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 ownershipof 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 employees informed about the
economic status of the company.
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, from determining 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 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.

Objectives of Workers Participation in Management

The objectives of workers’ participation in management are as follows:

 To raise level of motivation of workers by closer involvement.

 To provide opportunity for expression and to provide a sense of importance to workers.
 To develop ties of understanding leading to better effort and harmony.
 To act on a device to counter-balance powers of managers.
 To act on a panacea for solving industrial relation problems.
 Forms of Participation
 Different forms of participation are discussed below:
 Collective Bargaining: Collective bargaining results in collective agreements which lay down
certain rules and conditions of service in an establishment. Such agreements are normally
binding on the parties. Theoretically, collective bargaining is based on the principle of
balance of power, but, in actual practice, each party tries to outbid the other and get
maximum advantage by using, if necessary, threats and counterthreats like; strikes, lockouts
and other direct actions. Joint consultation, on the other hand, is a particular technique
which is intended to achieve a greater degree of harmony and cooperation by emphasising
matters of common interest. Workers prefer to use the instrument of collective bargaining
rather than ask for a share in management. Workers’ participation in the U.S.A has been
ensured almost exclusively by means of collective agreements and their application and
interpretation rather than by way of labour representation in management.
 Works Councils: These are exclusive bodies of employees, assigned with different functions
in the management of an enterprise. In West Germany, the works councils have various
decision-making functions. In some countries, their role is limited only to receiving
information about the enterprise. In Yugoslavia, these councils have wider decision-making
powers in an enterprise like; appointment, promotion, salary fixation and also major
investment decisions.
 Joint Management Councils and Committees: Mainly these bodies are consultative and
advisory, with decision-making being left to the top management. This system of
participation is prevalent in many countries, including Britain and India. As they are
consultative and advisory, neither the managements nor the workers take them seriously.
 Board Representation: The role of a worker representative in the board of directors is
essentially one of negotiating the worker’s interest with the other members of the board. At
times, this may result in tension and friction inside the board room. The effectiveness of
workers’ representative at the board depend upon his ability to participate in decision-
making, his knowledge of the company affairs, his educational background, his level of
understanding and also on the number of worker representatives in the Board.
 Workers Ownership of Enterprise: Social self-management in Yugoslavia is an example of
complete control of management by workers through an elected board and workers council.
Even in such a system, there exist two distinct managerial and operative functions with
different sets of persons to perform them. Though workers have the option to influence all
the decisions taken at the top level, in actual practice, the board and the top management
team assume a fairly independent role in taking major policy decisions for the enterprises,
especially in economic matters.
 Levels of Participation

Workers’ participation is possible at all levels of management; the only difference is that of
degree and nature of application. For instance, it may be vigorous at lower level and faint at
top level. Broadly speaking there is following five levels of participation:

 1. Information participation: It ensures that employees are able to receive information and
express their views pertaining to the matters of general economic importance.

2. Consultative participation: Here works are consulted on the matters of employee welfare
such as work, safety and health. However, final decision always rests at the option of
management and employees’ views are only of advisory nature.

3. Associative participation: It is extension of consultative participation as management here

is under moral obligation to accept and implement the unanimous decisions of employees.

4. Administrative participation: It ensure greater share of works in discharge of managerial

functions. Here, decision already taken by the management come to employees, preferably
with alternatives for administration and employees have to select the best from those for
implementation.

5. Decisive participation: Highest level of participation where decisions are jointly taken on
the matters relation to production, welfare etc. is called decisive participation.

Employee Empowerment
What motivates people to work? Money may be the primary reason, but beyond a certain
limit it fails to. Organizations have been trying out different things to increase the level of
motivation of its employees. Employee empowerment is one of them.

Employee empowerment means that an employee is given a chance to be enterprising, take

risks without compromising with the organizational goals, mission and vision. His say in the
process of decision making in increased. This can be for one particular individual or for the
entire organization. In the latter case it is called participative management.

There are pros and cons to this employee empowerment. Whereas it is said and has been
observed that participative management may lead to increased productivity, motivation, job
satisfaction and quality enhancement; it may also slow down the process of decision making
and act a potential security threat in terms of ease of access of information it offers to the
employees.

From an organizational perspective the following pros and cons may be associated with
employee empowerment.

Pros of Employee Empowerment

 It leads to greater job satisfaction, motivation, increased productivity and reduces the costs.
 It also leads to creativity and innovation since the employees have the authority to act on
their own.
 There is increased efficiency in employees because of increased ownership in their work.
 Lesser need of supervision and delegation.
  Focus on quality from the level of manufacturing till actual delivery and service of goods.
 Employees when empowered become more entrepreneurial and start taking more risks.
Greater the risk, greater are the chances to succeed.

Cons of Employee Empowerment

At the individual level employee empowerment means you are an integral component of the
organization. This may sprout egotism or arrogance in the workers.

