Participative Management Style and Its Impact on Productivity - Essay Example

Running Head: PARTICIPATIVE MANAGEMENT STYLE AND ITS IMPACT ON PRODUCTIVITY Participative Management Style and Its Impact on Productivity Glenda Burnett National University HUB 660 Table of Contents I Abstract …........................................................................................................................3 II Introduction …..................................................................................................................4 1 Purpose …...................................................................................................................4 2 Literature Review …...................................................................................................4 III Method …..........................................................................................................................7 IV References ….....................................................................................................................8 V Appendix ….......................................................................................................................10 Abstract Since the middle of the 1980s, the general productivity at workplace has been gradually declining. While the core reasons of such decline remained unclear, many professionals in organization studies pointed out the relevance and importance of the impact, which management style produced on productivity. The current research is designed to explore the specific links between management style and productivity. Special emphasis will be made on the interrelationship between dependent and independent variables, as well as the factors that change the quality and effectiveness of these interrelationships. The two research questions to be explored are: "What is the impact of management style on productivity?” and "How does a reward system influence executive function?" Participative Management Style and Its Impact on Productivity The link between management style and productivity is well recognized (Dorgan, Dowdy, and Pippin, 2006; Michael, 2002). What is more interesting to this researcher is the link between reward systems that managers choose to satisfy their organizational expectations and the impact of these reward systems on productivity. These reward systems grew out of a need to give workers an incentive to complete work satisfactorily. Incentives like bonuses, early time-off, and so forth, motivated workers to produce better results much more quickly than when there were no incentives (Camp and Lambert, 2005; Somaya, 2001; Schraeder and Becton, 2008). Beyond incentives, management and leadership style have been seen to also bring about productivity. There is a relationship between management style and the types of incentives they use that also has a bearing on productivity. There are several management styles that include the authoritarian, the participative and the autocratic and the permissive to name a few. This research seeks to measure the efficacy of the participative management style, both in terms of organizational output and worker satisfaction. In analyzing participative management style, it has been found that this type of leadership is also open to certain reward systems more so than other management styles. It is the hope of this research that a correlation will be found between participative management style, incentives and worker productivity. How these systems impact one another will also be explored. Review of Related Literature Exploring the relationship between management style and productivity is impossible without having a clear definition of what participative management style is and how managers use reward systems. Generally, authors define participative management as a system of goal setting and problem solving activities aimed to involve employees in operational decisions (Pattanayak, 2005). According to Fisher (1986), participative management is a flexible work design, wherein employees are given active decision-making roles so that barriers to their participation is minimized or eliminated all together. The philosophy of participative management is that the organization is striving to encourage equality between managers and employees (as a result gaining an increase in production), to secure full recognition of the human element. This in turn gives all staff stronger motivation to do their best and increases interest in the organization’s performance. (Pattanayak, 2005). It is not a secret that reward systems are effective elements that improve motivation and participation. The link between participative management style and productivity is extremely important for it provides a better understanding of what reward systems are and what type participative managers choose. It also creates an understanding of how productivity improves industrial relations in the workplace. This review of literature will define participative management styles, outline the reward systems that participative managers prefer to implement and report