Participatory Management
Michael Maccoby
The concept of participatory or participative management has been used in the context of traditional hierarchical industrial organizations or bureaucracies. It means that, to a greater or lesser extent, managers share their power with employees, managers, or non managers who are lower in the structure. The opposite of participative management is autocratic or dictatorial management.
This overview first describes the experience of participative management in traditional industrial organizations and then reports recent organizational initiatives that have redefined participative management in terms of empowerment and interactive management.
Within the traditional organizational frame work, there are three degrees of participative management: consultation, value based influence, and formal power sharing. Consultation is the form of participation wherein a manager seeks the viewpoints of subordinates before making a decision. There is no commitment by the manager to act according to the wishes or suggestions of subordinates (Weber, 1964). Value based influence implies a commitment by management to take account of subordinates’ viewpoints before making decisions. Typically, there is agreement that managers will honor explicitly stated values. In some of the most effective companies, these values try to balance the interests of a number of stakeholders, in particular, owners, customers, and employees (Kotter and Heskett, 1992) (see organizational culture). Formal power sharing entails a more democratic form of governance in which some, but not necessarily all, so called managerial decisions are made by consensus or vote. This type of participation or co determination is not usually adopted freely, but is typically forced on management by the political system or stakeholder power (e.g., unions, environmental groups). It is then up to management to make good use of co determination by adopting a participatory style of leadership.
An example of co determination is the German Works Council, where members elected by the employees can make some decisions concerning changes in work rules and also influence top management’s strategic decisions. Another example is the General Motors Saturn factory in Spring Hill, Tennessee, where union officials, elected by workers, formally share power with plant management.
Participatory management often implies that while managers may listen to or even share power with those lower in the hierarchy, they reserve the right to make the final decisions. Exceptions to this rule are those cases where through collective bargaining there is a contractual agreement with a union to share power – for example, in setting wages and evaluating working conditions. In some organizations there is a mixture of consultation, influence, and power sharing, depending on the type of decisions involved.
Why Does Management Invite Participation?
The purposes of practicing participatory management are to arrive at better decisions, to achieve employee buy in for implementing management decisions, and to increase employee motivation. By listening to frontline employees, managers gain information and ideas. Workers may find processes ineffective, inefficient, or cumbersome. They may offer suggestions for improvement. Especially in the age of service, frontline employees are in the best position to hear customer complaints and ideas for improvement. Experience demonstrates that at all organizational levels, when people feel they have been heard and their views given serious consideration, they are more likely to support management decisions and implement management plans.
Beginning with the pioneering research on worker morale at the Western Electric Hawthorne plant in Chicago in the 1930s, there has been evidence that by giving employees a say in how work is performed, satisfaction with work usually improves (Rothilsberger and Dickson, 1939) (see the discussion of resistances to participation, below, for exceptions). Surveys indicate that a majority of employees believe that participation in these areas will improve organizational effectiveness and quality. Employees in the US want to have a say in deciding how to do their jobs and organize the work; deciding what training is needed for their jobs; setting work schedules, including breaks, overtime, and time off; setting goals for their work group; deciding how to work with new equipment or software; and setting safety standards and practices.
Japanese industries took the lead in the 1960s and 1970s by integrating participative management into a total quality management system, including the idea that all workers have internal and external customers they must satisfy. Workers are encouraged to participate in continuous improvement and are rewarded for ideas adopted by management. At Toyota Motors, in the early 1990s, there were about 50 ideas per worker per year proposed and of these 80 per cent were adopted, with workers rewarded with bonuses for those adopted. Japanese management also allows workers to experiment with changing work methods. In most large Japanese companies, worker representatives are consulted on strategic decisions.
The participation of unions as institutions in management decisions is required by law in Germany and Sweden, where union representatives sit on supervisory boards. This participation can range from a more perfunctory information sharing, with minimal consultation, to significant involvement in shaping and implementing policies. In the US, in some companies, the United Autoworkers (UAW), United Steel workers (USW), United Needletraders Indus trial and Textile Employees (UNITE), and Communication Workers of America (CWA) have reached contractual agreement to participate with management in decisions ranging from market strategy to process changes. In these cases, the unions also encourage management to involve frontline employees in decision making.
Limits to Participatory Management
The ability to participate in a meaningful way depends on such factors as size of group, participants’ knowledge of the situation, and speed of decision making required. There are occasions when management wants to limit the number of people involved in sensitive negotiations because of possible negative consequences if the information becomes known publicly.
There are also cases where employees reject invitations to participate. For example, union representatives have refused to participate in decisions which might adversely affect their members. Although generally union members want their leaders to participate with management, there are instances in which participation could erode their political support. Crozier (1964) showed that many French bureaucrats rejected opportunities to participate in order to protect autonomy and the right to object, or in the case of union members, grieve a management decision.
