Second Necessary Component:
Economic Return

Although participation in decision-making can produce dramatic results in terms of increased worker productivity and morale (Blumberg, 1968:Ch. 5; HEW, 1973:Ch. 4), it does not seem to last very long by itself, nor can it continue to produce those results unless other factors are present. One crucial component uncovered during this research was an economic return to employees separate from the basic wage. By "economic return" we mean a regular monetary feedback to employees from the surplus that they themselves have produced. In various cases of democratization it has been called by different names: a "refund from receipts" (in the plywood mills), a "partner's bonus" (in the John Lewis Partnership), a "distribution from common earnings" (in the Scott-Bader Commonwealth), or a "collective-economy dividend" (NICB, 1922: 67-68). This payment may be a share of the year-end profits, or it may be a more frequent return from productivity margins calculated monthly or so. (A third form has been devised for partially democratized firms where surpluses from production have been barred because management anticipates an inelastic market or because union leaders fear the precedent of a speed-up. In such cases the return from higher productivity has been distributed to employees as time-off from work at regular pay [Maccoby, 1975]). Whatever its name or form, the economic return will not support participation effectively unless it is directly related to what the workers themselves have produced. Other equally important qualifications are:

  1. That the return must belong to the employees by right; it will not support democratization if it is an arbitrary reward, given by someone else outside their control (e.g., a manager).
  2. The return must be made to the entire participating group, managers included. If not, the participants may become fragmented and are likely to compete against one another for individual rewards. This, of course, would tend to destroy the cooperative interaction necessary for joint decision-making and production.
  3. The return must be separate from the basic wage. If it is tied to the wage so that it occasionally fluctuates below its current level, the workers will resent and perhaps rebel against the entire democratization system.
  4. If the return comes frequently, it can usefully inform the worker/decision-makers of immediate effects of their efforts.