on their effectiveness in the workplace. Participative Rewards And Productivity Formbrun, Tichy and Devanna (1984) assert that an organization that wants to attract a mature and talented workforce will offer flexible compensation packages that are geared to draw exactly the types they want. The organization also will treat their employees well and motivate them to stay on the job over the long term. Bryson (2006) confirms that participative management style is associated with the choice of performance-based, profit-sharing, and gain-sharing systems, as the basis to increase the involvement of employees in all business operations. The relationship between performance pay and productivity has long been the subject of active organizational research. Kennedy (1995) identifies performance-based pay systems as those that boost employee morale and utilize employee competition for improved productivity. Azfar and Danninger (2001) support these findings, stating that participation management style and reward systems lead to better organizational cohesiveness, higher wage growth, improved rates of skill accumulation and, as a result, improved productivity. It should be noted, however, that the level of growth in productivity will depend on the extent to which employees are involved in the system of profit sharing or gain sharing. The greater the profit sharing fraction of the worker compensation, the greater the growth in productivity (Kruse, 1993). There is also a reciprocal link between profit sharing and participation, which can produce specific impact on the level and quality of productivity in organizations. In other words, when an employee has a high level of profit sharing and participation in decision making, they are more apt to have a high level of productivity as well. Levine (1990) states that increased participation can lead to increased demands for profit sharing, while increased profit sharing can demand greater participation. Nevertheless, participative management style, through gain sharing or profit sharing directly influences participation by being a stimulus for change and by causing positive psychological shifts in employees because they perceive themselves as more important and more valuable (Florkowski, 1987). Participative Rewards And Productivity: Factors And Influences According to the research, there are specific conditions and environments in which participative management would not work well or lead to improved productivity. As an example, a bureaucratic management style (Brown, 1992 where employees are not valued an their participation is not valued, would not improve employees knowledge. These employees often have excessive workloads and job stress and no incentives. Without incentives, employee morale may be low and they may fear that any decision making on their own may lead to problems in the workplace. Also, poor communication to employees in these situations may lead to low morale and lack of enthusiasm while working (Yohe & Hatfield, 2003). The effectiveness and positive impact of participative rewards in this environment would depend on whether there was a system of rewards and how employees saw the reward system as fair. Cooper, Bruno and Norman (1992) write that participation rewards can be deficient because not all workers participate in the plans inception. In some ways this can create a social dilemma because it only includes a few people in the planning process. In order for the incentive plan to be effective, it must have input from a majority of employees. Reed (2010) discusses the various motivations that make employees productive. Some of the things that Reed discovered was that money, recognition, job satisfaction, opportunities, and benefits are important to some workers. However, they are not important to all workers. Two of these, money and job satisfaction, are most closely related to productivity. However, money is not always a motivator in every situation. As an example, in a bureaucracy where decisions are generally made from the top down, and incentives to improve service are inadequate to warrant changing the status quo, money is not a motivator. In these situations, employees are more apt to come to work because they receive a paycheck but they may only produce the minimum of what is expected of them. This attitude suggests that employees are most creative when they have the ability to have a stake in what they are doing in an organization. This attitude also suggests that employees are people who must be intrinsically motivated to do a job rather than seeing a job as something they receive rewards for from the company necessarily. In order for money to be effective as a motivator, four conditions must be met, according to Reed: 1) money must be important to the employee, 2) the employee must perceive money as being a direct reward for performance, 3) the employee must perceive the marginal amount of money offered for the performance of work as significant, and 4) management must have the discretion to reward high performing employees with more money. Since it is unlikely (according