With Reference to Specific Business Examples Reported In The U.K Business Press, Critically Evaluate The Effectiveness Of Participative Decision - Making.

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With Reference to Specific Business Examples Reported In The U.K Business Press, Critically Evaluate The Effectiveness Of Participative Decision – Making.

Name: Rupal Patel                                                Module Code: 4HRB601

Student Number: 01073225B                                Date: 18/11/04

Subject: Managing Business Organisations                        Word Count: 2591

Module Leader: Amanda Rose

Seminar Tutor: Amanda Rose

In the business world today, there are a number of decision-making techniques that management can apply, to help improve the quality of the final outcome. One of them being Participative Decision Making (PDM). The following essay is based on critically evaluating the effectiveness of PDM, with reference to specific business examples reported in the UK business press. In order to do this, it is necessary to gain background knowledge of PDM, including how it came to arise and its positive and negative attributes.  The business examples will be incorporated in order to support both aspects. Once this is established, it will help to form an overall critical evaluation of the effectiveness of PDM.

The founder of Participative Management (PM) can be associated with Dr Alfred J. Marrow (1947), who was the CEO of the Harwood apparel manufacturing company. He observed that the company’s workforce consisted of poorly educated young women, thus resulting in low productivity levels, and in effect, kept declining nearly 25% every time a change was introduced. Due to this, there became great concerns regarding the causes of the workforce behaviour and how to improve it. As a psychologist, Dr Marrow and his colleagues discovered a positive relationship arising between productivity levels and the amount of decision-making employees held. In general, if employees were given the opportunity to make meaningful decisions regarding their own work, then this would lead to nearly a 14% increase in productivity levels. Thus, PM can be classified as a way of involving employees in various forms of decision-making.

PDM is an element within PM; it can be defined as being a form of a decision-making technique, of which participation involves individuals or groups in a process. What is likely is that everyone has the privilege of trying to influence the decision making process when the decision affects them. The decisions they make may concern problem solving, task assignment, or any number of issues that relate to the effectiveness of their operation. In practice, numerous issues can influence the scale of participation, for example, the experience of the individual/group and the type of task. In general, it is assumed that the greater the experience and the more open and unstructured the task, then a greater participation in decision making.

It appears that more and more organisations are taking a keen interest in participation. Reasons for this are due to greater competitive pressures, the removal of old hierarchical superior- subordinate relationships and the appearance of teams, horizontal structures, and boundary- spanning information technologies. As a result organisations, teams and individual managers are effectively using them.

Organisations often ask their employees to make organisational decisions, as there are certain advantages to this.  For example, multiple individuals in a group can generate a greater range of knowledge and information, as they draw on collective, diverse organisational experiences as the foundation for decision-making. By enabling employees to have a say in the decision, different perspectives can be formed, and as they are more likely to view the decision as their own, this ownership perception makes it more likely that they will strive to implement the decision successfully. Studies carried out by Vroom and Yetton (1973) support this view, in which they established that groups have more advantages than individuals in decision-making according to situation, time and leadership. If the group also believes in its leaders preferred outcome, then according to them, the group will be more effective.

Three areas that influence the effectiveness of PM are, the design of work, the level of trust credibility between management and employees, and the employees’ willingness to participate. In line with Maslow’s (1954) need theory and the job characteristics model of job design, PM predicts a higher level of motivation, as it assists employees in fulfilling their three basic needs: autonomy, meaningfulness of work, and interpersonal contact. McGregor’s (1960) Theory Y can also be incorporated into this belief, as it holds the view that employees search for extra responsibility, want to be productive, want to achieve and are capable of problem solving. 1

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One of the best known supporters of PDM, comes form a Social Scientist, Rensis Likert (1967), who after years of research in organisations concluded that, better decisions are produced as a result of participation, and that those who make the decision are more likely to be committed to carrying them out than those not involved in the process. 4 He firmly believed that participation breeds more effective organisations. The majority of managers and subordinates he interviewed, believed that their organisations are more likely to operate effectively if leadership was shared, communication flowed freely, employees were encouraged to participative in ...

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