and Italian laws. Lastly, we discuss how workers’ participation can be implemented in SMEs, as well as the advantages of doing so.

3. The culture of workers’ participation

Over the recent decades, our economic system has grown to be dominated by a business culture whose sole aim is to generate profits for shareholders, de facto shirking any other social roles or responsibilities. Meanwhile, managers have focused only on increasing the market value of their companies, rather than on producing and selling goods and services. In the process, companies have been modeled to privilege financial investments over technical ones, replacing fixed costs with variable ones as well as implementing short-term strategies. Examples of such practices include outsourcing, staff reductions, relocations, and so on.

Businesses have thus become tools of short-term accumulation that merely extract income from the factors of production; this, in turn, has led to an overall weakening of the economic system and set the stage for social decline. This has resulted in a continuous reduction of wages, a reduction in the demand for labour, and delocalized companies that have become disengaged from any responsibility towards local communities.

All of this, in an increasingly vicious cycle, has generated ever lower growth, rising job insecurity, and, since the 2008 crisis, stagnant profits. Perhaps the most worrying aspect is the steady rise in economic inequality over the last few decades; growth has only helped the wealthy through a vile bottom-to-top redistribution mechanism.

Something has clearly run awry in a system that de facto continuously leaches social value away from the community. The process of ongoing impoverishment of collective socio-economic assets is not dissimilar to the process of increasing exploitation of the environment. While the free market long represented a positive social force that brought considerable progress around the world, it appears to be falling short in the 21^st century. Indeed, the economic crisis of 2008 appears to have been the breaking point.

The current pandemic is further accelerating the trend of impoverishment. As a consequence of the increasing digitalization of workplaces, we will witness an ever-greater concentration of profits as well as an upward redistribution of wealth towards the top. These imbalances are undoubtedly going to persist if the post-pandemic recovery takes place through the short-sighted quest for efficiency that was the norm before the crisis.

Such an unbalanced economic system constitutes a problem for the entire community. Growing inequality not only leads to injustice but fosters crime, spurs political instability, drives insecurity, and ultimately results in lower confidence. To overcome this, we must find new ways of doing business that reconcile productivity with a greater respect for equality and employment opportunities.

Workers’ participation in the management of enterprises is increasingly seen as a way to counter the current flaws in the economy. Among other things, the involvement of employees in management would introduce the necessary checks and balances to corporate governance and, thus, tackle the problem at its core. Moreover, employee-run businesses generate greater employment growth, offer their workers higher wages, and are likelier to nurture a healthy relationship with local communities.

Through participatory governance, businesses can and must make an important contribution to building a more socially sustainable economy. More generally, a participatory culture would make it possible to overcome the logic of accumulation in favor of a logic of involvement, because tackling imbalances in business means tackling them in society, well aware that the social fabric is a resource for all.

4. The main definitions of participation

The term ‘worker participation in management’ refers to all forms through which workers and their representatives influence business decisions, in some cases even partaking in the resulting profits. Participation can take on many shapes, from the simplest and most basic, such as the exchange of information and consultation with employees, to more institutionalized forms, such as the direct presence of workers’ on management or supervisory boards. There are many ways of defining the various methods to implement participation. Below is a summary of the main definitions used to identify the various kinds of participation.

Formal and informal participation

The first important distinction to be drawn is between informal and formal participation:

• informal participation may take place between the owners of small businesses and their employees or between middle managers and workers in the departments of larger companies;
• formal or institutional participation is achieved when workers are present in the company’s corporate governance bodies.

There are four types of institutional participation.

1. The direct presence of workers’ representatives in the governance bodies of the company (or in the so-called ‘supervisory boards’). These organs have the function of guiding long-term corporate strategy and are vested with relevant veto powers. This kind of participation is also called ‘co-management’, ‘co-determination’, or even ‘strategic participation’.
2. The presence of mixed committees that have representatives of both workers and the company ownership, called ‘joint committees’. These bodies typically carry out information and consultation functions within the company, but are not vested with decision-making or veto powers.
3. The involvement of workers’ representatives in the management of the company’s integrative healthcare plans as well as its occupational pension funds, which constitute the second pillar of Italy’s Notional Defined Contribution (NDC) system.
4. The existence of the so-called ‘bilateral bodies’ that deal with various aspects of social policies, such as scholarships or income support in case of unemployment. These functions represent vital parts of what has recently come to be known in Italy as the ‘second welfare’ system.

