In the business world today, there are a number of decision-making techniques that management can apply, to help improve the quality of the final outcome. One of them being Participative Decision Making (PDM). The following essay is based on critically evaluating the effectiveness of PDM, with reference to specific business examples reported in the UK business press. In order to do this, it is necessary to gain background knowledge of PDM, including how it came to arise and its positive and negative attributes. The business examples will be incorporated in order to support both aspects. Once this is established, it will help to form an overall critical evaluation of the effectiveness of PDM.
The founder of Participative Management (PM) can be associated with Dr Alfred J. Marrow (1947), who was the CEO of the Harwood apparel manufacturing company.1 He observed that the company’s workforce consisted of poorly educated young women, thus resulting in low productivity levels, and in effect, kept declining nearly 25% every time a change was introduced. Due to this, there became great concerns regarding the causes of the workforce behaviour and how to improve it. As a psychologist, Dr Marrow and his colleagues discovered a positive relationship arising between productivity levels and the amount of decision-making employees held. In general, if employees were given the opportunity to make meaningful decisions regarding their own work, then this would lead to nearly a 14% increase in productivity levels. Thus, PM can be classified as a way of involving employees in various forms of decision-making.
PDM is an element within PM; it can be defined as being a form of a decision-making technique, of which participation involves individuals or groups in a process. What is likely is that everyone has the privilege of trying to influence the decision making process when the decision affects them. The decisions they make may concern problem solving, task assignment, or any number of issues that relate to the effectiveness of their operation. In practice, numerous issues can influence the scale of participation, for example, the experience of the individual/group and the type of task. In general, it is assumed that the greater the experience and the more open and unstructured the task, then a greater participation in decision making.
It appears that more and more organisations are taking a keen interest in participation. Reasons for this are due to greater competitive pressures, the removal of old hierarchical superior- subordinate relationships and the appearance of teams, horizontal structures, and boundary- spanning information technologies. As a result organisations, teams and individual managers are effectively using them.
Organisations often ask their employees to make organisational decisions, as there are certain advantages to this. For example, multiple individuals in a group can generate a greater range of knowledge and information, as they draw on collective, diverse organisational experiences as the foundation for decision-making. By enabling employees to have a say in the decision, different perspectives can be formed, and as they are more likely to view the decision as their own, this ownership perception makes it more likely that they will strive to implement the decision successfully. Studies carried out by Vroom and Yetton (1973) support this view, in which they established that groups have more advantages than individuals in decision-making according to situation, time and leadership.2 If the group also believes in its leaders preferred outcome, then according to them, the group will be more effective.
Three areas that influence the effectiveness of PM are, the design of work, the level of trust credibility between management and employees, and the employees’ willingness to participate. In line with Maslow’s (1954) need theory and the job characteristics model of job design, PM predicts a higher level of motivation, as it assists employees in fulfilling their three basic needs: autonomy, meaningfulness of work, and interpersonal contact.3 McGregor’s (1960) Theory Y can also be incorporated into this belief, as it holds the view that employees search for extra responsibility, want to be productive, want to achieve and are capable of problem solving. 1
One of the best known supporters of PDM, comes form a Social Scientist, Rensis Likert (1967), who after years of research in organisations concluded that, better decisions are produced as a result of participation, and that those who make the decision are more likely to be committed to carrying them out than those not involved in the process. 4 He firmly believed that participation breeds more effective organisations. The majority of managers and subordinates he interviewed, believed that their organisations are more likely to operate effectively if leadership was shared, communication flowed freely, employees were encouraged to participative in the goal-setting processes, and when the subordinates assisted in making the decisions that affected them. Thus Likert stated that the closer the organisation was to, what he referred to as System 4, Participative Group (Appendix A), the more effective it would likely to be.
A really useful business example to emphasise the situation of full participation, (where everyone that could be affected by the decision is fully involved), applies to Gore Tex, which according to a survey in this year’s Sunday Times, is Britain’s Best Company to Work For (McCall, 2004).5 The reasons for this stem from the fact that the organisation’s structure consist of no hierarchy, thus there are no directors, managers, and secretaries. Instead, the emphasise lies upon the 400 strong workforce, who are believed to be “associates”, who have a sense of ownership in the business. The survey confirmed that over 90 % of the employees felt they had made a valuable contribution towards the organisation.
The Company has even won an award for its recognition in providing a working environment where equality is encouraged. W L Gore believes that an essential factor, which has made them a success, comes from the top, making quality of leadership, and the skill of the manager to motivate the workforce. Thus this business has successfully benefited from applying the principles of PDM and in effect can be said to support Likert’s theory on Participative Group. With more people contributing their skills, knowledge and experiences, better decisions will be formulated than of that formed by individuals (Hill, 1982).6 This example also supports claims held by Spreitzer, Kizilos, and Nason (1997), who argued that sharing managers’ decision-making power with the employees would improve performance and work satisfaction.7 Additional factors may include job involvement and commitment and it can also reduce role conflict and ambiguity.