Apart from disadvantages at the organizational level, there are certain challenges that emerge
at the individual level. Supervisors often complain disgust from the empowered workers. The
following points go against employee empowerment:

 Egotism / arrogance: Worker arrogance can create a big trouble for the supervisors and the
managers. There can be problems in delegating. Employees avoid reporting about their work
and feedback can be taken negatively.
 Security: Since information comes and is shared by all, there are apprehensions about
leakage of critical data.
 Risk: Creativity and innovation demands a greater risk bearing capacity and there are equal
chances of success and failure. Workers often lack the expertise to execute are enterprise,
which can cost big.
 Industrial Democracy: Labor unions and workers are empowered and they may misuse the
same. Strikes and lock outs become more frequent. Also, labor unions gain insights into
management and their functioning and they leak the same.

Quality of Work Life (QWL):

Dissatisfaction with working life affects the workers some time or another, regardless of
position or status. The frustration, boredom and anger common to employees can be costly to
both individuals and organisations.

Managers seek to reduce job dissatisfaction at all organizational levels, including their own.
This is a complex problem, however, because it is difficult to isolate and identify the
attributes which affect the quality of working life.

Profitability of a company is linked to satisfaction of its work force. A company that does not
measure and improve employee satisfaction may face increasing turnover, declining
productivity and limited ability to attract and retain qualified replacements.

Employee satisfaction and quality of work life directly affect company’s ability to serve its
customers. Efforts towards QWL measurement help in efficient and effective allocation of
resources to enhance productivity and stability of the workforce.

It leads to:
i. Positive employee attitudes toward their work and the company.

ii. Increased productivity and intrinsic motivation.

iii. Enhanced organizational effectiveness and competitive advantage.

Quality of work life involves three major parts:

1. Occupational health care:
Safe work environment provides the basis for people to enjoy his work. The work should not
pose health hazards for the employees.

2. Suitable working time:

Companies should observe the number of working hours and the standard limits on overtime,
time of vacation and taking free days before national holidays.

3. Appropriate salary:
The employee and the employer agree upon appropriate salary. The Government establishes
the rate of minimum salary; the employer should not pay less than that to the employee.
Work represents a role which a person has designated to himself. On the one hand, work
earns one’s living for the family, on the other hand, it is a self-realization that provides
enjoyment and satisfaction.

QWL is important because of the following reasons:

1. Enhance stakeholder relations and credibility:
A growing number of companies that focus on QWL improve their relationships with the
stakeholders. They can communicate their views, policies, and performance on complex
social issues; and develop interest among their key stakeholders like consumers, suppliers,
employees etc.

2. Increase productivity:
Programmes which help employees balance their work and lives outside the work can
improve productivity. A company’s recognition and support — through its stated values and
policies — of employees’ commitments, interests and pressures, can relieve employees’
external stress.

This allows them to focus on their jobs during the workday and helps to minimize
absenteeism. The result can be both enhanced productivity and strengthened employee
commitment and loyalty.

3. Attraction and retention:

Work-life strategies have become a means of attracting new skilled employees and keeping
existing ones satisfied. Many job seekers prefer flexible working hours as the benefit they
would look for in their job. They would rather have the opportunity to work flexible hours
than receive an additional increment in annual pay.
a. More employees may stay on a job, return after a break or take a job with one company
over another if they can match their needs better with those of their paid work.

b. This results in savings for the employer as it avoids the cost of losing an experienced
worker and recruiting someone new.

c. Employers who support their staff in this way often gain loyalty from the staff.

4. Reduces absenteeism:
a. Companies that have family-friendly or flexible work practices have low absenteeism.
Sickness rates fall as pressures are managed better. Employees have better methods of
dealing with work-life conflicts than taking unplanned leave.

b. Workers (including the managers) who are healthy and not over-stressed are more efficient
at work.

5. Improve the quality of working lives

a. Minimising work-life role conflict helps prevent role overload and people have a more
satisfying working life, fulfilling their potential both in paid work and outside it.

b. Work life balance can minimise stress and fatigue at work, enabling people to have safer
and healthier working lives. Workplace stress and fatigue can contribute to injuries at work
and home.

c. Self-employed people control their own work time to some extent. Most existing
information on work-life balance is targeted at those in employment relationships. However,
the self-employed too may benefit from maintaining healthy work habits and developing
strategies to manage work flows which enable them to balance one with other roles in their
lives.

6. Matches people who would not otherwise work with jobs:

a. Parents, people with disabilities and those nearing retirement may increase their work force
participation if more flexible work arrangements are made. Employment has positive
individual and social benefits beyond the financial rewards.

b. Employers may also benefit from a wider pool of talent to draw from, particularly to their
benefit when skill shortages exist.

7. Benefiting families and communities:

a. In a situation of conflict between work and family, one or other suffers. Overseas studies
have found that family life can interfere with paid work. QWL maintains balance between
work and family. At the extreme, if family life suffers, this may have wider social costs.

b. Involvement in community, cultural, sporting or other activities can be a benefit to

community and society at large. For instance, voluntary participation in school boards of
trustees can contribute to the quality of children’s education.

While such activities are not the responsibility of individual employers, they may choose to
support them as community activities can demonstrate good corporate citizenship. This can
also develop workers’ skills which can be applied to the work place.

