Participative Management Notes

8/2/2019 Participative Management Notes

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PARTICIPATIVE MANAGEMENT NOTES

Q. 1. Explain the different methods/ techniques of

participation.(I) Introduction:

Three groups of managerial decisions affect the workers of any industrial

establishment and hence the workers must have a say in it.

Economic decisions methods of manufacturing, automation,

shutdown, lay-offs, and mergers.

Personnel decisions recruitment and selection, promotions,

demotions, transfers, grievance settlement, work distribution.

Social decisions hours of work, welfare measures, questions

affecting work rules and conduct of individual workers safety, health,

and sanitation and noise control.

Participation basically means sharing the decision-making power with the

lower ranks of the organization in an appropriate manner.

Definitions:

The concept of WPM is a broad and complex one. Depending on the socio-

political environment and cultural conditions, the scope and contents of

participation changes.

International Institute of Labour Studies: WPM is the participation

resulting from the practices which increase the scope for employees share

of influence in decision-making at different tiers of organizational hierarchy

with concomitant (related) assumption of responsibility.

ILO: Workers participation, may broadly be taken to cover all terms of

association of workers and their representatives with the decision-making

process, ranging from exchange of information, consultations, decisions

and negotiations, to more institutionalized forms such as the presence of

workers member on management or supervisory boards or evenmanagement by workers themselves (as practiced in Yugoslavia).


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The main implications of workers participation in management as

summarized by ILO:

Workers have ideas which can be useful;

Workers may work more intelligently if they are informed about thereasons for and the intention of decisions that are taken in a

participative atmosphere.

(II) Scope and ways of participation (Forms):

One view is that workers or the trade unions should, as equal partners, sit

with the management and make joint managerial decisions.

The other view is that workers should only be given an opportunity, throughtheir representatives, to influence managerial decisions at various levels.

In practice, the participation of workers can take place by one or all the

methods listed below:

1. Board level participation

2. Ownership participation

3. Complete control

4. Staff or work councils

5. Joint councils and committees

6. Collective Bargaining

7. Job enlargement and enrichment

8. Suggestion schemes

9. Quality circles

10. Empowered teams

11. TQM

12. Financial participation

1. Participation at the Board level:

This would be the highest form of industrial democracy.

The workers representative on the Board can play a useful role in

safeguarding the interests of workers. He or she can serve as a guide and a

control element.


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He or she can prevail upon top management not to take measures

that would be unpopular with the employees.

He or she can guide the Board members on matters of investment in

employee benefit schemes like housing, and so forth.

Problems associated with this method:

Focus of workers representatives is different from the focus of the

remaining members of the Board.

Communication and subsequently relations between the workers

representative and the workers suffers after the former assumes

directorship. He or she tends to become alienated from the workers.

As a result, he or she may be less effective with the other members

of the Board in dealing with employee matters.

Because of the differences in the cultural and educational

backgrounds, and differences in behaviour and manners, such an

employees representative may feel inferior to the other members,

and he or she may feel suffocated. Hence, his or her role as a directormay not be satisfying for either the workers or the management.

Such representatives of workers on the Board, places them in a

minority. And the decisions of the Board are arrived at on the basis of

the majority vote.

2. Participation through ownership:

This involves making the workers shareholders of the company by inducing

them to buy equity shares.

In many cases, advances and financial assistance in the form of easy

repayment options are extended to enable employees to buy equity

shares. Examples of this method are available in the manufacturing

as well as the service sector.

Advantage: Makes the workers committed to the job and to the

organization.


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Drawback: Effect on participation is limited because ownership and

management are two different things.

3. Participation through complete control:Workers acquire complete control of the management through elected

boards. The system of self-management in Yugoslavia is based on this

concept. Self-management gives complete control to workers to manage

directly all aspects of industries through their representatives.

Advantages:

Ensures identification of the workers with their organization.

Industrial disputes disappear when workers develop loyalty to the

organization.

Trade unions welcome this type of participation.

Conclusion: Complete control by workers is not an answer to the problem of

participation because the workers do not evince interest in management

decisions.

4. Participation through Staff and Works Councils:

Staff councils or works councils are bodies on which the representation is

entirely of the employees. There may be one council for the entire

organization or a hierarchy of councils. The employees of the respective

sections elect the members of the councils. Such councils play a varied role.

Their role ranges from seeking information on the managements

intentions to a full share in decision-making.

Such councils have not enjoyed too much of success because trade union

leaders fear the erosion of their power and prestige if such workers bodies

were to prevail.

5. Participation through Joint Councils and Committees:

Joint councils are bodies comprising representatives of employers and

employees. This method sees a very loose form of participation, as these

councils are mostly consultative bodies.