PM is more likely to be effective when employees are appropriately trained, ready and interested in participating. A good example to highlight the importance of employee involvement is by Deere & Company, a firm which manufacturers and sells farm equipment.8 The CE, Hans W. Becherer, was faced with two problems, one being that the demand for the products were declining and two, that they were facing increasing competition. According to the CE, the answer laid in increasing employee involvement within the company.
For example, this meant that the assembly line workers had to be trained, and then travel across North America to discuss Deere’s new products to dealers and farmers. This would hopefully combat the problem of facing competition, as they would aim to please the customers and dealers with the quality of its employees and thus its products. Also in order to strengthen the employees’ commitment to manufacturing only the best products, production workers were made into marketing emissaries for the company’s product. This would anticipate to have had a knock on effect as the workers would hopefully have a greater sense of responsibility for output, after having formed personal relationships with customers and dealers.
Another aspect the company had adopted was to encourage employee involvement in retaining customer relationships and examining product-quality feedback. Overall, by allowing its employees to maintain more responsibilities and with the additional training, this had hopefully set them up for their new roles. The results produced seem clear that Deere & Company has benefited from these new changes involving the employees, as it has helped to overcome the challenges they initially faced.
A more recent example of the positive effects of PDM is noted in the recent turmoil of British Airways (BA), where employees were never given a say in decision making and thus resorted in strike action and a contempt for the company. The CEO, Rod Eddington, finally changed the structure to incorporate a wider influential say with his employees, in effect applying the features of PM, which has overall helped to improve the situation they faced.
Now we turn our attention to the other side of PDM, which views it as not working in all situations. It can be presumed, that it is the very strengths of a group that are also its weaknesses. In one sense the outcome of group decisions can be of lower quality than individual decisions, as they may be affected by the group members’ attempts to retain friendly relationships among themselves. This potential hazard in the decision making process is the risk of ‘groupthink’, a psychological phenomenon in which members of a close group all think alike. It comprises the quality of a decision to retain relationships. Research indicates that it is more likely to take place in groups where the leader is very dominant, and in contrast group cohesiveness is not an essential factor (McCauley, 1989).9
An example to highlight the phenomenon of groupthink, involves the Space Shuttle Challenger Disaster in 1986.10 It was confirmed that one of the causes for the disaster, pointed to the flawed decision-making process. In particular, it was believed that there had been negative symptoms of groupthink, from the different parties. For example, the engineers urged for the termination of the launch, however at the same time, the engineers were pressured by their managers to stifle their dissent and thus their views were devalued.
This example portrays the fact that the group failed to acknowledge other options available to them, failed to assess the risks linked to their ideal choice of action, and made use of bias information when forming the decisions, and lastly they had failed to recognise a contingency plan. It also highlights that a pseudoparticipation effect occurred between management and the engineers, as when the engineers made recommendations, their managers failed to acknowledge their comments.
Thus management wanted to get the engineers involved in the task but not in the decision making process. This can lead to the boomerang effect regarding employee satisfaction. Many researchers hold the view that the failure of the disaster was down to the flawed decision making process which had been contaminated by groupthink. In order to avoid groupthink taking place, individuals who have different views with the group’ agreement, must make an effort to get there opinion across. However this can pose to be a problem, as the individual members of the group need to reach an agreement if they are to make the decision, however it is in this process of interaction that conflict can occur.
Some organisations are aware of the need for change, but are reluctant in implementing the core principles and to offer a truly participative work environment. Thus they do not include the whole organisation in the change process; instead it is managed and controlled at the top. A major reason for this is that most managers and supervisors fear change that breaks down the hierarchical structures, empowers workers and disperses control. The belief is also that such sharing of power, prestige, esteem and control indicates an abdication of management rights and responsibilities. They see them affecting their existing traditional roles and job security in a negative way. For example, by releasing power and control, it means for management, that it defies their whole training, experience and their culture; which in turn contradicts Likert’s beliefs.
Individuals may not like the idea of a PDM approach, and thus may develop an attitude whereby they are unwilling to participate, as they may not want to face having additional responsibilities. It appears that PDM makes more demands on management than any other forms of employee involvement. In terms of social and cultural factors, many European countries have gone further than the UK where such participation is rare. It seems likely that British managers will have increasingly to learn to cope with such participation, and those with European subsidiaries and plants, are already having to do so. How successfully they deal with this depends upon the level of trust produced.
