HRM Participative Management

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T.Y.BANKING & INSURANCE

PARTICIPATIVE MANAGEMENT

PROJECT GUIDE

TRAINING CENTRE: COLLEGE CAMPUS

THIRD YEAR

(BANKING & INSURANCE)


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CERTIFICATE

This is certify that Master of T.Y.Banking & Insurance of academic year 2012-

2013 have successfully completed the project under the guidance of

Sd/- Research Guide

Place

Date:


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ACKNOWLEDGEMENT

This gives me an immense pleasure to submit my project in a subject participative

management in completion of the said project. My college principal Teacher,

librarian, friends help me in providing valuable material for the project.

I especially thanks to my project guide Prof. M.R.SONGIRE in completion

of project. I thanks to all who help to me completion of project

Place:-Kalwa Signature

Date


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INDEX

Section IPg.No Particular Signature

1 Name of the project

2 Certificate

3 Acknowledgement

4 Detail of Index

Section IIPg.No Particular Signature

5.1 Abstract of project

6.1 Need for research

7.1 Importance of research

8.1 Definition of subject

9.1 Objective of project

10.1 Scope

11.1 Limitation

12.1 Hypothesis

13.1 Methodology14.1 Tools of research


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INTRODUCTION

Participative Managementis the process of associating employees of an

organization in the decisions that affect them, in the organizational decision

making and increasing their autonomy & control over their work lives. Theunderlying belief of this approach is that by doing so the employees will become

more motivated, they will have far more commitment to the organization, they will

become more productive and ultimately they will be more satisfied with their jobs.

This approach was an offshoot of the human relations school of thought of 1920s.

Joint decision making is the key concept in participative management. Sub-

ordinates should share a significant degree of decision making power with their

immediate superiors according to this view. This will cause substantial mental and

emotional involvement of the employees with the organization and will motivate

them to share responsibility. Due to the increasing complexity and work load in the

modern organizations, the employees quite frequently suffer from low productivity

and poor morale. Participative Management has been proposed as a solution for

tackling these issues. For participative management to be successful there are some

pre-requisites. These are:

The employees must be involved in the issues which pertain to them i. e. they

should be part of decisions which affect them. On the part of employees

competence is necessary so that they may be able to contribute something

constructive. They should possess relevant knowledge and skills. Mutual trust and

confidence among all the stakeholders is the utmost necessity. The empirical

research shows that the employee performance, motivation and Productivity

increase under participative management however if the above mentioned

conditions are not fulfilled then the influence is only modest.

Representative participation is one form of participative management in which

instead of direct participation of workers, their representatives participate.Workers are represented by a small group of their representatives. Redistributing

power within the organization so that the employees could be put on equal footing

with its management and other stakeholders is the main aim of representative

participation. Representative participation is manifested in two forms: work

councils and board representatives. The former are the nominated or elected


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representatives of the employees who must be taken into confidence by the

management before taking a decision involving the personnel. The latter are

representatives of employees sit on the organizations board of directors. However

experience has shown that this form of participative management is poor choice for

improving employee involvement as it is dominated either by the management orthe vested interests


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ABSTRACT OF PARTICIPATIVE MANAGEMENT

Participative Management refers to as an open form of management whereemployees are actively involved in organizations decision making process. The

concept is applied by the managers who understand the importance to human

intellect and seek a strong relationship with their employees. They understand that

the employees are the facilitators who deal directly with the customers and satisfy

their needs. To beat the competition in market and to stay ahead of the

competition, this form of management has been adopted by many organizations.

They welcome the innovative ideas, concepts and thoughts from the employees

and involve them in decision making process.

Participative Management can also be termed as Industrial Democracy, Co-

determination, Employee Involvement as well as Participative Decision

Making. The concept of employee participation in organizations decision making

is not new. However, the idea couldnt gain that much popularity among

organizations. Studies have shown that only 3-5 percent of organizations have

actually implemented this concept in their daily operations. Though the theory of

participative management is as old as the institution of employees and employers

still it is not applied by a large proportion of organizations.

The idea behind employee involvement at every stage of decision making is

absolutely straight. Open and honest communication always produces good results

both for organization as well as workers. Freedom and transparency in companys

operations take it to the next level and strengthens the basis of the organization. On

the other hand, there are several companies that straightway rule out the possibility

of participative decision making process. According to them, employees misuse

their freedom of expression and participation in decision making as it provides

higher status to employees and empowers them.

However, there are many companies who have embraced this particular style of

management and are now getting positive results. Toyota is the best example. The

company has been following suggestion schemes and employee involvement

procedures for over a decade now. The management receives almost 2,000,000


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suggestions and ideas every year and around 95 percent of these are implemented

by the company. Who is not aware of Toyotas success rate? Around five thousand

improvements per year have made Toyota one of the fastest growing organizations

globally. The need is to develop and implement a comprehensive company policy

and everything works well.

