Participative Management

PARTICIPATIVE MANAGEMENT

AS A CATALYST FOR CHANGE

Today's business environment is subject to change. It is caused by limitless external and internal factors. It causes those involved to push aside traditions and supported ways of thinking, acting, living, and working together for new approaches. We trade in our current known environment for ambiguity and uncertainty. People create change, and are the targets of change. The obvious reason is that we will somehow benefit from the change. The change will eventually be of some importance in our lives, and our new views and actions will soon loose their ambiguity and unknown aspects. This will happen just in time for the next major change that throws everything back into turmoil. Therefore, how we learn to adjust to these changes is vital to our well being. The business world has developed many strategies and theories for change that are designed to aid the change process. These strategies are designed based upon the desired outcomes for the firm. In recent years businesses have tried to encompass a participative strategy to aid change and increase employee satisfaction, but the strategy is often spawned by a goal to decrease costs and in turn satisfy shareholders. Whatever the case may be, it is very important to have the right motives for the transformation. This paper will discuss the correct reasons for utilizing a participative management style. It will also provide information to support or negate the following question. Is introducing participative management an effective way to encourage and embrace change?

Before getting far into this debate it is important that we fully understand the main topic involved in our decision. Participative management encourages the employee to be involved in major change decisions and the decision making process. It empowers employees to be more efficient and cooperative. Studies have proven this style to improve employee relations and motivation in particular environments. Its existence has been well known for a number of years and it has been implemented into many successful organizations. Unfortunately it has also been a problematic decision for many organizations which did not fully employ the idea. Company's jumped on the bandwagon without considering whether their company was suited for the change and had large difficulties. Other companies just did not plan for the future and cut many employees during the process which they now need back. In all of these situations the reasons for adopting participative management were not fully thought out and understood when the company's made the jump. The next few pages will discuss some company's experiences with participative management.

The Ford Motor company is a good example of participative management (PM) done correctly. When PM was first introduced into the company there were common barriers to change. Employees were suited to their common practices and unwilling to voluntarily make the jump. Once the company got some practices in place and began involving employees in the actual processes PM started to become much more accepted, but there were always doubters. "The Resurrection of Ford" is an article which discusses Ford's problems leading to the change and positive effects after the changes were employed. After reading the article it is obvious that Ford implemented the changes effectively. Still there were those who doubted Ford's motives for the change. During the restructuring Ford faced the common task of downsizing it's workforce. Some suggested that the move to the participative structure was merely an excuse to cut costs on wages. Others that had not yet experienced positive changes experienced job insecurity issues and motivation problems. In Ford's case the participative management style did indeed cut some of its unwanted costs, but it has proven that the company took the new style very seriously and used it effectively to improve the long run performance of the organization. The Ford Motor Company is very proud of PM and boasts that the company's success is because of its people and its structure.

Bell Atlantic North has had a very different experience from that of Ford's. They got caught in an increasingly familiar trap. They launched a reengineering program to adopt a more participative management style and to decrease costs, but now find that they went too far. Negotiation with the union led to an offer by the company to buyout many of their employee's contracts when the restructuring occurred. The problem appeared in the fact that the company was not as successful as it hoped in reengineering and needed those employees. 14000 Bell Atlantic North employees said that they would seriously consider the lofty buyout that the company guaranteed it would offer them, leaving the company desperate for experienced employees in a low unemployment economy. Although the company has not expanded on why the restructuring was not as successful as planned, this situation is a scary thought. It shows that without the proper input and execution PM can lead to large problems. Other companies such as Boeing and Aetna Inc. ran into similar difficulties after restructuring. In all of these cases the firm's strategic intents were more focused on the cost cutting side of PM rather than the long term benefits of its internal effects.

Experience has shown that in order for a company to enjoy the full advantages of PM it must not focus on short term financial changes. Implementing participative management is a long haul deal. In the short term it will most likely burn up more costs during implementation than it will save on wages costs. Companies should be aware of the potential problems that could occur and focus on employee buy in. Once PM is properly integrated into the organization and things are running relatively similar to theory we can begin to prod at our question.

Emphasis needs to be put on how strategies diffuse throughout the organization. One study pointed out the importance of middle and lower level managers in strategy execution in ensuring that the strategy effectively "diffuses" throughout the company. The research focused on PM and whether or not it created a better environment for successful diffusion. Diffusion is the degree to which a strategy is effectively implemented and becomes an accepted part of the organization. It answers the question "how easily is the new strategy embraced by the organization?" The common belief is that the strategy being implemented