Another factor, which does not support PDM, is that it can be a very time consuming procedure. Achieving participation by employees is not very easy. In some cases, it can take a long time for employees to form the trust and credibility that are the crucial factors needed for the effectiveness of PM to work. Also it can take longer to form a group decision, as groups must allocate time to present and discuss all the members’ viewpoints. Thus in effect organisations may incur greater levels of costs, as they are taking up more of the employee’s time.
Nestlï¿½ is a good business example to highlight that it does not favour the concept of PDM, as it is time consuming. 11The CEO, Joe Weller, hopes to make the company faster moving and efficient. He believes that excess time is being wasted in meetings, and thus prefers managers making the decisions more quickly and independently. However it is through the use of the Internet, which is believed to help the company gain a more competitive edge. Thus the process is controlled and managed at the top. Nestlï¿½ therefore placed great emphasis upon the need to speed up the decision making process. This introduces the aspects of the contingency model and its issues on time constraints, which are an important aspect in determining whether to involve people in decision-making. In situations where there are time constraints, the most skilled individual instead of groups, should make the decision. In the occurrence of environmental threats, e.g., time pressures and potential serious impact of a decision; groups use a reduced amount of information and communication channels, which increases the chance of a bad decision.
Having considered some of the benefits and drawbacks of PDM through the use of business examples, an evaluation will be undertaken regarding PDM. It seems it can be very hard to maintain a balance between the two in evaluating the effectiveness of PDM, due to issues such as personality of the parties involved, leadership style, environmental, situational, and contextual factors, and ideology. Also it must be known that PDM does not work effectively in all situations. This includes the impact of certain cultures, for example, countries such as Brazil may not perceive PDM to be useful, they may prefer the more autocratic approach of forming decisions, where there is greater centralisation and thus subordinates expect to be told what to do. On the other hand, countries such as USA and Canada favour the use of PDM, as there practices encourage individual initiatives.
However PM, when applied to certain situations, can be viewed as being effective and to obtain better results management can apply a contingency approach. For example, whilst attempting to solve problems, the type of interaction or quality of communication between managers and employees can strongly influence the effectiveness of participation. The key elements required for an effective participation is a constructive interaction that emphasises cooperation and respect, in comparison to competition and defensiveness. In relation to complex tasks, it is vital to formulate mechanisms to improve communication effectiveness.
In conclusion, looking at the arguments of PDM, it seems the benefits of PDM far outweigh the drawbacks. The main advantage is that PDM emphasises that each individual can provide a significant involvement in reaching the organisations aims. From a management perspective, all the positive and negative attributes of PDM must be weighed, factoring in unique organisational situations. Thus businesses should only use a group authority to make decisions, only at times, when the advantages of implementing it, outweigh the disadvantages. It is vital to acknowledge that the effectiveness of PDM will depend upon factors such as the design of work, the level of trust between management and employees, and the employee’s willingness to participate which will all have a profound influence on it. However, as previously mentioned, to maximise the efficiency of PM, employees should be fully trained, prepared, and interested in participating. I feel that overall PDM is effective in certain situations, however the process of implementing it must be monitored and managed well by top management. This can be supported by recent business examples, such as BA, who are now adopting a PDM approach, so as to successfully compete in the global economy.
* 1 Pojidaeff, D. (Dec 95), The Core Principles Of Participative Management, Journal for Quality & Participation. Vol. 18, Issue 7. p 44, 4p
* 2 Rosenfeld, R. H. & Wilson, D. C. (1999), Managing Organisations, Text, Reading & Cases, 2nd edn, Berkshire: McGraw Hill Publishing Company. Pg.188
* 3 Kreitner, R., Kinicki, A. & Buelens, M. (1999), Organisational Behaviour, First European Edition, Berkshire, McGraw Hill International (UK) Limited. Pg.352
* 4 Quick, T. L. (1992), Successful Team Building, New York: Amacom. Pg. 24-27
* 5 McCall, A. (March 07 2004), Inspired all the way to the top, London, Times Newspaper Ltd.
* 6 Buchanan, D., & Huczynski, A., (2004), Organizational Behaviour, An Introductory Text, 5th edn. Essex, Pearson Education Limited. Pg. 769
* 7 Soonhee, K. (Mar 2002), Participative Management and Job Satisfaction: Lessons for Management Leadership. . Public Administration Review Vol 62, Issue 2, P231
* 8 Certo, S. C. (2003), Modern Management, 9th edn, New Jersey, Pearson Education Limited. Pg.155
* 9 Buchanan, D., & Huczynski, A., (2004), Organizational Behaviour, An Introductory Text, 5th edn. Essex, Pearson Education Limited. Pg. 772
* 10 Buchanan, D., & Huczynski, A., (2004), Organizational Behaviour, An Introductory Text, 5th edn. Essex, Pearson Education Limited. Pg. 774
* 11 Certo, S. C. (2003), Modern Management, 9th edn, New Jersey, Pearson Education Limited. Pg.147
* Buchanan, D., & Huczynski, A., (2004), Organizational Behaviour, An Introductory Text, 5th edn. Essex, Pearson Education Limited.