Direct and indirect participation

Another important distinction is drawn between direct (or organizational) participation and indirect (or representative) participation.

Direct participation entails various types of initiatives through which management either consults employees on how labour should be organized or fully delegates the relative decision-making to them. This method is based on professional criteria and technical skills; it is implemented through employee involvement and is aimed at improving work processes.

Indirect (or managerial) participation, on the other hand, is implemented through the involvement of the workers’ elected representatives in the company’s decision-making process, where delegates take part along with their employer counterparts in the company’s governing bodies that have the task of defining working conditions or, more broadly, how the company’s decisions may affect working conditions. This is what we refer to when we speak of ‘industrial democracy’, which takes place within the company, as opposed to ‘economic democracy’, which takes place outside the company.

Indirect participation can be either:

• ‘high-intensity’ or ‘strong’ when it takes place through ‘co-management’, ‘co-determination’, ‘co-decision’, or ‘oversight committees’ (also called ‘organic participation’);
• ‘medium-intensity’, when it pertains only to ‘information and consultation rights’;
• or ‘weak’ when there are only superficial forms of worker participation.

Economic and financial participation

A further important distinction is to be drawn between economic and financial participation.

Economic participation includes different forms of bonuses granted to workers in relation to the goals and results of the enterprise, such as:

• performance or participation bonuses;
• profit-sharing or stock options;
• other specific kinds of bonuses.

The most common type are ‘performance bonuses’ or ‘productivity bonuses’ (also called ‘variable salary’ or ‘flexible pay’), which are calculated using productivity and quality criteria.

Another form of economic participation comes about through financial participation that may be implemented:

• by granting the company’s shares to its employees;
• through a workers’ buyout when, in the event of a crisis, employees take on the onus of assuring business continuity;
• through employees’ pension funds that supplement public retirement pensions.

Strategic, organizational, and operational participation

Further useful distinctions can be drawn between three levels (or goals) of participaton, as follows:

Strategic participation concerns the involvement of workers in major decisions on the future of the company and, in particular, investment decisions on factories or plants, and decisions concerning production and management models. Historically, strategic participation has been developed on the basis of specific legislation (such as the German Mitbestimmung) or on the basis of ownership rights (such as widespread shareholding in the USA or cooperative ownership in Italy), or in the presence of a workers’ pension fund that owns shares (as happened with the VEBA fund, linked to the UAW union in Chrysler, in 2009).

Organizational participation concerns the involvement of workers in the ordinary running of the company and, specifically, management decisions on production flows. Organizational participation can be developed in various ways, i.e., through joint management-union committees with varying degrees of power, or through procedures for consulting workers (or their local grassroots representatives) on specific topics. In the case of Italy, organizational participation was mainly implemented in the 1990s in large industrial enterprises through the institution of joint commissions on themes such as environmental protection, safety, and work organization. The outcome of the Italian experience is normally assessed as somewhat meager.

Operational participation focuses on the direct involvement of workers in the day-to-day running of the company and, thus, first and foremost, of factory work. This type of participation has been studied in depth by the European Foundation in Dublin since the latter half of the 1990s. In particular, the Foundation’s EPOC and EWON surveyed the new forms of organizing work in Europe, focusing on “delegation by setting goals” and “teamwork”.

External (or extra-company) and internal (or organic) participation

A final distinction that deserves our attention is to be drawn between:

• “external” or “extra-company” participation, which is achieved outside the company through the presence of representatives of stakeholders in public institutions;
• and ‘internal’ or ‘organic’ participation, which involves the presence of representatives of stakeholders in the governance boards of the company.