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Work committees are a legal requirement in industrial establishments

employing 100 or more workers. Such committees discuss a wide range of

topics connected to labour welfare.

Examples of such committees are welfare committee, safety committee,etc. Such committees have not proven to be too effective in promoting

industrial democracy, increasing productivity and reducing labour unrest.

6. Participation through Collective Bargaining:

Through the process of CB, management and workers may reach collective

agreement regarding rules for the formulation and termination of the

contract of employment, as well as conditions of service in anestablishment. Even though these agreements are not legally binding, they

do have some force. For CB to work, the workers and the employers

representatives need to bargain in the right spirit. But in practice, while

bargaining, each party tries to take advantage of the other. This process of

CB cannot be called WPM in its strongest sense as in reality; CB is based on

the crude concept of exercising power for the benefit of one party. WPM, on

the other hand, brings both the parties together and develops appropriatemutual understanding and brings about a mature responsible relationship.

7. Participation through Job Enlargement and Job

Enrichment:

Excessive job specialization that is seen as a by-product of mass production

in industries, leads to boredom and associated problems in employees.

Two methods of job designing job enlargement and job enrichment are

seen as methods of addressing the problems.

Job enlargement means expanding the job content adding task

elements horizontally.

Job enrichment means adding `motivators to the job to make it more

rewarding. This is WPM in that it offers freedom and scope to the

workers to use their judgment. But this form of participation is very


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basic as it provides only limited freedom to a worker concerning the

method of performing his/her job.

The worker has no say in other vital issues of concern to him issues

such as job and income security, welfare schemes and other policydecisions.

8. Participation through Suggestion Schemes:

Employees views are invited and reward is given for the best suggestion.

With this scheme, the employees interest in the problems of the

organization is aroused and maintained. Progressive managements

increasingly use the suggestion schemes. Suggestions can come fromvarious levels. The ideas could range from changes in inspection

procedures to design changes, process simplification, paper-work reduction

and the like. Out of various suggestions, those accepted could provide

marginal to substantial benefits to the company. The rewards given to the

employees are in line with the benefits derived from the suggestions.

9. Participation through Quality Circles:Concept originated in Japan in the early 1960s and has now spread all over

the world. A QC consists of seven to ten people from the same work area

who meet regularly to define, analyze, and solve quality and related

problems in their area. These circles require a lot of time and commitment

on the part of members for regular meetings, analysis, brainstorming, etc.

Most QCs have a definite life cycle one to three years. Few circles survive

beyond this limit either because they loose steam or they face simpleproblems. QCs can be an excellent bridge between participative and non-

participative approaches. For QCs to succeed in the long run, the

management needs to show its commitment by implementing some of the

suggestions of the groups and providing feedback on the disposition of all

suggestions.

Training in problem-solving techniques is provided to the members. QCs are

said to provide quick, concrete, and impressive results when correctlyimplemented.


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Advantages:

Employees become involved in decision-making, acquire

communication and analytical skills and improve efficiency of thework place.

Organization gets to enjoy higher savings-to-cost ratios.

Chances of QC members to get promotions are enhanced.

10. Empowered Teams:

Empowerment occurs when authority and responsibility are passed on to

the employees who then experience a sense of ownership and control over

their jobs. Employees may feel more responsible, may take initiative in their

work, may get more work done, and may enjoy the work more. For

empowerment to occur, the following approach needs to be followed as

compared to the traditional approach:

ElementTraditional

OrganizationEmpowered Teams

Organizational

structure

Job design

Management role

Leadership

Information flow

Rewards

Job process

Layered, individual

Narrow, single task

Direct, control

Top-down

Controlled, limited

Individual, seniority

based

Managers plan, control,

improve

Flat, team

Whole process, multiple

tasks

Coach, facilitate

Shared with the team

Open, shared

Team-based, skill-based

Teams plan, control, and

improve

Features of empowered or self-directed teams:

Empowered to share various management and leadership functions.

Plan, control and improve their work.

Often create their schedules and review their performance as a

group.

May prepare their own budgets and co-ordinate their work with other

departments.


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o Usually order materials, keep inventories and deal with

suppliers.

o Frequently responsible for acquiring any new training they

might need.o May hire their own replacement to assume responsibility for the

quality of their products or services

Titan, Reliance, ABB, GE Plastics (India), Wipro Corporation and Wipro

InfoTech are empowering employees both frontline as well as production

staff, and are enjoying positive results.

11. Total Quality Management:TQM refers to the deep commitment, almost obsession, of an organization

to quality.

Every step in companys processes is subjected to intense and regular

scrutiny for ways to improve it.

Some traditional beliefs are discarded.

High quality costs more.