British Airways is another great example of participatory management. During

economic downsizing, employees suggestions helped them cut annual cost of their

operations by 4.5 million pounds. This is just unbelievable. The company would

have suffered from huge losses, had it not adopted employees suggestions. It is

right to some extent that employees can misuse industrial democracy but with a

proper management of HR functions, this problem can be solved and the

operations of organization can be taken to the next level.

Satyam is another great example. It has been implementing company-wide

suggestion scheme, The Idea Junction, since 2001. A real-time web-based portal

is present in Intranet that can be accessed by all its employees all across the globe

to support the entire life cycle of an idea right from its generation till its

implementation. The main idea behind adopting this management style was to

create values and bring sense of belongingness in the employees through ideas,

suggestions and complaints. The whole procedure is backed by a strong and

comprehensive reward policy that encourages employees to perform better eachtime.

Employee participation at each level of decision making process is not at all

harmful if managed efficiently. The whole process can be well coordinated and

controlled by the sincere and honest efforts of human resource managers.


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NEED FOR RESEARCH

NEED OF WORKERS PARTICIPATION IN MANAGEMENT

1.Increased organization balance:If worker are invited to share in organizational problems, and to work towards

common solutions, a greater degree of organizational balance occurs because of

decreased misunderstanding of individual and group conflict. Participation leads

to increased understanding throughout the organization. People learn that others

have problems beside themselves.

2.Industrial democracy:Participation helps to usher in an era of democracy in industry. It is based on the

principle of recognition of the human factor. It tends to reduce class conflictbetween capital and labour. It also serves as a support to political democracy.

3.Higher productivity:Increased productivity is possible only when there exists fullest co-operation

between labour and management. It has been empirically tested that poor labour

management relations do not encourage the workers to contribute anything

more than the minimum desirable to retain their jobs.


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4.Development of Individuals:Participation enhances individual creativity and response to job

challenges. Individuals are given an opportunity to direct their initiative and

creativity towards the objectives of the group. This facilitates individual growth.

5.Less resistance to change:When changes are arbitrarily introduced from above without explanation,

subordinates tend to feel insecure and take counter measures aimed at sabotage of

innovations. But when they have participated in the decision making process, they

have had an opportunity to be heard.


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IMPORTANCE OF PARTICIPATIVE MANAGEMENT

The greatest and widely accepted benefit of participation is the increased workownership of employee. An employee is better able to relate himself/herself withhis or her work and this improves performance and efficiency at work.

John Newstrom and Keith Davis worked extensively upon the subject. Theyidentified three variables that lead to increased performance. These variables are apart of participative management.

According to them, the three variables that collectively enhance performance are:

Removing conditions of powerlessness Enhance job related self efficiency Perception of empowerment Removing conditions of Powerlessness: This implies empowering the

employees to take decisions on their own, be enterprising and take morerisks. This requires a wholesome change in the entire organizational

structure and culture. Then leadership becomes a crucial aspect. The choice

of a leader who can inspire, motivate and delegate with equal efficacyassumes importance.

The reward system needs a revamp. Psychologically empowerment connotesincreased responsibilities in the mind of an employee, a hike is required.

Finally, participation should result in either job enrichment or job

enlargement. Job enlargement means expanding the job responsibilities -adding task elements horizontally. Job enrichment on the other hand meansthat the job becomes more rewarding - monetarily and otherwise.

Enhance Job Related Self Efficacy: Increase in responsibilities alsodemands increased efficiency at work. This is achieved by providing training

helping an employee achieve job mastery. Laying down benchmarks for acertain set of responsibilities by the use of role models (those who have

already accomplished tasks in similar capacities under similar workload)also benefits.


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Since training induces behavioral changes there is a need for reinforcing the

new behaviors. It is this change in attitude and behavior that brings inincreased efficiency. Each employee also requires support from those above

him and people working his supervision. Support functions become

important because the individual now himself delegates his own work. Thistrickles down to the bottom or the lower level and this is how participationhappens across various levels.

Perception of Empowerment: Employees often misunderstand the idea ofparticipation. There may be a certain group of employees who participate

aggressively and in the process their own work gets affected. These

perceptions need to be taken care of otherwise they may be well the undoingof all the good work.

Empowerment means more competence and value addition to work. Itmeans that individual accepts the responsibilities with humility and fulfills

them with grace and efficacy. It calls for increased use of talent. It is in wakeof this that the concept of talent management is fast evolving.

