Participative Management - Research Paper Example

Participation Management Table of Contents Introduction----------------------------------------------------------------------------------------------------4 What participative management does not do--------------------------------------------------------------4 Requirements of participative management---------------------------------------------------------------5 Rights and responsibilities of the employees in a company---------------------------------------------6 Skills required for participative management-------------------------------------------------------------7 Methodology for the incorporation of participative management--------------------------------------7 Benefits of participative management; pros---------------------------------------------------------------8 When might it be better not to use participative management------------------------------------------8 Examples and possible results using participative management----------------------------------------9 Why is participative management not widespread------------------------------------------------------10 Will participative management work in a certain environment---------------------------------------10 Semco: How successful was it?----------------------------------------------------------------------------10 Mondragon: How successful was it?----------------------------------------------------------------------11 Conclusion----------------------------------------------------------------------------------------------------12 Bibliography--------------------------------------------------------------------------------------------------13 List of Diagrams Figure 1- Rights and Responsibilities----------------------------------------------------------------------7 Figure 2 – Statistics for a Manufacturing Plant-----------------------------------------------------------9 Figure 3 - Statistics for a Manufacturing Plant -----------------------------------------------------------9 Figure 4 - Statistics for a HealthCare Clinic -------------------------------------------------------------11 Figure 5 - Table for the working of Participative Management --------------------------------------11 Introduction A new form of management which seems to be in fashion these days is the concept of participative management. Literally it means an organization where there is a strong cooperative relation between employers and employees in all business decision-making. It term was first commercialized separately by Macgregor (theory X and theory Y), Lickert (four-model system), and Mouton (Managerial Grid) (John Schyuler, Participative Management, 1997). Semler told people in his company, Semco, to think outside their closed-up box, very soon they even forget they had a box (Maverick, 2001). The main reasons for the need of participative management is that employees should have a share in the business’s profit/loss; they should be business literates; and there should be a culture of trust and faith in the entire organization. This report discusses, the following questions regarding participative management in great detail: What Participative Management does not do Requirements of participative management Rights and responsibilities of the employees in participative management Skills required for participative management Methodology of participative management Benefits of participative management; pros When might it be better not to use participative management Examples and possible results using participative management Why is participative management not widespread Will participative management work in a certain environment Semco: How successful was it? Mondragon: How successful was it? What participative management is does not do Participative management takes a lot of character and skill to apply. It holds the employees accountable for their work instead of just the leader. In it, no authority of any sort is given up, instead the authority is distributes in between the employers and the employees with equal transfer of responsibility. Also it certainly does not mean delayed action. Action is taken quicker and faster in participative management. Requirements of participative management Amy Mcmillan says “Participative management is not just allowing employees a part in the business decisions. This scheme can work anywhere and everywhere considering a few points are kept in mind, which include the fact that the employers should be confident and not insecure about letting-go of their stronghold and authority. This increases trust that the employees have over the managers”( Participative Management, 2011). If the organization was formally democratic or autocratic, than it takes careful strategies and studies for the change to participative management. So employees should be given a little time for adjustment. Of-age employees who have spend entire lives in the former types of management might resist this change, so managers should take advantage of honesty, respect and genuinity for repeated proof of their point. The managers should applaud new ideas, even if they are not that acceptable and not be critical of them in any form/way. This is highly critical for the success of the program. Employees, on the other hand should readily give/share ideas rather than just not-caring. This is a two-way path. Both sides have to work for the success of the program. Managers should give important information to the employees if needed without hesitation. Managers should increase productivity by localizing the jobs and giving each to whom it suits best. For this the managers need to get down and interact with their employees to know their strengths and weaknesses. Each action should be calculated and its output predicted, so that unnecessary time and energy is not wasted on any of it. So managers should let the employees what is expected of them beforehand. If employees are ensured that they are contributing to the final decision-making then they will work with higher gratification, impetus, and dedication. Rights and responsibilities The Ownership Culture Report says that “ the task that falls on managers first thing is to be seriouys about their authority . in other words their ‘active voice’”(1998). If given the right the employees will now expect more and more authority. But this authority goes to a certain extent. How much is that, depends on how much responsibility a certain employee has to undertake. People all over the world have a natural-born need for ownership. Thus if not defined the extent to which any employee has this employee-ownership, a lot of problems and mistrust can be harvested. The following bar-chart (Ownership Culture Society, 1998) shows the relation between responsibility and rights. In the graph, the right side shows the rights of employees in a company and the left side shows their increased responsibilities. It shows that higher the rights, higher will be the responsibilities, thus showing that rights and responsibilities come equally hand in hand. This diagram also shows that according to the survey, the companies which have a higher-rights rate than responsibilities, are in disorder and need much change of figures. Thus showing that harmony between managers and employees in participative management can only be acquired by giving employees equal rights and responsibilities. Figure 1- Rights and Responsibilities Skills Required for Participative Management This section defines a few skill sets which are much needed in an employee if they are to successfully participate in this form of management. These include a great degree of concern and interest in the work, enhancement of one’s talents in a specific area, ability to appreciate others’ ideas, solve fights and conflicts skillfully, ability to negotiate easily, compromise, flexibility and self control, and the drive to teach others and share knowledge. Ricardo semlar said “the reason