to Reed) that all criteria can be met simultaneously, it is unlikely that money can successfully be used to improve performance. However, in situations where employees have a say in what happens in the company, the incentive for more money can be met with all of the criteria because of how management performs towards its workers. Most research on job satisfaction suggests that when employees are comfortable and like their jobs, they are more apt to perform their best. Employee job satisfaction predicts subsequent employee performance when other variables (education level and age, for example) are controlled. Job dissatisfaction is positively associated with poor work performance. (Reed, 2010). The National Business Research Institute conducted a survey for a large electronics retailer. The results of the survey identified three factors that drove employee perceptions. These factors appeared on 62% of the surveys. These three factors were: 1) management is approachable, and easy to talk with, 2) I am given the resources and equipment to do my job, and 3) management keeps me informed about important changes and issues. (Reed, 2010). These factors clearly fall into the participative management category, indicating that participative management styles are closely related to employee satisfaction and, indirectly, increased productivity. Hypotheses This study will be driven by three hypotheses. These hypotheses are discussed below. Hypothesis 1: There is a significant difference between management style and productivity in organizations, as measured by job satisfaction. Because there is a link between employee satisfaction and customer satisfaction, productivity, and financial results, productivity will be measured by the results of an employee satisfaction survey from Zarca.com. The survey will be taken online through a program called Survey Monkey, and the results calculated from those combined answers. Hypothesis 2: There is a significant difference in the productivity managers report based on their self-identified style of management. The survey used for this measure will be the one found in Appendix B. This survey will be taken online as well, and the results tabulated from the answers given. Hypothesis 3: There is a significant difference in the productivity of workers relative to perceived management style as measured by job satisfaction. The self-reported productivity measures as they relate to management style will be obtained from the results of adapted surveys by Greenberg and Arkaway, found in Appendix C. Secondary data will reveal the relationship between participative management style and productivity. In some cases, this relationship will be compared to other management styles. Management Theories Management style is based on four leadership theories, and these theories cover manager traits, manager behavior, management situations, and sources of power. Trait theories suggest that there are certain traits that a leader must possess in order to be effective. These traits include empathy, assertiveness, and likeability. Behavioral theories focus on what good managers do. This theory embodies the autocratic leader, who makes all decisions from a top-down model, to democratic leaders, who invite participation in the decision-making process, and laissez-faire leaders, who allow the team to make the important decisions without interfering. Contingency theories relate to the management situation. This theory supposes that there is no one correct type of leader and that managerial style is contingent on the situation needing control. Power theories posit that different kinds of power result in different kinds of leadership, and the willingness of subordinates to follow. Also, four distinctive leadership styles and their relationship to productivity will be discussed. The first is the bureaucratic leadership style, the style of those characterized by going by the book. The second is the democratic style, or participative management. The third to be examined is the transactional style, which focuses on short-term goals and compliance with directives. The fourth is the transformational style, which puts leaders in the position of having big ideas and the vision to look to the future while leaving the detail work to trusted subordinates. Method Design The study utilizes a combination of historical and analytical research methods. The first task will be the gathering of secondary data through reliable research databases such as JSTOR, EBSCOHost, High Wire Press at Stanford University, and SAGE Publications. These databases will be used to set a baseline for productivity measures by management style in several different organizations. Obtained results from this study will be compared directly to the database study results, and that comparison will determine one aspect of the significance of the results. The second task involves primary data gathering through survey results and case studies that will allow for an in-depth exploration of a participative management style on workplace productivity. The survey in Appendix A attempts to discover