T.Y.

BANKING & INSURANCE

PARTICIPATIVE MANAGEMENT

PROJECT GUIDE THIRD YEAR (BANKING & INSURANCE)

TRAINING CENTRE: COLLEGE CAMPUS

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CERTIFICATE
This is certify that Master of T.Y.Banking & Insurance of academic year 20122013 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 Date

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INDEX Section I
Pg.No
1 2 3 4

Particular
Name of the project Certificate Acknowledgement Detail of Index

Signature

Section II
Pg.No
5.1 6.1 7.1 8.1 9.1 10.1 11.1 12.1 13.1 14.1

Particular
Abstract of project Need for research Importance of research Definition of subject Objective of project Scope Limitation Hypothesis Methodology Tools of research

Signature

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INTRODUCTION
Participative Management is 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. The underlying 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 di rectors. 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 or the vested interests

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ABSTRACT OF PARTICIPATIVE MANAGEMENT

Participative Management refers to as an open form of management where employees 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, Codetermination, 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 each time. 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 conflict between 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 work ownership of employee. An employee is better able to relate himself/herself with his or her work and this improves performance and efficiency at work. John Newstrom and Keith Davis worked extensively upon the subject. They identified three variables that lead to increased performance. These variables are a part 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 more risks. 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 efficacy assumes importance. The reward system needs a revamp. Psychologically empowerment connotes increased 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 means that the job becomes more rewarding - monetarily and otherwise.

Enhance Job Related Self Efficacy: Increase in responsibilities also demands increased efficiency at work. This is achieved by providing training helping an employee achieve job mastery. Laying down benchmarks for a certain 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 in increased 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. This trickles down to the bottom or the lower level and this is how participation happens across various levels.

Perception of Empowerment: Employees often misunderstand the idea of participation. 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 undoing of all the good work. Empowerment means more competence and value addition to work. It means that individual accepts the responsibilities with humility and fulfills them with grace and efficacy. It calls for increased use of talent. It is in wake of 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 been effectively used in organizations implementing participative management. They can 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 and consultation either formal or informal by which employees of an organization are kept informed about the affairs of the undertaking and through which they express their opinion and contribute to management decisions.

2) Marchington defines the term participation to cover employee influence which 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 not restrict 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 a say 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 most effective 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 achieving success.

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 of management 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 communication plays 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, economic and 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 decision making 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 of

employees 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 personnel decision-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 and Technology 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 not participate. 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 manipulate employees. 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 they are 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 mentioned earlier 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 participative management; 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 have provided 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 different authors. I also provide my personal experience regarding the participation as it is not a forceful activity but it is a psyches phenomenon.