5. The Origins, evolution, and history of workers’ participation

The idea of participation, along with plans for economic and industrial democracy, began to take shape in Europe following World War One. Workers’ representation on the supervisory boards of large firms (co-management) was first implemented in Germany during the Weimar Republic. In 1918, workers’ representatives were seated in joint committees with employers in British municipal enterprises. Similar forms of cooperation took shape in Austria in 1919, and in Germany and Czechoslovakia in 1920. Perhaps the earliest example is that of Russia where, already in 1917, some forms of worker’s participation were recognized. After World War II, workers’ participation was recognized in some national constitutions as a fundamental right along with the rights of organization and collective bargaining.

At the beginning of the 1950s, codetermination was definitively institutionalized in the West German framework, through a number of federal laws covering two areas:

• workers’ participation in corporate organs;
• workers’ information and consultation rights as an essential feature and prerequisite of business co-determination.

In 1951, the law introduced the requirement of equal participation of employee and shareholder representatives on the Supervisory Board of coal and steel companies with at least 1,000 employees. The representatives were to be respectively nominated by trade unions and elected by the shareholders’ assembly. This was followed by the law of 1968, which allowed co-determination to be extended to other companies; in 1976 a quasi-equal management model was introduced, in which workers and shareholders were to be afforded the same number of representatives, while the chairperson was to be elected by shareholders.

Another instance of workers’ participation was undertaken in Yugoslavia in the early 1950s. The Yugoslavian example is one of the most comprehensive programs for workers’ self-management, as it involved the widespread and compulsory use of Workers’ Councils.

In Hungary, self-established Workers’ Councils (Munkástanácsok) played a decisive role in the 1956 uprising. These councils managed to preserve the concessions they had gained and thus remained one of the sole political counterweights to the regime in the post-revolutionary period.

In Italy, the first instances of worker participation in the management of companies date back to the years following the First World War, as happened at FIAT in August 1919. In 1921, the Giolitti government sought to regulate this subject matter with a bill that foresaw commissions made up of workers, with specific rights of information and consultation vis-à-vis business management.

Subsequently, the first effective legal recognition of the so-called management councils (Consigli di Gestione, which included workers’ representatives) came by way of the Decree on Socialization of the Italian Social Republic (Decreto sulla Socializzazione della Repubblica Sociale Italiana) of 2.2.1944 no. 375, which entrusted the workers with various tasks, including those of:

• helping the entrepreneur in the management of the business;
• taking part in the shareholders’ meeting with voting rights equal to those of the owners;
• giving workers’ representatives sitting on the board of directors workers’ voting rights equal to those of the owners on the board.

The law was later repealed by the National Liberation Committee (Comitato di Liberazione Nazionale), which, however, chose to not cancel the rules on the tasks and functions of management boards.

In 1948, Article 46 was introduced into the Constitution of the Italian Republic, recognizing the right of workers to take part in the management of companies within the boundaries set by the law. To date, however, this article has not been implemented in practical terms.

Since the Second World War, in Italy there have been several instances of workers’ participation, such as:

• the workers’ councils (consigli operai) set up in the Turin area in the early post-war period that were based on an antagonistic and conflictual logic, thus rejecting collaboration with the company and favoring confrontation between entrepreneurs and workers;
• the so-called cooperatives, which were often initiated with an antagonistic bent, but later evolved towards a more participatory approach;
• the brief experience of management councils (Consigli di Gestione), which would later inspire the Constituent Assembly of 1946 to draft article 46 of the Italian Constitution;
• and Adriano Olivetti’s pioneering initiative of the so-called community enterprise (imprese comunità), which aimed to enhance the organization of work, provide company welfare, and support the urban development of cities.

The post-war abolition of management councils and the lack of developments in workers’ participation in the ensuing decades were mainly the result of the hostility of certain unions towards enterprises. Around this time, an antagonistic view of the relationship between capital and labour prevailed, which strongly denied the possibility of any shared interest between workers and entrepreneurs. This attitude has been matched by a mistrust of entrepreneurs towards trade unions that were almost entirely dominated by a culture opposed to free enterprise and the capitalist system.

