Employee Participation and Increased Performance

Introduction

The paper discusses various definitions of performance management and employee empowerment, which in today’s world is considered to be an important tool to increase the overall performance of the organization. It is also mentioned that usage of financial benefits and the high salary packages cannot contribute greatly to the development of an organization. Instead, they should be mixed with the non-monetary benefits to produce greater results. The paper has also highlighted that the innovative way of thinking comes from empowering the employees. Japanese companies thrive on this notion which is why they have become market leaders in innovation and creation. The roles of every individual, department, and management are vital and so is their contribution; only then is the project of employee empowerment completed to its greatest extent.

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Performance Management

The function of Human Resource does not end at the recruitment of the employee; it continues and progresses till the employee stays in the company. The HR department is responsible for devising policies and strategies that help in shaping a company’s culture. Most importantly it is there to introduce the elements that enhance the culture, employee development, which eventually leads to increase in overall company performance. The overall process of linking the employee performance with the performance of the firm can be referred to as “performance management.”

A definition of performance management is provided to us by Cannell (2009) with reference to the definition of the term by Armstrong and Baron (2004). The term is defined as a course of action which aids in the “effective management” of individual employees, teams, and the departments which lead to “high levels of organizational performance”. It goes on by stating that it develops a mutual belief and understanding about the goals while training the people to make certain that the goal is achieved. The nature of performance management needs to be “integrated” to play a “strategic” role in the history of the organization. The “continuous” nature of the performance management is yet another important characteristic mentioned by Aguinis (p. 2, 2009).

The new concept of performance management differs greatly from the previous one, which only involved “informing the subordinate” with the results of his evaluation (Shields, p. 22, 2007). Now, he says firms involve numerous criterion, feedback systems, and external / internal elements when evaluating the performance of an employee.

Employee Empowerment & Participation

The days are gone when the employees were motivated on the basis of traditional motivational factors such as salary packages, benefit plans, and short / flexible working hours. Today, the employees focus is not only on the above factors but also on the internal working environment of the firm. The presence of features like interactive and participative management, friendlier working environment, flexible communication lines, employee empowerment, and team work play a big role in attracting and retaining a competitive human resource. All these elements describe the participation of the employees of a firm in decisions, processes, and even day-to-day operations. Researchers and authors readily agree that employee empowerment and participation will lead to an increase in the employee as well as overall organizational performance.

Employee participation techniques are divided into “material and immaterial forms” (Nerdinger, p. 107, 2008). The “material” form involves “financial participation” by enabling the employee to share in the “capital and profit” or by investing in “stocks.” “Immaterial” is the form of empowerment described above, which he also refers to as “psychological ownership.” The ownership in the stock or the profit of the organization enables the employee to think like an ‘owner.’ They take decisions which will maximize the benefits being offered ultimately leading to the maximization of organizations profits. The share in the profits of the organization makes employees feel that their hard-work has paid off. Financial and monetary participation tends to increase the “job satisfaction and work motivation,” but until and unless the “psychological ownership” is experienced the employees are unable to realize their potential.

The empowerment and the participation of employees, thus begins with the usage of participative management. As the name implies, interactive or participative management is when the manager and the employee interact to manage the business or the problem together, rather than the manager managing or dictating an employee. Alessandra and Hunsaker (p. 4, 2008) believe that non-interactive or aggressive behavior by the manager lowers the overall productivity. The interactive management requires the manager to play “the role of a counselor, consultant, and problem solver.” This they state will help in instilling trust between an employee and manager resulting in a “a win-win relationship” (Alessandra and Hunsaker, p. 7, 2008). When treated as production tools employees will rebel, whether it is passively or aggressively, disabling the organization in reaching its objectives. The trust, care, respect, and gratitude shown towards them will help all the participants of the firm. The authors believe that through participative and interactive management the organization can increase the performance of its employee while retaining a healthy and motivated workforce.

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“Participative” management is referred to as a “support for employee involvement” in relation with the decision making process (Thornburg, 1993). She believes that the “open communication” line and the concern of the management to hear the voices of its employees lead to “high performance.” Her research proves that the companies who have adapted employee participation in decision making process have witnessed “improved business results, better customer relations and service, increased job satisfaction, improved labor management relationships, improved quality of work life and continuous, responsive training.”

Empowerment and participation is not only important to improve individual employees performance, it also enables the groups to achieve a higher performance rate. Even in team work empowerment of the employees is necessary proves the study conducted by a few researchers (Liden, Wayne, and Bradway, 1996). The results conclude that the “task interdependence” and the “group empowerment” aids in enhancing the performance of the group as well as the individuals of the group. Another aspect that empowerment improves is the overall organizational performance. It has also been highlighted that the employee participation and empowerment leads to a “greater organizational commitment” resulting in a higher “quality of output” (Summers and Hyman, p. 10, 2005). Employees, on their own, are best at “organizing” their “work tasks” (Bryson and Millward, p. 29, 1997).The better understanding of the task and the process of its completion leads to a level of “optimum productivity.”

The advantages of employee participation can also be of financial nature. Evidence has shown that an increase in employee empowerment and participation can “can deter or delay quits and lower absenteeism rates” (Summers and Hyman, p. 10, 2005). The organization is able to minimize its hiring, training and development costs by retaining the loyal employees (Referenced by Kessler and Purcell, 1992). Lower rate of absenteeism will lead project completions and goal achievements without delays. The employees will remain loyal to the organization during the time of economical and financial hardships.

