Business
This paper will attempt to identify the need for workers participation in the decision-making process and will help us to understand the best management practices to maximize the potential of our employees and also benefit from their knowledge regarding intricate details of the organizations processes. The workers who are motivated by a share in the growth of the company, usually in the form of profit-sharing by the company, prove to be more involved in the decision making process and appear to be more participative in the organizations policies. This paper will attempt to prove that workers who are motivated through such incentives prove to be more participative as compared to those companies which do not offer any such incentive.
Thesis Statement
Workers should be allowed for formulated participation in organizational control and profits.
Background
During the Industrial Revolution, the role of employees and workers were similar to that of drones and mindless laborers who were ruthlessly exploited by the giant industries being set up. They offered poor living conditions, low wages and limited rights and securities to the employees, hence, treating the working class poorly (Mantoux, 2006). These conditions maintained throughout the initial 20-30 years of the industrial era.
However, eventually the management concepts began to take birth and after a series of worker movements against the harsh treatments, employees created unions and groups which were able to advocate for their rights. These groups and unions either through strikes or by lawful intervention were able to protect the rights of the employees and employees began influencing the decisions being made within the management level of the companies. Gradually, management began involving the workers when they realized that their knowledge about processes and functions were an asset to the organization and that the workers would be beneficial in creating strategies directed towards the workers and the company in general.
Following in a downward descent, the decisions were first made by executives, later managers and floor supervisors were permitted to aid in the decisions being made. Once floor managers and similar horizontal employees were given decision making authority, workers who worked under these authorities also began getting more and more flexibility to suggest any ideas.
The Need for Workers Participation
There are various types of worker participation which could be practiced by organizations. Levine and Taylor (1990) discuss the consultive and substantive style of worker participation. The Consultive style of worker participation involves the workers helping the management identify solutions and alternatives however they do not have the power to implement these suggestions. Meanwhile, the Substantive style allows the workers the autonomy to actually make decisions and take action on their own rather than wait for approval from the management.
The reason why workers participation is stressed upon can lie perhaps on the fact that the workers are on the execution stage of the ladder and they are the ones who are bringing all the orders into action. Thus, management can gain much from their insights regarding the production or processes leading to the creation of goods andor services. The workers can offer information regarding customer feedback in the services sector or they may identify wasted motion or wastages in raw material in production. These are issues which the management is usually unaware of and it may cause great losses to the company.
The need for worker participation has increased more as organizations have realized that proactive workers are not simply an asset but can become a competitive advantage over other players within the market. Most companies in same industries often use the same machines and have same processes. Their differences arise in their personnel and the company which has a dedicated, positive and proactive workforce usually surpasses the companies which do not offer their employees with similar values and growth opportunities.
Current Trends in Workers Participation in Management Decision Making
In recent years, the trend has been noted that most organizations are offering their employees with empowerment and that the decision-making authority is being decentralized in certain circumstances. Organizations which have employees directly coming into contact with the customers and are service oriented by nature prove to be more empowering to their employees and it has been noted that the employees themselves take a greater interest into the affairs of the company (Noah, 2008). They usually are more involved in the decision making process as compared to those workers who work for the manufacturing department or production department. This lies in the fact that service sector workers usually come into direct contact with the customers and are more susceptible to make on the spot decisions regarding servicing the customers while workers in the manufacturing departments are working on fixed schedules and routines hence they hardly ever come into critical decision making scenario. The difference between the nature of the work involved can also influence the extent of participation within the organization.
Aside from the difference in the nature of the work involved, participation varies against the structure of the organization. Participation in worker owned organizations may differ from participation in a private held company. Worker owned companies can be created if employees are offered bonuses in the form of company shares and other such options so that they become part owners of the company (Ros, 2001). By doing this, their objective would be to grow the company and hence increase their share value, creating a win-win situation whereas, in the private held companies, bonuses and motivational incentives are usually in the form of monetary rewards or other benefits. They may offer shares as well but they are not distributed so commonly.