From the 1980s onwards, neoliberal economic theories began to abound. This change was accompanied by an increased use of technology, the introduction of rewards systems based on individual goals, and a gradual shift of business ownership from entrepreneurs to the financial world. In that context, the discussion revolving around workers’ participation in the management of enterprises lost momentum.

Today, economic and employment data show that it is time to resume the discussion about workers’ participation. A fresh start is needed with a new model of development based on collaboration between workers and businesses, accompanied by a greater focus on local communities. To do so, we must overcome the anachronistic conception of class struggle between capital and labour that hindered the growth of workers’ participation in the recent past.

6. Workers’ participation in the European Union

For decades, the European Union has been developing a wide-ranging regulatory framework concerning different forms and degrees of workers’ participation. The scope of these norms ranges from the right of information and consultation, participation rights in corporate governance, to financial participation through ownership of shares by employees.

EU legislators have issued regulations on the subject matter on several occasions. Many of these norms follow the German model of co-management (the so-called Mitbestimmung).

The various directives have mainly focused on the right to information and consultation, intending to standardize the disparate national rules at the Community level. However, this has been done without implementing a “strong” form of participation, i.e., organic participation, which had been present in Germany.

Since 1970, the Community’s norms on participation have evolved from two standpoints: first, from the standpoint of industrial relations law, and second, from the standpoint of corporate law.

The former includes a 1980 proposal for a directive, known as Vredeling, on the information and consultation of employees in multinational undertakings and groups of undertakings, as well as Directive 94/45/EC on European Works Councils on the information and consultation of employees in Community-scale undertakings and Community-scale groups of undertakings.

Workers’ participation is one of the core elements of the EU’s social policy, whose main documents are:

• the Charter of Fundamental Rights of the European Union;
• the Community Charter of Fundamental Social Rights of Workers;
• and the European Social Charter.

In Article 17, the Community Charter provides a general reference to the appropriate information, consultation, and participation of workers. The Social Charter, on the other hand, refers to workers’ right “to be informed and to be consulted within the undertaking” (Article 21) as well as “to take part in the determination and improvement of the working conditions and working environment in the undertaking”. Since 1970, various other directives have been issued on the matter, the most important one being Directive 94/45/EC, which established European Works Councils (EWCs) with the explicit goal of representing employees.

As we have seen, there is no shortage of directives protecting the workers’ rights to information, consultation, and participation in the EU landscape. The number of directives regulating organic participation are however fewer.

The second category of regulations concerns company law. The European Company Statute (ECS), as well as the EU norms regulating the structure of public limited companies in Member States, aim to introduce collective forms of employee participation. The ECS does not propose a single model but rather a plurality of procedures that establish different modes of participation for workers within the so-called European Companies (Societas Europaea, SE). EU norms tend to avoid blanket solutions as Member States have disparate systems of industrial relations; the same companies might have dissimilar needs depending on the national context in which they operate. Although still not widespread, European Companies are becoming more common; this is especially true in Northern European countries, where organic forms of participation have deeper roots.

As far as “financial participation” is concerned, the European Union has limited itself to a recommendation that promotes the participation of workers in profits and business results, including participation through share ownership.

7. The situation in Italy

Workers’ participation is one of the founding values of the Italian Republic; under Article 46, the Constitution explicitly recognizes the right of workers to take part in the enterprise as an essential part of Italy’s economic and social model.

This provision of the Italian Constitution has yet to be implemented, however. The lack of action is mainly due to the defiance of a large portion of trade unions which, rather than the participatory model proposed by the Constitution, have preferred a more conflictual approach. A more collaborative attitude would have been more conducive to the development of workers’ participation, which has been achieved in several other European countries.

In recent years, however, the topic has sparked new interest both within the industry and among policymakers and experts. We have seen growing attention to the challenge of participation, even from trade unions that have historically been opposed to it. The increased demand for involvement is also connected to the growing need to value both workers and their work through greater transparency, as well to fulfill the need for corporate social responsibility (CSR).