One limitation of participative management is that the results or decision making

doesnt improve overnight. The above mentioned three variables have beeneffectively used in organizations implementing participative management. Theycan act as a catalyst in speeding up the results.


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DEFINATION OF PARTICIPATIVE MANAGEMENT

1) Mamoria defines Participation as a system of communication andconsultation either formal or informal by which employees of anorganization are kept informed about the affairs of the undertaking and

through which they express their opinion and contribute to management

decisions.

2) Marchingtondefines the term participation to cover employee influencewhich may be exercised through bargaining and negotiation over a wide

range of issues associated with the organization and conduct of work and

terms and conditions of employment.


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OBJECTIVES OF PARTICIPATIVE MANAGEMENT

Participative management acts as a force to motivate employees to meet specific

organizational goals. The main idea behind this style of management is not only

using physical capital but also making optimum utilization of intellectual and

emotional human capital. This is the process of involving people in decision

making process to ensure that everyones psychological needs are met. It, in turn,

increases the job satisfaction among employees and improves the quality of their

work life. Motivated employees are the biggest assets of an organization and

participative management is an effective strategy to retain the best talents of the

industry.

Participatory Management or co-determination is seen as the quick cure for poor

morale, employee attrition, low productivity and job dissatisfaction. However, it

may not be appropriate to empower employees at every level but use of joint

decision making at certain levels in organization can work wonders. Let us read

further to explore the main objectives to introduce participative style of

management in organizations:

To Make Best Use of Human Capital: Participative management does notrestrict organizations to exploit only physical capital of employees. Rather it

makes the best use of human intellectual and emotional capital. It gives

employees an opportunity to contribute their ideas and suggestions to

improve business processes and create a better working environment.

To Meet the Psychological Needs of Employees: When employees have asay in decision making process, it gives them a psychological satisfaction. It


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is a simple force that drives them to improve their performance, create a

proper channel of communication and find practical solutions to design

better organizational processes.

To Retain the Best Talent: Participatory management is one of the mosteffective strategies to retain the best talent in the industry. It gives

employees a sense of pride to have a say in organizational decision making

process. Once they are valued by their seniors, they stick to the organization

and become managements partners in meeting specific goals and achievingsuccess.

To Increase Industrial Productivity: In todays competitive world,motivation, job security and high pay packages are not enough to increase

industrial productivity. Leadership, flexibility, delegation of authority,

industrial democracy and employee say in decision making are important to

increase annual turnover of any organization.

To Establish Harmonious Industrial Relationship: Participatory from ofmanagement is an unbeatable tact to establish and maintain cordial

relationships with employees and workers union. The success of an

organization depends on its human resources. Employee empowerment acts

as a strong force to bind the employees and motivate to give them their best

to the organization.


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To Maintain a Proper Flow of Communication: Two-way communicationplays an important role in the success of any organization. Employee

participation in decision making ensures proper flow of communication in

the organization. Everyone contributes their best and tries to strengthen the

organization by contributing their best to improve business processes.

Participative management is beneficial to organization as well as

employees. It gives employees a higher degree of enjoyment at work place that

drives them to work harder. It is equally rewarding for the management as it

ensures tremendous improvement in work culture within the organization as well

as increase in its productivity.


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SCOPE OF PARTICIPATIVE MANAGEMENT

The scope of participative style of management certainly depends on the

organization, its nature, functions and processes. Though associating employees at

every stage of decision-making is not possible still regular exchange of

information, ideas, consultations, thoughts, decisions and negotiations between

employer and the employees definitely is a boon to the organization. Few of the

worlds biggest organizations like Toyota, HSBC, British Airways, Satyam, British

Gas and Nokia Cellular have achieved considerable profits and value creation by

implementing the most amazing ideas of their employees. Their success witnesses

the importance of workers participation in the process of decision making.

The scope of workers involvement in managerial decision-making may extend to

social, economic and personnel decision making depending upon the requirements

of the organization. But there is a difference of opinion about the extent to which

employees can participate in managerial decision-making process. Should they be

equal partners and make joint decisions or should workers be given opportunities

through their seniors to come up with the ideas. The first school of thoughts favors

the actual participation of workers while the second school of thoughts suggests

the consultation of workers in managerial decision making. It is up to the

management to decide which style it prefers and till what extent it requires

involvement of employees.

However, if we talk about the scope of workers participation in social, economicand personnel decision-making, it may have a direct impact on some of the most

crucial activities of the organization. Lets read further to understand how these

three groups of managerial decision-making can affect any industrial

establishment:


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Social Decision-Making: It refers to employee involvement in decisionmaking regarding hours of work, rules and regulations at workplace, welfare

measures, workers safety, employee welfare, health and sanitation. In this

category, employees have a say in decisions in these areas. They may take

an advantage of their liberty and sometimes, can dominate the management.