The Need for Worker Participation in Decision Making
Decision making process was initially a task held by the executive board and top level management. However, due to the fast paced nature of todays marketplace and the intensely competitive nature of companies, decision making needs to be quick, proactive and easily implemented rather than be tedious, reactive and flowing vertically down the hierarchy. The need for worker participation has risen from the need of organizations to be more flexible and to create new and innovative processes. Rather than have a few management level members thinking along those lines, companies now have the entire workforce striving to that end. The participation of workers in the decision making process increase the employee loyalty to the organization and their affiliation with the company usually grows when they are taking part in the decisions and their suggestions are being implemented. This has helped to not only motivate the employees but has also led to decreased turnovers and grievances rates (Bud, 2006).
Decisions are made on long term and short term basis within organizations. The management and executive levels usually concentrate their efforts on the long term goals and perspectives of the organization detailing where the company will be headed and what it would try to achieve. For the short term goals and decisions however, the lower levels are given autonomy and decision making powers as long as they do not come into conflict with the long term goals. This kind of demarcation of decision making boundaries has led to the need for increased worker participation and their active involvement in the companys operations.
The participation of workers in all aspects of the companys operations is imperative yet their participation in the decision making process is more so due to the fact that the decisions which workers come up with are usually minute in nature and can help companies to identify the small leakages in revenues and minute costs which the company executives or higher managers have not considered. These suggestions can involve fixing employee amenities to increase morale to identifying processes which either waste time or are simply done because of tradition and are no longer relevant in the operation process. The need for workers in the decision making process is hence more critical than ever before as this gives companies a competitive edge over those companies which are still traditional and conservative in their power sharing styles.
Advantages and Disadvantages of Current Practices and Process used by Organization
The major disadvantage which may occur in decentralizing decision making within an organization is that the accountability decreases and the margin of errors may increase in business. The decisions from the workers may not always be beneficial for the company as a whole and leaving decision making up to their discretion may lead to a company having dissatisfied customers or some operational or similar flaw.
The advantages however are many. The company can become more flexible and the workers may easily embrace change if they are involved in the decision making process. One major issue which arises with change management is that the employees may be resistant to changing their ways or may not accept the managements decisions too warmly. However by involving them in the decision making process they are often more receptive to the change and they are gradually warmed up to the new practices or ideas.
Similarly another advantage of worker participation in the decision making process is that they can create competitive advantage over other market competitors by refining internal processes which the competitors cannot do. The key differential factor between progressive companies and stagnant ones is that the progressive companies have realized that their labor is also not just an asset but that it is a strategic tool which can be used to gain an edge over their competition. By having a proactive and involved workforce, companies have been able to overcome adverse situations and have survived to become giants. Many of the major corporations today are identified by having a highly proactive and involved workforce. The employees within these organizations are given liberties and they are involved in the decision making processes at all stages in their hierarchy. Companies which embrace this fact can better survive as compared to those companies which still hold the traditional belief that the manager is the only decision making authority within the organization.
A Good Framework for Workers Participation in Management Decision Making
Regarding the framework of the workers participation in the decision making processes, there are 2 specific models which are present today. These models include the Human Relations Model and the Participatory Democratic Model.
The Human Relations framework advocates that the employees be treated with respect and be acknowledged as part of the organization and not as individuals. It preaches the supportive framework where employees basically receive encouragement in the form of being appreciated as part of the decision making process and being treated in a manner that makes them feel that their voices are heard and respected. Rather than to treat employees on an individual basis and assume them to be monetary driven beings, the organization must acknowledge them as a member of the social groups within the organization. This would then make the employees, when placed in a decision making situation, to think of the organization as a social group and strive for the combined benefit rather than concentrating on their own self and to think of personal gains. This framework holds much potential on its own yet it has its limitations as such. For this framework to succeed it must be assumed that the employees of the organization are willing to rise above their personal needs and that they have already met their basic needs to strive to attain the higher needs such as self actualization and similar such beliefs. If the employees havent received their basic needs which include shelter, food and safety then it is very difficult for them to use the decision making process to come up with anything progressive other than to concentrate on ways of making more money or improving their own personal states rather than help drive the company forward.
The second framework is the Participatory Democratic model which basically states that by allowing employees to voice their opinions they hence lead to employees having a greater control on their lives which would make them think of other things rather than their own self. This is a causal linkage which has been created on the assumption that people are greedy and that their first instinct would be self preservation. Once that has been assured, they would be willing to consider other possibilities. Having employees feel that they have the ability to control their own direction would lead them to participate more actively in the decision making process as their decisions would lead them to their desired futures and goals.