External forms of participation – i.e., participation that takes place outside the company through representatives of social stakeholders in public institutions – are common in Italy. On the other hand, internal and organic forms of participation – i.e., the presence of representatives within the bodies of corporate governance – are seldom seen. This difference between company-level participation and non-company-level participation represents an Italian anomaly. In other European countries, these two aspects have developed side by side.

In more recent years, an increasingly favourable attitude has developed towards organic forms of participation in Italy, also thanks to the implementation of the relevant EU directives from 2002 to 2012 through various legislative decrees and thanks to the recognition of the EU Charter of Fundamental Rights along with the right of workers to information and consultation within companies.

 There have been recent experiences of this kind in Italy mainly due to the presence of German companies. A virtuous example has been provided by the Volkswagen group, which has implemented a Charter of Labour and Workers’ Rights in its Italian subsidiary. In these companies, there is no participation in the strict sense of the word as there is no institutional participation of workers in the bodies of the company.

 Workers’ participation in Italy has taken place in the following areas:

1. Organizational-institutional participation entails the presence of representatives of employees and shareholders in the corporate governance. Italian legislation on commercial law, however, does not foresee a model of co-management or co-determination as can be found in Germany and in Northern European countries. These so-called “strong” forms of participation are thus rarely implemented in Italy.

2. Financial participation takes place through the collective ownership of the company’s shares by employees and entails varying forms and extents of involvement in the organs of the company. This form of participation has achieved a satisfactory level of development and broad use both in Italy and throughout Europe.
3. Informative or consultative participation concerns information and consultation relations between entrepreneurs and workers’ representatives and takes place through special meetings and or through other corporate institutions.
4. Direct participation, also called operational or integrative participation, involves workers directly in the day-to-day running of the enterprise through the establishment of integration mechanisms such as quality circles, improvement groups, and so forth.
5. And, lastly, economic participation takes place, for example, when workers share in the profit of the company or when a part of their pay is linked to the results of the enterprise, generally in terms of profitability, productivity and/or quality. Through this form of participation, the results of the enterprise are disclosed to the workers, but they are not involved in the decisions that determine the company’s performance.

8. Workers’ participation in SMEs

It is often thought that the participatory model, due to its complexity, is suitable only for large companies. Workers’ participation can nonetheless be implemented, albeit with simplified procedures, in medium-sized enterprises, and even in smaller businesses through the habits, customs, and values that underly and guide their strategies.

Small and medium-sized companies (SMEs) are typically family-owned and are strongly rooted within their local communities. This determines a more personal and direct link of these companies to the social context within which they operate and of which they form an integral part. This relationship can prove to be a great advantage towards the development of workers’ participation.

Most often, SMEs have governing bodies made up of family members. This can represent a strength on one hand and a major limit on the other, as the activity and strategic choices of small businesses can be greatly affected by the relationship between family members. In these cases, participation can serve as a stabilizing factor, facilitating a balanced approach towards strategic decisions.

Experiences with employee ownership in SMEs show that it is a highly competitive business model that also protects employees, as the firm’s strategy will always take their interests into account. This stands in contrast to instances in which shares are bought by investment funds that, by their very nature, seek to maximize profits and company value while paying little attention to the interests of local communities.

It should be noted that employee participation in large enterprises is framed by well-structured regulations and procedures. It is thus easier to outline, negotiate, and contract the principles, policies, models, and mechanisms that drive participation. SMEs, on the other hand, must develop a participatory approach from the ground up. As a consequence, it is necessary to convey to entrepreneurs and workers the possibility of creating new models of company management within horizontal organizations, with little use of hierarchical authority, and with employees who are recognized as protagonists in the enterprise. In this context, workers are better motivated as they develop a sense of belonging to the business, as well as a sense of ownership and entrepreneurship as regards their own labor.

While participatory practices are often adopted in SMEs without explicitly labelling them as such, it is important to develop awareness of this way of doing business to make the most of the benefits deriving from it.