Quality can be improved by inspection.

Defects cannot be completely eliminated.

Quality in the job of the QC personnel.

New principles of TQM are:

Meet the customers requirement on time, the first time, and 100% of

the time.

Strive to do error-free work.

Manage by prevention, not correction.

Measure the cost of quality.

TQM is called participative because it is a formal programme

involving every employee in the organization; making each one

responsible for improving quality everyday.

12. Financial Participation:


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This method involves less consultations or even joint decisions.

Performance of the organization is linked to the performance of the

employee. The logic behind this is that if an employee has a financial stake

in the organization, he/she is likely to be more positively motivated andinvolved.

Some schemes of financial participation:

Profit-linked pay

Profit sharing and Employees Stock Option schemes.

Pension-fund participation.

Pre-requisites for successful participation:

Management and operatives/employees should not work at cross-

purposes i.e. they must have clearly defined and complementary

objectives.

Free flow of communication and information.

Participation of outside trade union leaders to be avoided

Strong and effective trade unionism.

Workers education and training.

Trade unions and government needs to work in this area.

Trust between both the parties.

Workers should be associated at all levels of decision-making.

Employees cannot spend all their time in participation to the

exclusion of all other work.

Limitations of participation:

Technology and organizations today are so complex that specialized work-

roles are required.

This means employees will not be able to participate effectively in

matters beyond their particular environment. Everybody need not

want participation.


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The role of trade unions in promoting participative management has

been far from satisfactory.

Alternative answer for Methods or Techniques of

Participative Management

Participation of workers in decision-making process has resulted in

successful value creation in many organizations. Though the extent to

which employees should participate in organizational decision making is still

a matter of debate. Some say that workers union should participate with

management as equal partners while some believe in restricted or bounded

participation, that is, participation of employees or workers to a limited

extent. However, there are a number of ways through which employees can

participate in decision-making process of any organization.

1. Participation at the Board Level: Representation of employees at

the board level is known as industrial democracy. This can play an

important role in protecting the interests of employees. The

representative can put all the problems and issues of the employees

in front of management and guide the board members to invest in

employee benefit schemes.

2. Participation through Ownership: The other way of ensuring

workers participation in organizational decision making is making

them shareholders of the company. Inducing them to buy equity

shares, advancing loans, giving financial assistance to enable them to

buy equity shares are some of the ways to keep them involved in

decision-making.

3. Participation through Collective Bargaining: This refers to the

participation of workers through collective agreements and by

deciding and following certain rules and regulations. This is

considered as an ideal way to ensure employee participation in

managerial processes. It should be well controlled otherwise each

party tries to take an advantage of the other.


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4. Participation through Suggestion Schemes: Encouraging your

employees to come up with unique ideas can work wonders especially

on matters such as cost cutting, waste management, safety

measures, reward system, etc. Developing a full-fledged procedurecan add value to the organizational functions and create a healthy

environment and work culture. For instance, Satyam is known to have

introduced an amazing country-wide suggestion scheme, the Idea

Junction. It receives over 5,000 ideas per year from its employees and

company accepts almost one-fifth of them.

5. Participation through Complete Control: This is called the

system of self management where workers union acts as

management. Through elected boards, they acquire full control of the

management. In this style, workers directly deal with all aspects of

management or industrial issues through their representatives.

6. Participation through Job Enrichment: Expanding the job content

and adding additional motivators and rewards to the existing job

profile is a fine way to keep workers involved in managerial decision-

making. Job enrichment offers freedom to employees to exploit their

wisdom and use their judgment while handling day-to-day business

problems.

7. Participation through Quality Circles: A quality circle is a group

of five to ten people who are experts in a particular work area. They

meet regularly to identify, analyze and solve the problems arising in

their area of operation. Anyone, from the organization, who is an

expert of that particular field, can become its member. It is an ideal

way to identify the problem areas and work upon them to improve

working conditions of the organization.

Employees can participate in organizational decision making through

various processes mentioned above. However, there are other ways such as

financial participation, Total Quality Management, participation through

empowered teams and joint committees and councils through which they


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can contribute their share in making the organizations a better place to

work.

Q. 2. Write Short Notes on:

a. Participative Management:

Participative (or participatory) management, otherwise known as employee

involvement or participative decision making, encourages the involvement

of stakeholders at all levels of an organization in the analysis of problems,

development of strategies, and implementation of solutions. Employees are

invited to share in the decision-making process of the firm by participating

in activities such as setting goals, determining work schedules, and making

suggestions. Other forms of participative management include increasing

the responsibility of employees (job enrichment); forming self-managed

teams, quality circles, or quality-of-work-life committees; and soliciting

survey feedback. Participative management, however, involves more than

allowing employees to take part in making decisions. It also involves

management treating the ideas and suggestions of employees with

consideration and respect. The most extensive form of participative

management is direct employee ownership of a company.

