A Basic Understanding of Participative Management

Participative Management refers to as an open form of management where employees are actively involved in organization’s 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 organization’s decision making is not new. However, the idea couldn’t 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 company’s 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 suggestions and ideas every year and around 95 percent of these are implemented by the company. Who is not aware of Toyota’s 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.