Democratic Management of Enterprises and Workers Congresses System in China

Prof. Jiang Daxing is a professor at Peking University Law School

May 2019

Introduction

The system of workers’ congresses is the basic form of democratic management of enterprises in China. The so-called “basic form” is the most important and basic way for employees to participate in enterprise democratic management, which is enough to reflect the importance of employee representative conferences. For example, Article 17, Paragraph 3 of the Company Law stipulates: “When a company studies and decides on major issues such as restructuring, dissolution, bankruptcy, and operation, and formulates important rules and regulations, it shall listen to the opinions of the company’s trade union and listen to the opinions and suggestions of employees through the workers’ congress or other forms.”  Organizing trade unions in private enterprises is mainly to protect the rights and interests of employees, which is different from implementing democratic management in state-owned enterprises, which also has the mission of promoting the construction of socialist democratic politics.

Democratic management of enterprises mainly involves mobilizing employees to participate democratically in enterprise economic and management activities through trade union representatives and organizations, implementing mass supervision, promoting democratic enterprise decision-making, fair and just interest relations, and unity and harmony among employees. It is a powerful driving force for building a harmonious enterprise.

The concept of enterprise democratic management is the theoretical basis for building an enterprise democratic management system and promoting the process of enterprise democratic management. It is a major issue that concerns whether the democratic rights of employees can be truly implemented and even whether the enterprise can survive and develop in the global competition.

Regarding the concept of democratic management of enterprises, scholars in China’s theoretical circles generally believe that democratic management of enterprises is a management system and management method in which employees, as masters of the enterprises, implement democratic decision-making , democratic participation, and democratic supervision of the economic life, political life, social life, cultural life and other affairs of the enterprise through employee representative conferences or other forms in accordance with legal provisions .

However, there are different interpretations of its theoretical positioning, subject and object, and channels and methods of implementation. In practice, people still find it difficult to grasp the essence of the concept and there are many misunderstandings.

New interpretation on Democratic management of enterprises

Democratic management of enterprises is first of all a modern management system and management method. This means that it should ultimately be positioned in the field of management science, rather than in the field of democratic politics.

Only by positioning it in the field of management science can we truly grasp the true nature of democratic management of enterprises. As a management concept and method, democratic management of enterprises must comply with the basic principles of management science to ensure the scientific nature of management . It must meet two purposes and requirements:

Firstly, it is to promote the development of enterprises, that is, enterprises are the purpose.

That is to give full play to the talents and enthusiasm of all stakeholders , promote the scientific management of enterprises, and improve the operating conditions of enterprises.

Second, it is to promote the development of people.

As Marx said, people themselves are the purpose. Democratic management of enterprises must fully safeguard the legitimate rights and interests of employees and meet people’s needs for respect and self-realization.

The president of Mary Kay Cosmetics Company in the United States said, “P and L not only represent profit and loss, but also people and love.” Democratic management of enterprises must focus on the integration of democracy and management, and unify the interests of enterprises with the interests of employees and stakeholders. Only in this way can it be conducive to the formation of internal synergy of enterprises and the development and growth of enterprises. Otherwise, blindly emphasizing democracy will undermine the democratic process and will not help employees truly participate in enterprise management and realize their democratic rights.

Secondly, the so-called employees in the definition must be in a broad sense, including the owners of all factors, rather than just ordinary employees, employees should include investors, enterprise managers, and others.

In other words, the owners of all factors of the enterprise are the subject, which includes both production workers and capital owners, business managers, patent owners, senior technical personnel, etc. Enterprise managers are not the object of democratic management of enterprises, but a component of the subject.

Excluding enterprise managers from the subject status is undoubtedly an overemphasis on the democratic connotation of democratic management of enterprises, while ignoring its fundamental management connotation, which is easy to cause opposition and conflict between enterprises and stakeholders , and turn the cooperative game between them into a confrontational game.

As a result, it is easy to cause enterprise democracy to be separated from enterprise management, and ultimately make democratic management formalistic. Of course, in terms of the development stage of enterprise democratic management, it is undoubtedly necessary and understandable to emphasize the democratic management rights of the majority of employees in enterprises.

Thirdly, the workers’ representatives’ congress is a very important democratic management channel for Chinese enterprises and cannot be ignored.

However, it is not the only one. The channels and methods of democratic management of enterprises still need to be further standardized and innovated. With the acceleration of the process of globalization , the composition of enterprise employees has become more and more diverse in terms of race and nationality.

Whether China’s previous democratic management methods are still suitable for the development of modern enterprises deserves further consideration. The author believes that the channels and methods of democratic management of enterprises in various countries are not the same. The democratic management of each enterprise contains three levels of content: global commonality, national characteristics and corporate personality.

The first level is the democratic management method that is generally agreed upon internationally, which is the common wealth of human civilization. The second level is the democratic management method with national characteristics. According to their different historical and cultural backgrounds and political and economic environments, countries have formulated different corporate democratic laws and regulations and adopted different management channels and methods to adapt to the democratic management of their own enterprises. The third level belongs to the category of corporate individual culture. Each enterprise can adopt different democratic practices according to its own development needs. These three levels will exist for a long time in a certain historical period.

Please Download for Full Text