8. Job involvement:
Companies with QWL have employees with high degree of job involvement. People put their
best to the job and report good performance. They achieve a sense of competence and match
their skills with requirements of the job. They view their jobs as satisfying the needs of
achievement and recognition. This reduces absenteeism and turnover, thus, saving
organisational costs of recruiting and training replacements.

9. Job satisfaction:
Job involvement leads to job commitment and job satisfaction. People whose interests are
protected by their employers experience high degree of job satisfaction. This improves job
output.

10. Company reputation:

Many organizations, including Governments, NGOs, investors and the media, consider the
quality of employee experience in the work place when evaluating a company. Socially
responsible investors, including some institutional investors, pay specific attention to QWL
when making investment decisions.

Significance of Good Work-life Quality:

1. Decrease absenteeism and increase turnover,

2. Less number of accidents,

3. Improved labour relations,

4. Employee personification,

5. Positive employee attitudes toward their work and the company,

6. Increased productivity and intrinsic motivation,

7. Enhanced organizational effectiveness and competitive advantage, and

8. Employees gain a high sense of control over their work.

Impact of Technological Change on Industrial Relations

An organisation’s Technology is the process by which inputs from an organisation’s
environment are transformed into outputs. Technology includes tools, machinery, equipment,
work procedures, and employee knowledge and skills. In the present competitive world,
technological breakthroughs can dramatically influence and organisation’s service markets,
suppliers, distributors, competitors, customers, manufacturing processes, marketing practices
and competitive position. Technological advances can open up new markets, result in a
proliferation of new and improved products, change the relative cost position in an industry
and render existing products and services obsolete.
Technological advancements can create new competitive advantages that are more powerful
than existing ones. Recent technological advances, as we all know, in computers, lasers,
robots, satellite networks, fibreoptics, biometrics, cloning and other related areas have paved
the way for significant operational improvements.
Impact Of Technology On Industrial Relation

New skills required :

As new technologies are developed and implemented, there is an urgent need to upgrade
existing employee skills and knowledge if the organization wants to survive and flourish in a
competitive world. Additionally there will be growing demand for workers with more
sophisticated training and skills especially in emerging ‘hot’ sectors like telecommunications,
hospitality, retailing, banking, insurance, biotechnology and financial services. For example,
services. For example, service sector employee require different skills than those utilized in
manufacturing. They need strong interpersonal and communication skills as well as the
ability to handle customer complaints in a flexible way.

Downsizing
New Technologies have decimated many lower end jobs with frustrating regularity. Increased
automation has reduced employee head counts everywhere. The pressure to remain cost
effective has also compelled many a firm to go lean, cutting down extra fat at each
managerial level. The wave of merger and acquisition activity, in recent times has often left
the new, combined companies to downsize operations ruthlessly. The positions that have
been filled up with workers possessing superior technical skills and knowledge has also tilted
the poser base ( in many emerging industries) from management
to technical workers. It is not uncommon today for managers to have limited understanding of the
technical aspects of their subordinates’ work. Managing the expectations of knowledge workers is
going be major area of concern for all IR Managers in the years ahead.
WHY? COSEQUENCES MANAGING SURVIVOR’S
OF DOWNSIZING

Automation. Cuts payroll expenses Bitterness, anger disbelief

and shock need to be handled
Restructuring Eliminates extra layers properly

Mergers. Improves functioning Give information as to why

the action had to be taken.
Acquisitions if firm’s product and
service profiles is good Tell how it is going to help
Competitive the firm and employees in the
Shocks those left out long run
Pressures
Shattering impact on

employee motivation
and morale if not
managed properly

Collaborative work
Technological change has resulted in hierarchical distinctions being blurred and more
collaborative teamwork where managers, technicians and analysts work together on projects.
Team based incentive plans have also made it necessary for all classes of employees to work
in close coordination with each other.

Telecommuting
The rapid advance in technology have led to the relocation of work from the office to the home.
Telecommuting has become the order of the day where employees work at home, usually with
computers and use phoned and the Internet to transmit letters, data and completed work to the
home office.

Internet and intranet revolution:

Internet and information technology have enabled companies to become more competitive by
cutting costs. Manufacturers, bank, retailers, and you name anything have successfully
harnessed computer technology to reduce their costs and deliver want satisfying goods and
services to customers at an amazing speed. Even in IR, internets and intranets are being used
to handle training, benefit administration, performance management and out placement
functions, in recent times. The cumulative impact of new
technology is so dramatic that at a broader level, organizations are changing the way they do
business. Use of the internet to transact business has become so commonplace for both large
and small companies that e-commerce is rapidly becoming the organizational challenge of the
new millennium. Managing virtual corporations and virtual workers in this technology driven
world is going to pose tough challenges for HR Managers in the years ahead.

Role of IR in a virtual organization : A virtual organization is network of companies or

employees connected by computers. Virtual workers work from home, hostel, their cars, or
wherever their work takes them.
The IR plays a unique role in a virtual organization :
Psychological fit
System alignment
Reconsider rewards
Reconsider staffing needs
Build partnerships
Develop leaders