Analysis of Employee Involvement on American Water Company - Essay Example

An Analysis of Employee Involvement on American Water Company Employee involvement or participation is an important area of research in the industrial relations field (Heller, et al., 1998). As practiced in many organizations, employee involvement is not a goal nor is it a tool. Relatively, it is a leadership and management philosophy about how employees are most enabled to contribute as they participate to constant improvement and the continuing success of their work organization (Heathfield, 2007). Discussions on the advantages and disadvantages of involving employees in decision making are ongoing to make it beneficial for both the management and the employees. Advantages of Employee Involvement The following advantages had been cited for having employee involvement in an organization. It is argued that when employees are allowed to get involved in the organization’s decision making, employees are more likely to apply decisions they have made themselves (Porter, et al., 1975). Staw & Ross stated that employees know better what is expected of them, and they commit better on the organization’s decision (1978). [Employee]Participation may lower the disutility of effort, by providing intrinsic motivation (Staw, 1980). Also, participation may suit non-financial needs such as achievement, creativity and the longing for respect. This may also develop cooperation and communication; employees discuss with each other instead of allowing all discussions only to the management, saving management time. When employees are participative, they tend to supervise themselves, therefore reducing the need for a lot of managerial positions and lessening costs of labor. Involvement teaches employees new skills and helps identify and train leaders. Strauss emphasized that “participation increases loyalty and identification with the organization”. He also argued that “If participation and rewards take place in a group setting, the group may pressure individuals to conform to decisions” (1977).When management leaders and union participate cooperatively to resolve problems on a non adversarial basis; it improves union management relationship. Involvement often results in the setting of goals and according to Latham, Gary “goal setting is often an effective motivational technique, particularly when workers set their own goals (1988). Disadvantages of Employee Involvement However, employee involvement had been evaluated as disadvantageous in some ways. Among the disadvantages cited are: Employees may be less knowledgeable than managers, and the understanding upon the decisions they made may be different. Aside from this, Jensen and William stated that “the rewards motivating workers to share their ideas may be larger than the value of the ideas themselves” (1979). Employees may be unenthusiastic to change, once they commit to a decision. Employee Involvement is time consuming, and if the groups decided, response to changing environments may be mainly slow. Another concern is the possibility that when a precedent of employee involvement is established, it is difficult to withdraw this right to participate. Organized, participative groups may unite against the management to limit production and avoid change. Sharing information with unions raises their bargaining power, so companies may lose. If the management and union are unified, working together with management may lower unions' legitimacy with members. Goals employees set for themselves may be low. In order to better understand employee involvement, it is better if we take a closer look on an organization that allows/promotes employee involvement. One of these organizations is “American Water”. Employee Involvement in American Water Company As cited in the World Wide Web American Water Works & Guarantee Company was founded in 1886 and was restructured in 1947 as American Water Works Company, Inc., and locally operates in New Jersey. Its major mission is to become a trusted water resource company dedicated to delivering innovative solutions. This mission and vision of the company had been a collaborative effort of both the management and the employees. As stated in their website, “Hundreds of employees from all levels of the company contributed to the development of the company mission/vision statement”. The Company’s mission and vision showed a great participative effort of the employee as they are mainly focused on the values of American Water employees. Employee Involvement in American Water Company is focused on both direct and indirect participations. EPOC differentiated these two kinds of employee involvement by stating that “direct participation involves the employees themselves, whereas indirect participation takes place through an intermediary of employee representative bodies, such as works councils or trade unions (1997). Strauss (1998) argues the effectiveness of direct participation will be restricted if it is not combined with indirect participation. The arguments supporting indirect participation are significant because many high level decisions affect the people who work within the organisation, and vice versa. This is because the strategic direction of the company is usually a determinant of the workers actions and beliefs (Wilpert, 1998). Therefore, high level company decisions should be made in consultation with a participative body of employees. Direct Participation of the Employees in American Water American Water Company makes use of Employee Opinion Survey to get recommendations and hear out the voices of the workers. As stated in their website, “with over an 80% response rate, the Employee Opinion Survey gives all employees a voice. Changes have been implemented that demonstrate that management is listening as the company strives to be more employee-focused”. This kind of direct participation is consultative in nature; wherein management encourages employees to contribute their opinions about work-related concerns, however retaining management’s right to final decisions. American Water Company also utilizes delegated participations among its employees as exhibited on the employee’s contribution in the making of the company’s mission and vision. In accordance to participative cognitive models, the effects of employee involvement enhance the flow of information in organizations (Frost, Wakely, & Ruh, 1974; Miller & Monge, 1986). In this kind of employee’s involvement, frequently, employees task to apparently inconsequential tasks have ways of accessing valuable information. Managers gain access to valuable information via participative management practices. Thus, employee opinion survey as one of the participative practices encourage employees to freely share information more often leading to a higher level of performance (Lawler, Mohrman, & Ledford, 1995). Indirect Participation of the Employees in American Water Company Rubenowitz explains that “indirect participation entails decision making through representatives of the employees” (1983). American Water Company designed a network to encourage a cross section of people in the business as mentioned in their website. The partner network comprise of union, non-union, hourly and salaried “to share information and to stimulate conversation on changes being implemented. It is an important feature of the company as they [we] strive to improve what, how and when they [we] communicate. The Network is intended to help all employees better understand the changes occurring in the business and open up more communication channels for the future.” This kind of approach falls on the definition of a joint consultative committee; in which, according to Marchington et al. is “a mechanism