how respondents react to the changes, if there are any, in their respective companies and workplaces as a result of employee participation. Participants Manager surveys will be conducted with a minimum of twenty managers at different levels in different fields, such as healthcare, manufacturing, finance, and service/retail, within the local community. Employee participants will be chosen from among those supervised by the twenty managers in order to compare the results of the surveys and to correlate them. This will be a convenience sample of available employees who are willing to participate in the surveys. All participants will be chosen based on their fit for the information the research is looking for and their ability to participate. The researcher will conduct an initial screening to determine fit from those participants who show interest in the study. Procedures After the initial study of secondary data has been analyzed and a baseline established, the surveys will be taken online through Survey Monkey. There will be two types of surveys and they will be given according to whether the participant is a manager or an employee. Once the online surveys are completed, an analysis will be conducted that mirrors the secondary data analysis, and these results will be compared with the secondary data. Results Differing management styles have differing impacts on employee job satisfaction and on productivity, which is measured by job satisfaction. The results should show that there is a significant difference between management style and productivity, with the participative style of management yielding the greatest amount of job satisfaction, and productivity. There should also be a clustering of high-productivity around those management styles on the Management Style Matrix that are considered more participative in nature. As an example, on a matrix of individual scores, such as in the example below, most employee satisfaction scores would fall into the team leadership quadrant. Table 1: Matrix Section Plot your final scores on the graph below by drawing a horizontal line from the approximate people score (vertical axis) to the right of the matrix, and drawing a vertical line from the approximate task score on the horizontal axis to the top of the matrix. Then, draw two lines from each dot until they intersect. The area of intersection is the leadership dimension that you operate out of.  Table 2: Example The above sample shows score of 4 in the people section and a score of 6 in the task section. The quad where the two lines intersect is the leadership style, in this case -- Authoritarian section. The Results This chart will give you an idea of your leadership style: Impoverished (1,1 to 4,4): weak on both tasks and people skills Authoritarian (people - 1 to 4 and task - 5 to 9): strong on tasks, weak on people skills Socialite (people - 5 to 9 and task 1-4): strong on people skills, weak on tasks Team Leadership (6,6 to 9,9): strong on both tasks and and people skills Middle-of-the-Road (5,5): in the middle of the chart, but with more experience and skills can display good team leadership (From Clark, 2010). The results for Hypothesis 3 should show results in a positive direction for effective leadership. Discussion This study is difficult for several reasons. Productivity in the manufacturing sector is differently measured than in a hospital setting, and much easier to determine. In studying management styles, one finds the same varieties of managers in service contexts as one does in manufacturing contexts. Therefore, the measure of productivity chosen for this study is the measure of job satisfaction, which is fairly constant over work domains. A limitation of choosing the area of job satisfaction is that productivity has more than one variable. Another limitation is that managers will be self-reporting their management style. In an effort to look good for the study, some authoritative managers may minimize their true feelings about the kinds of management they do. Future research may benefit from focusing on one type of work setting, and then repeating it in others, rather than combining the results. This may provide a clearer picture of the effects of management style on the kinds of productivity expected for each context. It will also be helpful to find other and better ways of measuring productivity directly across work settings, so that a standard can be developed for each kind of manager style. References Azfar, O. & Danninger, S. (2001). “Profit-sharing, employment stability, and wage growth”. Industrial & Labor Relations Review, 54 (3), 619-630. Bryson, J. (2006). Managing information services: A transformational approach. England: Ashgate Publishing. Camp, S.D. and Lambert, E.G. (2005). The influence of organizational incentives on absenteeism: sick leave use among correctional workers. US Bureau of Prisons. Retrieved Sept 11, 2010. http://www.bop.gov/news/research_projects/published_reports/ prison_mgmt/sick_cjpr.pdf Cooper, C.L., Bruno, D. & Norman, F. (1992). Improving the Effectiveness of Gainsharing: The Role of