Training and education can play a key role in this last respect:

• By teaching how to go beyond the traditional “boss-employee” management paradigm, still widely considered the only way of doing business.
• By explaining the great benefits that can be achieved through participation, including increased productivity, better decision-making, enhanced organizational capacity, and reduced costs.
• By conveying that workers’ participation is a powerful tool to protect enterprises from the overwhelming competition resulting from globalization with regards to which SMEs need the support of the entire community. The participatory model exalts the positive characteristics of local rootedness, such as the sense of belonging to a community, the strengthening of local supply chains, as well as the Made in Italy brand name. It is impossible to achieve what it takes to be a truly excellent company without involving everyone that works in the firm.
• And, lastly, by explaining that a company that works in the interest of all is more solid, more capable of long-term survival, and better equipped to overcome any personal vicissitudes of its founders.

9. Workers’ participation as a resource

The promotion of a culture of workers’ participation is one of the best responses one can give to the current economic crisis. Such a culture would be able to transform the difficulties of the present moment into opportunities for both businesses and workers. Moreover, it will be necessary to create organizations that can navigate the ongoing market changes that will take place in the near future. Soon, doing business will no longer be just a matter of generating profits, as it has been in the past; competition will take place ever more commonly based on the degree of trust and social value that business transactions incorporate and generate. One need only consider the number of certificates of corporate social responsibility (CSR) that already exist today and that will undoubtedly become more widespread and relevant in the future. The same goes for the attention that new generations of workers will pay to the degree of trust and social commitment that their company effectively puts into practice.

Businesses will thus need to take into account every component of the social ecosystem in which they operate, as they will need to face increasingly complex situations that they cannot overcome without the genuine loyalty of their employees and strong ties with the local community in which they operate. We can thereby create responsible companies that, by linking all internal and external stakeholders, contribute to the creation of value by integrating competitiveness, while fostering the safeguarding and protection of jobs, long-term sustainability, and the development of roots within the local community.

It is therefore important to develop a participatory culture within companies by actively involving everyone so that participation becomes a foundational value of organizations. We must overcome the top-down, authoritarian business model of the past that produces antagonism between owners and employees, and move towards a logic of co-responsibility, consensus, and sharing. We must also spread the culture of workers’ participation to all levels of business, small and large companies alike, as well as across borders, to make sure the concept is understood by laypeople.

We must raise a generation of managers, entrepreneurs, and workers who know and cherish the value of workers’ participation so that they pass these values on to society as a whole, starting from their companies and workplaces. This way, we can achieve a new way of doing business and performing work, and we can go beyond the current economic structure that is presently experiencing a decline.

It is not a simple task to transform an organization from a rigid top to bottom hierarchy into one that involves employees at all levels in decision-making. It requires a change in the structure of the company and, more importantly, it takes a cultural change that requires time, commitment, and the support of experts who can facilitate the process.

10. Conclusion

To adequately face the economic challenges of the near future, it will be necessary to create organizations and companies that are capable of being competitive while also safeguarding jobs, fostering long-term sustainability, and building a strong bond with the local community and territory. Workers’ participation in the management of companies is one of the main ways to achieve this. It is thus necessary to build a culture that nurtures a continuous dialogue between companies, workers, and communities.

It would thus appear necessary to integrate participatory culture into training courses for both businesses and workers. Technical skills alone are not enough; organizational and management knowledge is needed in order to achieve a new way of doing business based on participation.

This can be done in large companies by developing know-how at all levels, so that the company is ready to make changes in advance of or upon the introduction of new regulations on workers’ participation. In small companies, on the other hand, one should encourage a participatory approach to doing business that gives employees a leading role, motivation, and a sense of belonging, so that they can experience genuine feeling of ownership of their work.

Finally, it would be crucial to develop educational and vocational training on the subject matter, as well as development plans and programs that have as their main goal the promotion of the participatory culture. We must raise a generation of entrepreneurs and workers, including those in small businesses, who know, cherish and incorporate these values so that, starting from the company and the workplace, they can pass them on to society as a whole.