for working is not to earn money, but it is to make every working person feel great about life” (maverick, 2001). Methodology People feel energized when they solve their own problems and are their own masters, which is the method of participative management. In this management people work according to their abilities. Managers and employees decide specific roles at the very start of a project, so that everything goes on in an organized manner. The managers decide the strategy but the employees are told about the results expected of them. It is now totally up to the employee what they want to make of that project. To keep proper checks on the development of each employees’ job and development, workshops are arranged which help motivating the employees to work to their fullest. These workshops have 2 phases, first being bureaucratic assessment and second being participative assessment. In the first phase, briefing is done, which includes bureaucratic DON’Ts for higher performance. In the second phase the briefing carried out is based on participative DOs for higher performance. Benefits of participative management; pros The benefits acquired from this form of management include more productivity, higher efficiency, hard-hitting decisions, higher employee morale and job-satisfaction, dedication, adaptibility,and increased group-spirit. In addition the members now feel more involved and are thus likely to be more interested in their work in want of better incentives and perks. Even if there are bad outcomes of the work, the employees now own their faults and failure and try to improve their work for next time. Ricardo Semlar, owner of Semco, encouraged his employees to decide upon their own wages: in this manner the competent now greatly devalued them and now their own skills set their standards to low; while the incompetents rated themselves. As a result, they left (Maverick, 2001).  When might it be better not to use participative management? It is utterly necessary to be able to have a competitive but not too competitive environment for the working of participative management, because many employees may not be very willing to share their ideas for fear of being robbed of their credit. Also if a company changes their decision-making policy to a participative one only because their competitors are doing so without much back-up examination of their strategies, problems and possible solutions a lot of problems are created instead of being erased. In such situations it is highly recommended that participative management be shunned and the current course be kept at it. It would only aggravate the situation of lawlessness and chaos in the company instead of improving anything. Examples and possible results using participative management Evangeline Caridas says that Participative management defines the goals of the company crystal clearly and does not give complete power to employees (Participative Management Advantage). A few companies which have successfully incorporated participative management include W.L. Gore & Associates (makers of Gore-tex). Here this report shows results of participative management statistics in a manufacturing plant. The results are dramatic and highly productive with the employee production going upto 4000lbs per hour and people who have also started to participate more. Figure 2- Statistics for a Manufacturing Plant Figure 3 – Statistics for a Manufacturing Plant Participative Management statistics for a health Clinic are also shown here in the three steps as initial, transition and current stages of the work plan development. Figure 4- Statistics for a Health Care Clinic Semco: How successful is it? Ricardo Semler, the CEO of Semco, brought out a new way of business management Managerial staff set their own salaries and bonuses. All individuals have the access to the company books. No regulation - a minimum of meetings, memos and approvals. Internal walls are torn down. Shopfloor workers set their own productivity targets and schedules, and even have mandatory vacation times. Result - Semco is one of Latin Americas fastest-growing companies, acknowledged to be the best in Brazil to work for, and with a waiting list of thousands of applicants waiting to join it. Semco builds rocket fuel, mixers for aspirins, pumps for drilling, and also provides real estate, professional services, and chocolate. With this it also has 3100 employees in 300 companies and $200million sales a year. It’s method of action includes no HR departments, and no organizational plans. Also Semlar encourages faith and trust in employees, right-person hiring, flexibility of time and employee input is liked and have been adopted by companies all around the world. Mondragon: How successful was it? In the company, all employees have strong bonds and so have better solidarity, better business, and participation, and a concept of a mission with the realization of corporate values. The cooperative congress, have made ties over the years which have managed to form rules of the company. These cooperative principles have formed 10 rules which are the bases of Mondragon. These include, solidarity in payment and inter-cooperation and education and capital nature; open admission labor independence and democracy. The philosophy of the company is based on values like owning, protagonists, responsibility, novelty, and participation Why is participative management not widespread The concept of participative management is still quiet foreign to many companies and organizations. This is solely due to the fact that humans like to be told what to do instead of having to decide for themselves. This leaves less work to be done by them. And this trait particularly suits the human nature of laziness. Also people have a strange misconception that participative management cannot even work, as this distributes power to all the employees. So they don’t even give it a try. Furthermore the management sometimes do not like employees questioning their moves and motives so they do not promote this form of management. Will participative management work a certain company The following table shows where participative management works best (participative Management): Environment factors Organizational decision Making Organizational decision Making Homogeneous Heterogeneous Stable 1. Centralized rule orientation 2. Centralized, rule orientation Shifting 3. Less centralized, some rules 4. Participative, planning emphasis Figure 5 – Table for the working of Participative Management Conclusion It is crystal clear that with more rights come more responsibility. But this right can only come with the sole understanding that one is ready to face the possible good or bad outcomes of their decision. Participative have helped a lot of organizations to increase productivity and yield. But this management also have many pros and cons and specifications. Fulfilling these successfully is the only ticket to a brighter future. Semco, owned by Ricard Semlar, was called the "Global Leader of Tomorrow" in World Economic Forum , and is also mentioned by America’s Economia Magazine as the “Business Leader of the Year” in Brazil Bibliography Participative Management : http://elsmar.com/pdf_files/participative%20management.pdf Participation; Decision Making and Employee Ownership: Ownership Culture Report(1998): http://www.ownershipassociates.com/ocr2.shtm John Schuyler (Participative Management, 1997): http://www.maxvalue.com/tip024.htm Evangeline Caridas: Participative Management Advantage: http://www.flowmanagement.net/studies/pma.htm Amy Mcmillan : Participative Management (2011) : http://www.enotes.com/management-encyclopedia/participative-management Eric Brown : Participative Management (March 8, 2007) : http://ericbrown.com/participative-management.htm Management Study Guide: Features of Participative Management (1998-2011) : http://www.managementstudyguide.com/features-of-participative-management.htm Read More