Fairness and Participation. Administrative Science Quarterly, 37 (3), 471-490. DeBruin, W.B., Parker, A.M., & Fischhoff, B. (2007). “Individual differences in adult decision-making competence”. Journal of Personality & Social Psychology, 92(5), 938-956. Eisenhardt, K.M. (1989). Building Theories from Case Study Research. Academy of Management Review, 1989, Vol 14, No 4, 532-550. Fombrun, C.J., Tichy, N.M. & Devanna, M.A. (1984). Strategic human resource management. Toronto: John Wiley and Sons. Florkowski, G.W. (1987). The organizational impact of profit sharing. Academy of Management Review, 12 (4), 622-636. Kennedy, P.W. (1995). Performance pay, productivity, and morale. Economic Record, 71 (214), 240-247. Kenny, G. & Steiger, J. (1996). “The Participative Management Style: Does it Work?” Asia Pacific Journal of Human Resources, 19(2), 46-49. Kruse, D.L. (1993). Profit sharing: Does it make a difference? The productivity and stability effects of employee profit-sharing plans. Michigan: Up John Institute for Employment Research. Levine, D.I. (1990). Participation, productivity, and the firm’s environment. California Management Review, 32 (4), 86-100. McNamara, C. (n.d). Overview of leadership in organizations: Leadership styles, approaches, and domains. Free Management Library. Retrieved Sept 11, 2010. http://managementhelp.org/ldrship/ldrship.htm#anchor282848 Michael, R. (2002). Good human factors in management style increases profits and productivity. Ergonomics Today. http://www.ergoweb.com/news/detail.cfm?id=558 Nebeker, D.M. & Tatum, B.C. (2002). “Understanding Organizational Processes and Performance: A Continuous Improvement Model for Psychologists”. In R.L. Lowman (Ed.), The California School of Organizational Studies Handbook of Organizational Consulting Psychology: A Comprehensive Guide to Theory, Skills, and Techniques. San Francisco: John Wiley & Sons. Pattanayak, B. (2005). Human resource management. New Delhi:PHI Learning. Schraeder, M. and Becton, J.B. (2008). An overview of recent trends in incentive pay programs. The Coastal Business Journal. Vol 2, No. 1. Coastal College. Retrieved Sept 11, 2010 from http://www.coastal.edu/business/cbj/pdfs/articles/Schraeder-IncentivePay.pdf Somaya, D. (2001). Incentives, organizational choices and transactional challenges in software production. Conference presentation, Software and Business Method Patents Policy Conference at the German Marshall Fund, December 10, 2001. http://kahin.people.si.umich.edu/hawk/htdocs/SomayaGMF2.pdf Yohe, S.W. & Hatfield, L. (2003). Moderating factors in participative management. Proceedings of the Academy of Organizational Culture, Communications and Conflict, 7 (2), 33-38. An Overview of Recent Trends in Incentive Pay Programs Mike Schraeder, Auburn University J. Bret Becton, Auburn University-Montgomery Is there more to this? Appendix A Survey for Employees JOB SATISFACTION SURVEY Paul E. Spector Department of Psychology University of South Florida Copyright Paul E. Spector 1994, All rights reserved. PLEASE CIRCLE THE ONE NUMBER FOR EACH QUESTION THAT COMES CLOSEST TO REFLECTING YOUR OPINION ABOUT IT. Disagree very much Disagree moderately Disagree slightly Agree slightly Agree moderately Agree very much 1 I feel I am being paid a fair amount for the work I do. 1 2 3 4 5 6 2 There is really too little chance for promotion on my job. 1 2 3 4 5 6 3 My supervisor is quite competent in doing his/her job. 1 2 3 4 5 6 4 I am not satisfied with the benefits I receive. 1 2 3 4 5 6 5 When I do a good job, I receive the recognition for it that I should receive. 1 2 3 4 5 6 6 Many of our rules and procedures make doing a good job difficult. 1 2 3 4 5 6 7 I like the people I work with. 1 2 3 4 5 6 8 I sometimes feel my job is meaningless. 1 2 3 4 5 6 9 Communications seem good within this organization. 1 2 3 4 5 6 10 Raises are too few and far between. 1 2 3 4 5 6 11 Those who do well on the job stand a fair chance of being promoted. 1 2 3 4 5 6 12 My supervisor is unfair to me. 1 2 3 4 5 6 13 The benefits we receive are as good as most other organizations offer. 1 2 3 4 5 6 14 I do not feel that the work I do is appreciated. 1 2 3 4 5 6 15 My efforts to do a good job are seldom blocked by red tape. 1 2 3 4 5 6 16 I find I have to work harder at my job because of the incompetence of people I work with. 1 2 3 4 5 6 17 I like doing the things I do at work. 1 2 3 4 5 6 18 The goals of this organization are not clear to me. 1 2 3 4 5 6 PLEASE CIRCLE THE ONE NUMBER FOR EACH QUESTION THAT COMES CLOSEST TO REFLECTING YOUR OPINION ABOUT IT. Copyright Paul E. Spector 1994, All rights reserved. Disagree very mcuh Disagree moderately Disagree slightly Agree slightly Agree moderately Agree very much 19 I feel unappreciated by the organization when I think about what they pay me. 1 2 3 4 5 6 20 People get ahead as fast here as they do in other places. 1 2 3 4 5 6 21 My supervisor shows too little interest in the feelings of subordinates. 1 2 3 4 5 6 22 The benefit package we have is equitable. 1 2 3 4 5 6 23 There are few rewards for those who work here. 1 2 3 4 5 6 24 I have too much to do at work. 1 2 3 4 5 6 25 I enjoy my coworkers. 