IMPACT OF PARTICIPATIVE MANAGEMENT ON ORGANIZATIONAL PERFORMANCE: A

CONCPETUAL EXAMINATION

INTRODUCTION: Post Globalization Growth of service sector Multiple employment opportunities High attrition rate to prevent Participative management

PARTICIPATIVE MANAGEMENT:

Participative management has been broadly adopted as a strategy in

organizational development because most people believe that

participative management not only encourages workers to identify with

their duties, but also improves their own performance as well as

organizational performance.

Overview of Participative Management:

Elton Mayo(1880-1949):

Hawthorne Studies

Social side of the organization

Employee Productivity

Kurt Lewin (1947): Participative Management

Includes employee involvement

Industrial democracy

Stakeholder involvement

Recent Paradigm:

Networked Organizations Information and communication technology Citizen involvement in Decision Making

Link between Participative Management & Organization Performance

Review of Literature:

Addison, Kraft and Wagner(1993)

Work Councils no positive impact on participative management

No consistency in the previous studies

Eg: Cotton et al 1988

Employee Participation is associated with different outcomes

Cable and Fitzroy(1980) Promote work motivation Increases Productivity Participative management has positive effect on organization performance

Vanek (1970) and Horvat (1982) Promote organization morale Increases Productivity

Hypothesis:

Participative Management and Organization Performance:

Organization factors:

Type (stream and size)History

Financial statusEmployee (age,

qualification, experience)Number of employees

Organization Performance:

Turn over rateMobility rate

Absenteeism rateRevenue growth rate

Market shareProduct value per employee

Profit rate

Fig: A Conceptual Framework

Seven Variables:1.Tumover rate: proportion of employees resigning in the Particular year (quits/total employees)

2. Mobility rate: proportion of employees resigning and employed in that particular year

((quits + new hired)/total employees)

3. Absenteeism rate: annual working days missed per employee in that particular year

(Exclude industrial disputes)

4. Revenue growth rate: (Present year revenue – Previous year revenue)/Present year revenue

5. Product value per employee: Present year revenue/number of employees in that particular year

6. Profit creation per employee: Particular year gross profit before tax/number of employee in that year.

7. Market Share: Companies total revenue/entire industry market value of that particular year.

Participative management in relationship to Job satisfaction. Participative management in relationship to Employee Absenteeism. Participative management in relationship to Employee Retention.

Participative Management Relationship to other HR Topics:

Benefits of Participative Management:

Based 0n Organization Percepts:

Increased PerformanceImproved quality

Reduced costsInnovation

Requires less supervisionHigher flexibilityIncreased culture

Increased team building

Based on Employee Percepts:

Reduced AbsenteeismImproved qualityJob satisfaction

MotivationSense of belongingnessLearning opportunity

Superior-subordinate relationship

Limitations of Participative Management:

Decision making requires more time Some security related

problems may arise.

Conclusion:

Participative management brings together employees' identification, enthusiasm, wisdom and willingness to comply with company goals and enhances the organizational performance. Employee participation does improve an individual's behavior in terms of recognition, job satisfaction and absenteeism, as well as organizational effectiveness such as productivity, profit and revenue and market share.

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