An issue is the fear by employees that by volunteering ideas to improve productivity, they may no longer be needed and lose their jobs. In the large Japanese companies, participation has been reinforced by promises of employment security. In the US, some unions have bargained for employment security, while others in industries undergoing continual restructuring and rationalization have negotiated programs for retraining and continual learning to enhance employability.
Effective participatory management requires a high level of mutual trust, otherwise managers will not share information and their subordinates will not want to open themselves to possible manipulation or exploitation. The most effective participative management is based on practicing values such as respect, honesty, and an attempt to obtain mutual benefit from decisions. (Participatory management also requires that employees are educated sufficiently about management goals so they can contribute meaningfully to decisions. Equally, it requires facilitative skills and the willingess to listen to employees on the part of managers. Maccoby (1988) has found that managers with an ‘‘expert orientation’’ have a hard time learning from sub ordinates.)
In 1994 the Communication Workers of America studied examples in which they had participated with the management of telecommunication companies. They found that when participation was value based and information was shared sufficiently, there were significant benefits to both management and employees. However, they also found cases of pseudo participation and promises for participation made by a manager who then left his or her position and was replaced by someone who took advantage of the trust previously developed.
Beyond Participative Management
A new organizational model is emerging. It is flatter than the traditional industrial bureaucracy, with fewer middle managers. The ideal is that top management determines strategy and the frontline is empowered to implement and adapt it (see empowerment). To some degree, these elements have been part of good management in the past. What is most different is the movement from autonomous functions to inter activity and heterarchical cross functional teams.
The new organizational model has resulted from four factors: the shift in the mode of pro duction in manufacturing as well as in service industries, the lessons of total quality management, the competitive demand for speed in bringing new products to market, and the significant development in the 1980s and 1990s of information and telecommunications technology (IT). IT allows manufacturing processes to be automated and information to be shared rapidly to and from the front lines. Furthermore, the new IT has allowed management to ‘‘reengineer’’ processes to cut out layers of control and communication.
Under this model, instead of following directions, the frontline employees must be ‘‘empowered’’ to use judgment and make decisions that will both satisfy customers and implement management strategy. In the case of continuous process technology, quick decisions must be made for purposes of safety and to avoid product losses.
In the heterarchical, cross functional team or network, leadership shifts according to who has the appropriate knowledge. An example is a concurrent design process which replaced a linear design process that moves from design to engineering to production. Instead, designers, engineers, marketing experts, and frontline pro duction employees (and in some cases, customers) work together, share different types of knowledge, and make decisions by consensus. The results are better products, produced more rapidly.
The management model proposed by Ackoff (1994) redefines participatory management as interactive management, based on the concept of the organization as a social system with the goal of satisfying the main stakeholders: customers, employees, and owners. The interactive planning process requires that management design an ‘‘ideal future’’ which is interpreted and implemented by people in different parts of the system. A continual dialogue is led by management concerning how to close the gaps between the present state and the organization’s ideal design.
This interactive approach to continual trans formation and employee empowerment was the basis for AT&T’s Workplace of the Future and was agreed to by its unions – CWA and IBEW – in their 1992 and 1995 contracts (Heckscher et al., 2003). Each business unit and division had a planning council which included union representatives who were there not because of their demand for power, but because they facilitated communication, and by emphasizing employee needs and protecting their contractual rights, they increased trust in the process. The planning council was led by management with the value based participatory approach. The council designed the ideal future, developed an education program with the aid of professors from Rutgers University, and interactively sup ported attempts by the various workplaces to interpret and implement it. However, this participation ended in 2000 when new leadership at AT&T became adversarial to union organizing in newly acquired units and the unions withdrew from participation.
In the new interactive model, with or without union cooperation, participatory management no longer depends on a few innovative managers. It engages everyone in the organization in learning what is needed for success by all stake holders. Interactive management becomes the most effective way of developing a customer responsive, efficient, and highly motivated organization.
Bibliography
Ackoff, R. (1994). The Democratic Corporation: A Radical Prescription for Recreating Corporate America and Rediscovering Success. New York: Oxford University Press.
Crozier, M. (1964). The Bureaucratic Phenomenon. Chicago: University of Chicago Press.
Heckscher, H., Maccoby, M., Ramirez, R., and Tixier, P. (2003). Agents of Change: Crossing the Post Industrial Divide. Oxford: Oxford University Press.
Kotter, J. and Heskett, J. (1992). Corporate Culture and Performance. New York: Free Press.
Maccoby, M. (1988). Why Work: Leading the New Generation. New York: Simon and Schuster.
Rothlisberger, F. J. and Dickson, W. J. (1939). Management and the Worker. Cambridge, MA: Harvard University Press.
Weber, M. (1964). The Theory of Social and Economic Organization. New York: Free Press.