11. Bibliography

• L’Idea Partecipativa dalla A alla Z

Mario Bozzi Sentieri

I Libri del Borghese, 2020

• La partecipazione che non c’è e invece servirebbe

Francesco Paolo Capone

La Meta Sociale – Ottobre 8, 2020

https://www.lametasociale.it/2020/10/08/la-partecipazione-che-non-ce-e-invece-servirebbe/

• La partecipazione dei lavoratori alla gestione dell’impresa. Un progetto possibile

Marco Carcano (a cura di), Roberto Ferrari (a cura di), Vito Volpe (a cura di) – 2017 – Guerini Next

• Le aspettative disattese della partecipazione dei lavoratori all’impresa

Andrea De Tommasi – 17 Giugno 2021

https://asvis.it/goal9/home/425-10035/focus-le-aspettative-disattese-della-partecipazione-dei-lavoratori-allimpresa

• Partecipazione dei lavoratori nell’impresa: le ragioni di un ritardo

Pietro Ichino

https://www.pietroichino.it/?p=29580

• La partecipazione dei lavoratori. Dal Mitbestimmung all’impresa sociale

07 Febbraio 2020 – di Francesca Manca

https://www.filodiritto.com/la-partecipazione-dei-lavoratori-dal-mitbestimmung-allimpresa-sociale

• Come cambieranno le relazioni industriali con il Coronavirus

di Salvatore Santangelo

https://www.startmag.it/economia/le-relazioni-industriali-al-tempo-del-covid19/

• Partecipazione dei lavoratori alla gestione dell’impresa

Tiziano Treu – Diritto online 2017

http://www.treccani.it/enciclopedia/partecipazione-dei-lavoratori-alla-gestione-delle-imprese_%28Diritto-on-line%29/

• La partecipazione dei lavoratori all’impresa

Roma, novembre 2012

Fondazione Cercare Ancora

Eni Corporate University

• Il modello tedesco. Come funziona davvero

6 aprile 2012 in Economia, Europa, Lavoro

https://keynesblog.com/2012/04/06/il-modello-tedesco-come-funziona-davvero/

• The rise of Employee Ownership Trusts and what this could mean for your business

23 luglio 2021

http://www.mitbestimmung.it/the-rise-of-employee-ownership-trusts-and-what-this-could-mean-for-your-business/

• Tipi e livelli della partecipazione

EQuIPE2020 – AnPAL Servizi SpA.

http://www.equipeonline.it/tipi-e-livelli-della-partecipazione

Afterword

Augusto became curious about a subject that was new to him. He studied it in-depth and now he has also found a way to make it known simply and clearly.

I was the one who told him about participation as one of the distinctive elements of our union, UGL, when, a few years ago, on the occasion of one of my trips to Hungary to attend an international conference, I met him in Budapest where he has been living and working for over thirty years as a business consultant for small and medium-sized enterprises, an expert in strategy, management and internationalisation.

Augusto is passionate about promoting participatory culture at the heart of new organisational models and new ways of doing business which are essential for facing the challenges of the near future.

We have translated his work into several languages because we consider it a very useful tool in our international relations.

by Gian Luigi Ferretti

UGL – International Relations

Augusto Cocchioni

Born in 1961, he has a degree in Economics Management from the University of Rome and a master’s degree in Internationalisation of Enterprises. After gaining his initial experience in England, Venezuela and Spain, he moved to Hungary in 1991. Hungary was – and it still is – a strategic country for the whole of Central and Eastern Europe at a time when these markets were opening up to Western companies.

He has always worked as a consultant alongside small and medium-sized companies, integrating traditional techniques with innovative management methods and tools. He is an author of books and publications, and he studies the dynamics of value creation in companies, while considering the culture of participation as fundamental in the new frontiers of social responsibility and corporate sustainability.

He is a Member of the UGL Foreign Affairs Council and Head of International Relations for Hungary as well as a Member of the Board of Statutory Auditors of  Confindustria Hungary. From 1998 to 2010, he was a Member and the Chairman of the Board of Auditors and Arbitrator of the Italian Chamber of Commerce for Hungary (CCIU). From 2006 to 2010, he was the Chairman of the Committee of Experts of the CCIU European Funds Office.