for managers and employee representatives to meet on a regular basis, in order to exchange views, to utilise members’ knowledge and expertise, and to deal with matters of common interest which are not the subject of collective bargaining” (1992). There are two opposing views regarding joint consultative committee. Both employees and managers regard it as a significant form of participation or involvement (Marchington, 1992). Contrary to how Ramsay (1990) viewed it on his ‘cycles of control theory’ arguing that joint consultative committee can be used by management to weaken the power of unions in the organization. In other words, joint consultative committee can be adversarial to collective bargaining. Hyman and Mason (1995) further elucidate the position of joint consultative committee; either the forums can be dominated by the management or employee representative influences the entire organisational decision-making. Therefore, this kind of employee involvement in American Water Company as explained by Marchington can play different roles in organisations effecting different outcomes (1994). Marchington (1992) in his book ‘Managing the Team’ detailed that employers set up joint consultative committee for several reasons. First, it can improve efficiency by gathering stock of ideas, which are obtainable inside the organisation because of a bigger exposure of an issue. Second, it can minimize industrial action as the company present a chance for employees to articulate their views. Third, it may lead to a higher employee fulfilment due to a higher level of commitment among the employees. Effects of Employee Involvement on Managers, Trade Unions, Employees, Community and Customers Effects on Managers Since American Water Company encourages joint consultation, the effects of employee involvement on the managers lie on empowerment. Empowerment has been defined in different ways. Some have claimed it is "a fundamentally different way of working together" and "quite different from the traditional notion of control". Empowerment is seen as a way of giving people more opportunity or "power" to exercise control over, and have responsibility for, their work. It is intended to encourage individuals to use their abilities by enabling them to take decisions. This question of how far control is transferred to workers is vital to an understanding of empowerment and greatly affects managers. However, in the case of joint consultation in American Water Company, managers have the final say. Workers have a right to information and are allowed to offer advice and objections. The core purpose of the organizational process is control. The aim is to secure more compliant and supportive responses from employees to managerially defined purposes and achievement of managerially defined goals. The concept of empowerment is intended to encourage a sense of common purpose which replaces the need for a direct hierarchical exercise of control. American Water Company clearly shows a well understanding on when and where employee’s involvement and decisions are needed and distinguished the necessity of managers on final decision-making. Ramsay (1977) has studied this cyclical nature of workers participation schemes and interpreted this in terms of a management response to challenges from labor over the control of the labor process and over the distribution of value created through that process. Effects on Employees The American Water Company initiated a sense of value for the employees. The employees are viewed as integral part of the organization and this creates positive outcomes on both the employer and the employees. Torrence (2006) stated that “A business comprised of contented employees flourishes. Each employee recognizes that he/she contributes to its success and feels that he/she is a part of the team. And, of course, when a business is lucrative the employer with real know-how rewards her/his employees accordingly”. Since the employees of American Water Company are given the rights to voice out what they believed is beneficial for them, they essentially state demands in an amicable way. Effects on Trade Unions Not much had been said about the Trade Unions of American Water Company; although, the existence of the union is presented on the website. In accordance to how the management view unions as a partner network, it shows that the union that exists in American Water Company work hand in hand to benefit both the company and the employees. The trade union becomes a part of joint consultative committee. It is viewed as not a sole representation of the employees. Guest and Pecceci argued that organised labour must recognise that for a partnership arrangement to work it most actively and meaningfully engage with management to seek solutions to business problems. If these two preconditions are not present an enterprise partnership is going to struggle to reach full maturity (2001). Effects on Community The employee involvement in American Company positively affects the community. The company has a community program wherein the employees are the vital part of it. On their website, American Water Company stated that: “We're part of your local community. We go beyond our role as a water services provider by becoming active in the communities we serve. Our employees are committed to their local communities, not only because they play a vital role in providing essential water services, but also because they live, work, and play in these very same communities. At American Water, we believe in making a social commitment to support a variety of programs.” (2007) Effects on Customers The involvement of employees in American Water Company has a great impact on providing good services to their customers. Torrence argued that “how an employer appreciates and treats his employees is reflected in their attitudes. Savvy employers know that contented employees are an integral part of a successful business. Happy employees make loyal employees. And loyal employees are an essential basis of excellent customer service” (2006). Involvement and participation of employees at all level of the organization has become significant for organizations to maintain and develop a competitive lead. The incessantly varying demands for improved services need the utilization of the emotional commitment and mental skills of each member. It has become merely unfeasible for managers to do micro-managing. Employee empowerment is now a vital skill for administration. Administration must ease the work development and processes of its employees. American Water Company elevates its market through employee involvement and the employee empowerment is well defined in the organization. As read in their website, “the company's track record of financial success, environmental compliance, and strong customer support is attributable to its rigorous operating discipline, as well as insightful planning, prudent capital investment, experienced managers, state-of-the-art water quality programs, research, and responsive customer service”(American Water, 2007). With the company’s approach to employee and business success, this company is worth recommending for those who would like to work in a customer and employee-focused setting. References EPOC (1997). New forms of work organisation: Can Europe realise its potential? Dublin: European Foundation for the Improvement of Living and Working Conditions.  Frost, et al., (1974). The Scanlon Plan for Organization Development: Identity, Participation, and Equity. Guest, David & Peccei, Riccardo (2001), “Partnership at Work: Mutuality and the Balance of Advantage”, British Journal of Industrial Relations, 39 (2), pp. 207-236. 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