Tag: Business Ethics

Participative decision-making (PDM) is the extent to which employers allow or encourage employees to share or participate in organizational decision-making. According to Cotton et al., the format of PDM could be formal or informal. In addition, the degree of participation could range from zero to 100% in different participative management (PM) stages.

PDM is one of many ways in which an organization can make decisions. The leader must think of the best possible way that will allow the organization to achieve the best results. According to Abraham Maslow, workers need to feel a sense of belonging to an organization (see Maslow’s hierarchy of needs).

Styles:

Democratic Leadership. This is the type of leadership style in which members are encouraged to share their ideas and then synthesizes the available information into the best possible decision. Researchers have found that this style is usually the most effective and leads to better contributions from the group, as it produces a work environment that employees can feel good about because they know their opinion counts and they can bring a real difference to the organization.

Autocratic Style. Here, the leader takes the employees’ opinions, collects them and facilitates the conversation, but takes control and responsibility of the final decision. This is most effective during crises and emergencies where decisions have to be made quickly.

Consensus. In the consensus participative decision-making style, the leader gives up complete control of the decision and leaves it to the members of the group to conclude the majority decision. Doing this requires teamwork, trust, and communication (and time, because it takes a while) but it usually brings out the best decisions since it is well thought out. Consensus style improves goal-setting, problem-solving, and team-building among groups.

Delegated by Expertise. Of course, not everyone is an expert at everything. Everyone has their area of expertise. Here, the leader delegates the responsibility to the expert of their area of concern so they can arrive at the best outcome. This style of decision-making process can help the group feel more creative and engaged in the process.

Choosing the right style for your organization shouldn’t be a one-off. As HR practitioners, we always have to be mindful of the dynamics in our organization so we can decide on the right participative decision-making style (depending on the situation) that will improve our employee engagement and ensure that everyone in the company feels valued and respected.

Advantages

PM is important where a large number of stakeholders are involved from different walks of life, coming together to make a decision which may benefit everyone. Some examples are decisions for the environment, health care, anti-animal cruelty and other similar situations. In this case, everyone can be involved, from experts, NGOs, government agencies, to volunteers and members of public.

However, organizations may benefit from the perceived motivational influences of employees. When employees participate in the decision-making process, they may improve understanding and perceptions among colleagues and superiors, and enhance personnel value in the organization.

Participatory decision-making by the top management team can ensure the completeness of decision-making and may increase team member commitment to final decisions. In a participative decision-making process each team member has an opportunity to share their perspectives, voice their ideas and tap their skills to improve team effectiveness and efficiency.

Participatory decision-making can have a wide array of organizational benefits. Researchers have found that PDM may positively impact the following:

• Job satisfaction
• Organizational commitment
• Perceived organizational support
• Organizational citizenship behavior
• Labor-management relations
• Job performance and organizational performance
• Organizational profits

Outcomes

The outcomes are various in PDM. In the aspect of employees, PDM refers to job satisfaction and performance, which are usually recognized as commitment and productivity[9] In the aspect of employers, PDM is evolved into decision quality and efficiency that influenced by multiple and differential mixed layers in terms of information access, level of participation, processes and dimensions in PDM.

Research primarily focuses on the work satisfaction and performance of employees in PDM. Different measurement systems were applied to identify the two items and the relevant properties. If they are measured with different processes in PDM, the relationship is as described below:

• Identifying problems: Do not have strong relationship with performance. Because even with full participation, participants may not explore their skills and knowledge in identifying problems, which is likely to weaken the desires and motivation then influence performance.
• Providing solutions: Positive and “potentially strong” relations with performance. It is not only attributed to the skills and knowledge could be explored but also the innovative ways employees can provide and generate.
• Selecting solutions: Positive to performance but not likely to enhance satisfaction. If the solutions generated are not acknowledged by the employees who are absent at the previous stage, the satisfaction could lessen.
• Planning implementation: Positive and strong relationship with both performance and satisfaction. Participants are given the possibility to affect the achievement of a designed plan. As the “value attainment” is attached, the extent of performance and work satisfaction increase.
• Evaluating results: Weaker relationship with performance, but positive relationship with satisfaction due to the future benefit.

There are a number of ways through which employees can participate in decision-making process of any organization.

• Participation at the Board Level: Representation of employees at the board level is known as industrial democracy. This can play an important role in protecting the interests of employees. The representative can put all the problems and issues of the employees in front of management and guide the board members to invest in employee benefit schemes.
• Participation through Ownership: The other way of ensuring workers’ participation in organizational decision making is making them shareholders of the company. Inducing them to buy equity shares, advancing loans, giving financial assistance to enable them to buy equity shares are some of the ways to keep them involved in decision-making.
• Participation through Collective Bargaining: This refers to the participation of workers through collective agreements and by deciding and following certain rules and regulations. This is considered as an ideal way to ensure employee participation in managerial processes. It should be well controlled otherwise each party tries to take an advantage of the other.
• Participation through Suggestion Schemes: Encouraging your employees to come up with unique ideas can work wonders especially on matters such as cost cutting, waste management, safety measures, reward system, etc. Developing a full-fledged procedure can add value to the organizational functions and create a healthy environment and work culture. For instance, Satyam is known to have introduced an amazing country-wide suggestion scheme, the Idea Junction. It receives over 5,000 ideas per year from its employees and company accepts almost one-fifth of them.
• Participation through Complete Control: This is called the system of self management where workers union acts as management. Through elected boards, they acquire full control of the management. In this style, workers directly deal with all aspects of management or industrial issues through their representatives.
• Participation through Job Enrichment: Expanding the job content and adding additional motivators and rewards to the existing job profile is a fine way to keep workers involved in managerial decision-making. Job enrichment offers freedom to employees to exploit their wisdom and use their judgment while handling day-to-day business problems.
• Participation through Quality Circles: A quality circle is a group of five to ten people who are experts in a particular work area. They meet regularly to identify, analyze and solve the problems arising in their area of operation. Anyone, from the organization, who is an expert of that particular field, can become its member. It is an ideal way to identify the problem areas and work upon them to improve working conditions of the organization.