1 2 3 4 5 6 26 I often feel that I do not know what is going on with the organization. 1 2 3 4 5 6 27 I feel a sense of pride in doing my job. 1 2 3 4 5 6 28 I feel satisfied with my chances for salary increases. 1 2 3 4 5 6 29 There are benefits we do not have which we should have. 1 2 3 4 5 6 30 I like my supervisor. 1 2 3 4 5 6 31 I have too much paperwork. 1 2 3 4 5 6 32 I dont feel my efforts are rewarded the way they should be. 1 2 3 4 5 6 33 I am satisfied with my chances for promotion. 1 2 3 4 5 6 34 There is too much bickering and fighting at work. 1 2 3 4 5 6 35 My job is enjoyable. 1 2 3 4 5 6 36 Work assignments are not fully explained. 1 2 3 4 5 6 Appendix B—Management Style Survey _ Leadership Matrix Survey Objective: Determine a persons leadership style. This is accomplished by measuring the degree that a person likes working with tasks and people. Questionnaire Below is a list of statements about leadership behavior. Read each one carefully, then, using the following scale, decide the extent to which it actually applies to you. For best results, answer as truthfully as possible.   never sometimes always 1 2 3 4 5 1. _______ I encourage my team to participate when it comes decision making time and I try to implement their ideas and suggestions.   2. _______ Nothing is more important than accomplishing a goal or task.   3. _______ I closely monitor the schedule to ensure a task or project will be completed in time.   4. _______ I enjoy coaching people on new tasks and procedures.   5. _______ The more challenging a task is, the more I enjoy it.   6. _______ I encourage my employees to be creative about their job.   7. _______ When seeing a complex task through to completion, I ensure that every detail is accounted for.   8. _______ I find it easy to carry out several complicated tasks at the same time.   9. _______ I enjoy reading articles, books, and journals about training, leadership, and psychology; and then putting what I have read into action.   10. _______ When correcting mistakes, I do not worry about jeopardizing relationships.   11. _______ I manage my time very efficiently.   12. _______ I enjoy explaining the intricacies and details of a complex task or project to my employees.   13. _______ Breaking large projects into small manageable tasks is second nature to me.   14. _______ Nothing is more important than building a great team.   15. _______ I enjoy analyzing problems.   16. _______ I honor other peoples boundaries.   17. _______ Counseling my employees to improve their performance or behavior is second nature to me.   18. _______ I enjoy reading articles, books, and trade journals about my profession; and then implementing the new procedures I have learned. Taken from Clark, D. Leadership Matrix survey. _ http://www.nwlink.com/~donclark/leader/matrix.html__ Appendix C—Questions to Measure Positive Leadership Answer of a 5-point scale (1=strongly disagree, 5=strongly agree). 1. My Project Manager spends more time focusing on my weaknesses than focusing on my strengths. 2. My Project Manager appreciates my strengths. (Strength-Based question) 3. My Project Manager matches my talents to the tasks that need to be accomplished. (Strength-Based question) 4. My Project Manager lets decisions be made after input from all of us in the team. 5. My Project Manager encourages high performance by building on my strengths. (Strength-Based question) 6. In what ways does your Project Manager help you develop your strengths? (Open-ended Strength-Based question) 7. When a problem crops up on my project, I usually go to my Project Manager for help. (Perspective question) 8. When I have a problem, I avoid going to my Project Manager. 9. When a problem crops up on my project, my Project Manager is able to help me come up with solutions. (Perspective question) 10. My Project Manager can manage his/her emotions. (Perspective question) 11. My Project Manager makes all of the decisions. 12. What steps does your Project Manager take when a problem on your project arises? (Open-ended Perspective question) 13. My Project Manager lets me work independently, with unput only when I ask for it. 14. My Project Manager regularly recognizes project milestones. (Recognition question) 15. I would describe my Project Manager as a “cheerleader”. (Recognition question) 16. My Project Manager notices even “little” accomplishments. (Recognition question) 17. I know exactly what my Project Manager expects from me. (Recognition question) 18. I know that my Project Manager will recognize my hard work/devotion. (Recognition question) 19. My Project Manager regularly provides encouragement to me. (Recognition question) 20. My project manager takes all of the credit for accomplishments. Adapted from Optimistic Managers & Their Influence on Productivity & Employee Engagement in a Technology Organization Margaret H. Greenberg Mrs._ Dana Arakaway The International Coaching Psychology Review 2006 http://repository.upenn.edu/cgi/viewcontent.cgi?article=1003&context=mapp_capstone Read More