Here the concept of bounded or restricted participation can work well.

Economic/Financial Decision-Making: It includes involvement ofemployees on various financial or economic aspects such as the methods of

manufacturing, cost cutting, automation, shut-down, mergers and acquisition

and lay-offs. Inviting ideas from employees on various issues like how to cut

down the operating cost can work wonders.

Personnel Decision-Making: The employees participation in personneldecision-making refers to their involvement in various management

processes including recruitment and selection, work distribution,

promotions, demotions and transfers, grievance handling, settlements,

voluntary retirement schemes and so on. Participation of employees in these

processes can safeguard their interests and motivate them to work hard for

the betterment of self as well as the organization. Employee participation in

decision-making process although is beneficial. However, there may be

some limits on it to ensure that they do not take advantage of their liberty

and right of participation. There are several ways through which employees

can participate in the whole process. Some of them are financial

participation, participation through collective bargaining, participation at the

board level, participation through ownership, participation through work

councils and committees and participation through suggestion schemes.

Anyone of these ways or processes can be adopted by the management to

ensure participation from workers.


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LIMITATIONS OF PARTICIPATIVE MANAGEMENT

Participative management is undoubtedly one of the better approaches to

management. But like any other style of decision making there are certain

limitations. These limitations arise either externally or internally vis--vis the

implementation.

The following are certain limitations of participative management:

Complexity of Technology and Organizations: Organizations andTechnology are so complicated these days that there are specialized workers

required for each job. Workers cannot extend beyond a certain limit in

participation. There are instances when a certain department or group

participates aggressively and a corresponding group acts equally opposite.

Then there are limitations at the level at which you work. Workers, for

example, can participate in matters pertaining to operations, policy matters

remain outside their reach.

Employees right of not participating: An employee has the right to notparticipate. Certain people do not believe in the usefulness of participation

and therefore opt out of the same. Some labor unions for example question

the usefulness of participation reasoning that participation offers the

management deep insights into the workers and they may then use it against

the latter.

Manipulation: Managers may sometimes use participation to manipulateemployees. This may be both conscious and subconscious. Similarly,

representatives of the labor unions may also exploit the workers in the name

of participation.


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Workers Psychology: An existent psyche amongst the employees, that theyare the workers and their primary purpose is to serve their masters

(management) prevents them from participating. It is therefore of little

interest to such people.

General Bias: Resistance to change inside the organization as mentionedearlier is the biggest hurdle to participative management. Managers decline

to share power or to delegate apprehending that they may lose authority by

doing so. Workers similarly show disinterest in the participation presuming

everything to be well in order. Further there is bias from the top

management who step back on their promises when they fail to see

participation deliver results in quick time.

Trade Unions: Trade unions are integral to the success of participativemanagement; they may be equally detrimental to the success of the same.

Most of the trade unions engage in politics and are little bothered about

participation. Add to it, the approach of representatives or individuals is also

not very favorable. Workers join trade unions for personal rather than

organizational reasons. Membership is regarded as a kind of protection

against mishaps like accidents, dismissal and other problems whereby union

interventions can rescue the worker. Naturally, the motive of participation is

diluted.

Participative management cannot work in isolation. It involves each and

every member of the organization. For deriving benefits and success out of the

same, no single member or employee group can be left out. There are limitations

but they arise because there either one or the other group is left out or there is

serious communication gap that needs to be taken care off.


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HYPHOTHSIS

Participative management practices are popular motivation technique along with

appraisal and incentive systems, for improving employee performance partictive

many decision-making has been found to increase organization effectiveness,

improve relationship between managers and subordination increase company

loyalty, and reduce absentism and turnover. Research suggests that for

participation to impact positively on productivity the organization system must

include gain sharing. Long-term employment relationship, group cohesiveness, and

guaranteed in individual employee right. in a study of 1,576 Clark county

employees in local government agencies, found that supervisory in enhancing

employees, job satisfaction. If found support for including participative

management and employee empowerment techniques in leadership training

programmes as a way of improving communication and job satisfaction.

Participative decision-making has also been found to be beneficial to workers

mental health and job satisfaction.


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METHODOLOGY

For the project on Participative management I have selected historical method /

secondary method for gathering data & valuable information. This method haveprovided me valuable data from the various books written by the scholars. I

personally thanks to them for the particular subject which I have selected for my

project.


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TOOLS AND RESEARCH

I preferred may books related to my subject as well as I gone through different

websites and collected some selected information with the opinions of differentauthors. I also provide my personal experience regarding the participation as it is

not a forceful activity but it is a psyches phenomenon.

HRM Participative Management

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