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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 sociopolitical 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 even management by workers themselves (as practiced in Yugoslavia).

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 the reasons 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, through their 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. 11. 12. Empowered teams TQM 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.

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 director may 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.

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.

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 an establishment. 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 appropriate mutual 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

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 policy decisions.

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 from various 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 simple problems. QCs can be an excellent bridge between participative and nonparticipative 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 correctly implemented.

Advantages: Employees work place. Organization gets to enjoy higher savings-to-cost ratios. Chances of QC members to get promotions are enhanced. become involved in decision-making, acquire communication and analytical skills and improve efficiency of the

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: Element Organizational structure Job design Management role Leadership Information flow Rewards Job process Traditional Organization Layered, individual Narrow, single task Direct, control Top-down Controlled, limited Individual, seniority based Managers plan, control, improve Empowered Teams 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.

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 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. quality. Every step in companys processes is subjected to intense and regular

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:

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 and involved. 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 crosspurposes 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 workroles are required. This means employees will not be able to participate effectively in matters beyond their particular environment. Everybody need not want participation.

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.

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 procedure can 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 decisionmaking. 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

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 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. participative By creating a sense of instills a ownership of in the company, management sense 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 selfesteem 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.

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. Longterm 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

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 employees engage 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 time to 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 to distrust management, thus halting participation. The key is to build employee confidence so their ideas and decisions become more creative and sound.

b. Work Committees:
The Industrial Disputes Act of 1947 provides for establishing work committees in every establishment employing hundred or more workers. This legislation thus makes it compulsory for the organisation to ensure employee participation. The work committee consists of equal number of members of workers and employer. The employers representatives are nominated by the employer and should be those who are connected with the firm and have day-to-day contact with workers. The workers representatives are elected from among the workmen engaged in the firm in consultation with the union. The main function of the works committees is to promote measures for securing and preserving amity and good relations between the employers and the workers. The works committee is normally concerned with day-today problems of the firm. Their task is to smooth away any fiction that may occur between the management and the workers. Despite the noble intentions of the Act, works committees have not been very successful due to the following reasons: a. Workers representatives on these committees lack the competence to carry out their responsibilities well. b. Unions consider these committees as a threat to their existence as employers prefer to talk to these committees rather than the union. c. Some employers consider it below their dignity to sit on these committees along with the workers.
d. There is lack of interest among workers in works committees as they

concentrate only on minor issues pertaining to wages, bonus, etc are not included.