Both of these models are beneficial in their own conditions. I believe that the Human Relations model is best suited for developed nations and companies where employees are satisfied with their basic needs and are seeking something more spiritual than money. They could be searching for a satisfying job or a career where they are fulfilling their ideologies. Yet for companies which have the majority of their workforce below or at the poverty line, the Democratic model is more feasible as they would be able to first improve their conditions and then ascend to worrying about organizational concerns.
Workers Participation in Companys Profits
Companies can increase workers participation by involving them in the company profits. By actually offering them a percentage from the profits earned from their dedicated efforts, companies can motivate greater participation and lead to a better organizational culture.
This practice of sharing-the-profits is relatively new and has been implemented successfully in the developed nations yet is still not practiced so commonly in developing nations. The companies basically use their growth and profits to entice employees to work harder as the greater the growth of the organization, the more rewards would trickle down to the deserving employees. The multinationals began this measure to encourage the host workers to work dedicatedly for their organizations and to take greater concern for the organizations well being as previously multinational corporations lacked loyalty from their host workforce. To remedy this situation, they devised the concept of profit sharing which has led to a dedicated workforce mentality and has resulted in enormous percentage growths for companies.
Current Processes for Profit Sharing in Organization
There are 2 major means of profit sharing for an organization. The first method is by offering dedicated employees a monetary bonus or incentive package at yearly basis. This monetary reward often depends on the nature of the workforce and the receivers option. Workers who are more pressed for monetary concerns prefer being paid in something material and immediate. This type of profit sharing basically is used for people who have immediate demand for money or have lack of vision.
The other option of profit sharing usually takes place by companies distributing shares and options to their employees who participate actively. This incentive mostly is given to upper level employees who concerned about future potential and believe that they would fare better with shares of a growing company than to be paid in cash or similar method.
There are laws in countries which also encourage profit sharing, which allow profit deducations pre-tax and allow companies to pay lower taxes after subtracting the profits due to their employees. European countries and other countries promote profit sharing as it allows people to benefit from this while the company benefits by developing a more loyal and supportive workforce.
The Need for a Profit Sharing Framework
The need for a profit sharing framework is to identify a stable and consistent means of profit distribution. By operating without the basic framework, a company may do the exact opposite and dissatisfy its employees as there would be no specific guidelines to entitle employees to their benefits and there would be no measurable performance evaluators.
It is essential that key performance indicators be identified for employees and their participation be recorded so that they could know that a transparent methodology has been utilized in determining their participation and that they would receive a specific amount for a specific level of support they have given to the company.
The need for the profit sharing framework is thus to maintain a stable environment and to allow employees a standardized workplace environment and a measurable scale for participation and its corresponding rewards. If there is instability, employees would show lack of effort and would work randomly as well.
Identification of Critical Factors in the Profit Sharing Framework
As mentioned earlier, the key critical factors for a profit sharing framework include consistency and stability. The policy should be established and communicated to everyone in the organization so that they work accordingly. Similarly, there should be a set measure with which to reward employees. Participating on a certain level should entitle them to a certain profit which should be delivered to them accordingly. If the employee is derived from that reward, there would be a backfire with the employee ceasing participation and doing the minimal required work from him.
The profit sharing framework should allow options as to the type of rewards that the employee is entitled to. Providing employees with shares when they would prefer cash or vacations would lead to a lack of interest in the rewards and they should not be random or forced onto employees. Workers should be given the choice to choose their mode of profit sharing from the company. This would lead to greater satisfaction and more participative workforce.
Conclusion
By allowing workers to participate in all the aspects of decision making within the organization, from the productionservices to their choice of profit sharing, companies can create a loyal and dedicated workforce which would seek to help the company grow and would lead to a more competitively positioned company then its competitors. Recognizing the human potential is the job of managers and they must strive to bring the best from all their employees from the most menial workers to the executives so that the company does not lose out on any opportunity to succeed and gain an edge over others. In todays fast paced world, companies are being born and die but the only ones which survive are those which recognize their human potential and which utilize it to cover all its operational and strategic goals. By involving the workers in the decision making process, the company can identify minute losses and can avail sudden opportunities as it would be more flexible and would be more receptive to change than its competitors. It can gain tax benefits by profit sharing and can use that to its advantage by motivating its employees to work harder to help the company grow further.
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