Four processes influence participation. These processes create employee

involvement as they are pushed down to the lowest levels in an

organization. The farther down these processes move, the higher the level

of involvement by employees. The four processes include:

1. Information sharing, which is concerned with keeping employeesinformed about the economic status of the company.


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2. Training, which involves raising the skill levels of employees and

offering development opportunities that allow them to apply new skills to

make effective decisions regarding the organization as a whole?

3. Employee decision making, which can take many forms, fromdetermining work schedules to deciding on budgets or processes.

4. Rewards, which should be tied to suggestions and ideas as well as

performance.

BENEFITS OF PARTICIPATIVE MANAGEMENT

A participative management style offers various benefits at all levels of the

organization. By creating a sense of ownership in the company,participative management instills a sense of pride and motivates

employees to increase productivity in order to achieve their goals.

Employees who participate in the decisions of the company feel like they

are a part of a team with a common goal, and find their sense of self-

esteem and creative fulfillment heightened.

Managers who use a participative style find that employees are more

receptive to change than in situations in which they have no voice. Changes

are implemented more effectively when employees have input and make

contributions to decisions. Participation keeps employees informed of

upcoming events so they will be aware of potential changes. The

organization can then place itself in a proactive mode instead of a reactive

one, as managers are able to quickly identify areas of concern and turn to

employees for solutions.

Participation helps employees gain a wider view of the organization.

Through training, development opportunities, and information sharing,

employees can acquire the conceptual skills needed to become effective

managers or top executives. It also increases the commitment of

employees to the organization and the decisions they make.

Creativity and innovation are two important benefits of participative

management. By allowing a diverse group of employees to have input into

decisions, the organization benefits from the synergy that comes from a


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wider choice of options. When all employees, instead of just managers or

executives, are given the opportunity to participate, the chances are

increased that a valid and unique idea will be suggested.

REQUIREMENTS OF PARTICIPATIVE MANAGEMENT

A common misconception by managers is that participative management

involves simply asking employees to participate or make suggestions.

Effective programs involve more than just a suggestion box. In order for

participative management to work, several issues must be resolved and

several requirements must be met. First, managers must be willing to

relinquish some control to their workers; managers must feel secure in their

position in order for participation to be successful. Often managers do not

realize that employees' respect for them will increase instead of decrease

when they implement a participative management style.

The success of participative management depends on careful planning and

a slow, phased approach. Changing employees' ideas about management

takes time, as does any successful attempt at a total cultural change from a

democratic or autocratic style of management to a participative style. Long-

term employees may resist changes, not believing they will last. In order for

participation to be effective, managers must be genuine and honest in

implementing the program. Many employees will need to consistently see

proof that their ideas will be accepted or at least seriously considered. The

employees must be able to trust their managers and feel they are

respected.

Successful participation requires managers to approach employee

involvement with an open mind. They must be open to new ideas and

alternatives in order for participative management to work. It is important

to remember that although the manager may not agree with every idea or

suggestion an employee makes, how those ideas are received is critical to

the success of participative management.

Employees must also be willing to participate and share their ideas.

Participative management does not work with employees who are passive

or simply do not care. Many times employees do not have the skills or


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information necessary to make good suggestions or decisions. In this case it

is important to provide them with information or training so they can make

informed choices. Encouragement should be offered in order to accustom

employees to the participative approach. One way to help employeesengage in the decision-making process is by knowing their individual

strengths and capitalizing on them. By guiding employees toward areas in

which they are knowledgeable, a manager can help to ensure their success.

Before expecting employees to make valuable contributions, managers

should provide them with the criteria that their input must meet. This will

aid in discarding ideas or suggestions that cannot be implemented, are not

feasible, or are too expensive. Managers should also give employees timeto think about ideas or alternative decisions. Employees often do not do

their most creative thinking on the spot.

Another important element for implementing a successful participative

management style is the visible integration of employees' suggestions into

the final decision or implementation. Employees need to know that they

have made a contribution. Offering employees a choice in the final decision

is important because it increases their commitment, motivation, and job

satisfaction. Sometimes even just presenting several alternatives and

allowing employees to choose from them is as effective as if they thought

of the alternatives themselves. If the employees' first choice is not feasible,

management might ask for an alternative rather than rejecting the

employee input. When an idea or decision is not acceptable, managers

should provide an explanation. If management repeatedly strikes down

employee ideas without implementing them, employees will begin todistrust management, thus halting participation. The key is to build

employee confidence so their ideas and decisions become more creative

and sound.


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Participative Management Notes