* Certo, S. C. (2003), Modern Management, 9th edn, New Jersey, Pearson Education Limited.
* Cooper, C. L. & Argyris, C. (1998), Encyclopedia Of Management, Oxford, Blackwell Publishers Limited.
* Francis, D. (1990), Effective Problem Solving, Great Britain, Routledge
* Gilligan, C., Neale, B. & Murray, D. (1983). Business Decision Making. Oxford. Philip Allan Publishers Ltd
* Gore, C., Murray, K., Richardson, B. (1992), Strategic Decision-Making, London, Cassell
* Heckscher, C., (1995) The Failure of Participatory Management, School of Labour and Management Relations, vol. 54, pp. 16-21
* Jones, G. R. (1998), Organisational Theory, Text & Cases, 2nd edn, U.S.A, Addison Wesley Longman Publishing Company Inc.
* Kreitner, R., Kinicki, A. & Buelens, M. (1999), Organisational Behaviour, First European Edition, Berkshire, McGraw Hill International (UK) Limited.
* Luthans, F (2005), Organizational Behaviour, 10th edn. New York, McGraw Hill Companies Inc.
* Mullins, J. L. (1999), Management and Organisational Behaviour. 5th edn. London. A division of Financial Times Professional Limited
* Pojidaeff, D. (Dec 95), The Core Principles Of Participative Management, Journal for Quality & Participation, Vol. 18, Issue 7. p 44, 4p
* Quick, T. L. (1992), Successful Team Building, New York, Amacom
* Rosenfeld, R. H. & Wilson, D. C. (1999), Managing Organisations, Text, Reading & Cases, 2nd edn, Berkshire: McGraw Hill Publishing Company.
* Soonhee, K. (Mar 2002), Participative Management and Job Satisfaction: Lessons for Management Leadership. . Public Administration Review Vol 62, Issue 2, P231
* Stewart, R (1997) The Reality Of Management, 3rd edn. Oxford, A division of Reed Educational and Professional Publishing Ltd, Great Britain
* Thomson, R (1997), Managing People, 2nd edn. Oxford, A division of Reed Educational and Professional Publishing Ltd, Great Britain
* Watson, J. T, (2001), Sociology Work and Industry, 3rd edn. London, Routledge & Kegan Paul Ltd.
Below is a description of the fourth aspect of Rensis Likert’s four management systems, which he describes in his two books, New Patterns Of Management (1961) and the Human Organization (1967).
System 4- Participative Group
Management trusts employees and views them as keenly working towards the success of the goals of the organisation. People’s motivation is related to rewards. Employees from all levels are involved in discussing and choosing those issues that are vital to them. Regarding communication, it seems it is quite precise and freely goes up, down, and across. In terms of goals, they are formed with the participation of the people who will work to achieve them. Due to the fact that information flows freely in all directions, management can establish what it needs to function. People from the lower levels of the hierarchy understand the importance that management be appraised of everything that occurs. Management does not feel that releasing data is as good as giving up their power and status.
1 Pojidaeff, D. (Dec 95), The Core Principles Of Participative Management, Journal for Quality & Participation. Vol. 18, Issue 7. p 44, 4p
2 Rosenfeld, R. H. & Wilson, D. C. (1999), Managing Organisations, Text, Reading & Cases, 2nd edn, Berkshire: McGraw Hill Publishing Company. Pg.188
3 Kreitner, R., Kinicki, A. & Buelens, M. (1999), Organisational Behaviour, Berkshire, McGraw Hill International (UK) Limited. Pg.352
4 Quick, T. L. (1992), Successful Team Building, New York: Amacom. Pg. 24-27
5 McCall, A. (March 07 2004), Inspired all the way to the top, London, Times Newspaper Ltd.
6 Buchanan, D., & Huczynski, A., (2004), Organizational Behaviour, An Introductory Text, 5th edn. Essex, Pearson Education Limited. Pg. 769
7 Soonhee, K. (Mar 2002), Participative Management and Job Satisfaction: Lessons for Management Leadership. . Public Administration Review Vol 62, Issue 2, P231
8 Certo, S. C. (2003), Modern Management, 9th edn, New Jersey, Pearson Education Limited. Pg.155
9 Buchanan, D., & Huczynski, A., (2004), Organizational Behaviour, An Introductory Text, 5th edn. Essex, Pearson Education Limited. Pg. 772
10 Buchanan, D., & Huczynski, A., (2004), Organizational Behaviour, An Introductory Text, 5th edn. Essex, Pearson Education Limited. Pg. 774
11 Certo, S. C. (2003), Modern Management, 9th edn, New Jersey, Pearson Education Limited. Pg.147