Since the employees are now empowered to voice opinions in the decision making process they feel attached to the organization. The culture of the organization becomes friendlier and the new elements are readily accepted. Since the decisions are made with participative management style, the employees to accept the decision without any doubts in their mind. They are more committed towards that decision because they also contributed in the process. As the commitment to the decision increases, the devotion to the goal of that decision also enhances. Job satisfaction is another element that increases with an increase in the level of empowerment (Bhatti & Qureshi, p. 57, 2007). They describe job satisfaction as “degree of an employee’s affective orientation” to perform its delegated individual and group tasks.

Workplace stress is very common today more than ever. This form of stress can cause high levels of absenteeism, low productivity, delays in meeting project deadlines and even resigning. By empowering employees to take their decisions, work on their pace, and achieve personal and organizational goals workplace stress can be reduced. The stress is usually generated by the workload, the autocratic attitude of the top management, the traditional cultural values, the high goals set by management and the inability to voice opinions. By increasing employee participation all these elements are minimized, thus leading to a stress free work environment.

Through empowerment employees are able to enhance their on-job learning options (Wood, p. 13, 2007). They are more participative and open towards the training sessions organized by the top management and the HR. This saves the cost of conducting training sessions with empty rooms. The HR department is able to play its role to the greatest extent when this form of management is successfully adopted.

According to Stanton (p. 1, 1993) American companies are “intrigued” by the way Japanese companies operate and their “management styles.” Therefore, it has become imperative to them to study and understand how these Japanese organizations operate even in America, which is why companies like “Nissan, Honda, and Toyota” are constantly visited by “American executives.” The American executives have found that these organizations point towards one thing to increase “organizational effectiveness.” They all recommend the usage of “employee empowerment” and “employee participation.” It is through the empowerment of their employees that their real capabilities become obvious. This leads to the innovative culture of these organizations, which is their core competency.

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A survey on the “Workplace Management Survey On incentives conducted by Workplace Program Management and Wellness Junction” shows an increase in the number of managers who encourage and instill employee participation through “incentives and rewards.” During 2003 only 54.7% of the managers were using this technique, however by 2008, this number has gone up to 70% (Gathright and Rodman, 2008).

Bhatti and Qureshi (p. 63, 2007), prove through their research and study that employee participation has positive effects on employee commitment, job satisfaction, and employee productivity. When an employee feels empowered he is much more satisfied with his work as he can take his own daily decisions rather than relying on his bosses words. A satisfied employee feels committed to complete his work to prove to himself and his superiors that he is able to handle pressure on his own. The increase in commitment and satisfaction leads to an increased performance of an employee. When every individual employee starts to improve his or her performance the overall performance of the organization increases. Thus, the empowerment of the employees at all levels is the key towards an increased organizational performance.

Effects of Employee Participation
Figure 1: Effects of Employee Participation (Bhatti and Qureshi, p. 63, 2007)

Conclusion

The empowerment of employees and the usage of participative management is no longer a competitive advantage or a unique aspect in today’s world. Firms are employing various forms of employee participation to retain their workforce. This aspect has been known to work more than any other management style in the history of firms. The Human Resource department plays a major role in enabling the adoption of employee participation by devising the rules and regulations. The department devises and implements the strategy, while trying to aid its employees in adapting the participative management style. The commitment from the top management to the policies of HR is essential to achieve the objective. The implementation and adoption is a top-down process where the top management instills the spirit of empowerment and participation in its subordinates.

The usage of monetary participation by the employees gives them the place of ownership in the stocks or profits of the organization. Financial benefits of such sort aid them in making better decisions, considering financial and economic options, and devising plans to achieve the best for the owners. However, if only monetary benefits are used and the “immaterial” aspect of the empowerment is not introduced the productivity and performance level will not increase. Instead, the employees would be even more stressed and worried as they are not involved in the decisions about their money. Once the employees are immaterially empowered they will be highly motivated and committed (Nerdinger, p. 107, 2008).

Researchers and authors have constantly studied the impact and the relation of the employee empowerment with the overall organizational performance. Shockingly, they have found that employee empowerment does not only enable the commitment of the workforce towards the organization but it also leads to the satisfaction of the workforce. The relationships between the managers and subordinates are also of friendly nature, thus avoiding the push and pull between a traditional employee and manager. Once the workforce is satisfied and committed the manager start witnessing increase in the number of the organizational performance. Employee participation does not only give rise to the committed workforce but it also introduces an excellent form of competitive advantage: innovation. Since employees are involved in the decision making process they contribute their ideas freely to the top management. The employees at lower levels are the ones responsible for production; therefore they also have ideas about the production of these innovative products. Leading to an opening of more ways for the organization through innovation and creation of new products and services (Bhatti and Qureshi, p. 63, 2007).

Another effect of empowerment is the opening of communication lines horizontally (downward and upward) and vertically (Thornburg, 1993). This means that the information flows freely from top management to subordinates and from the bottom of the tier to the top levels of the organization. The people in operations, production, and sales department are the first ones to learn about the changing trends, demands, and values of the market. By facilitating the free flow of information in all directions the top management can learn about the changes in the society, enabling the firm to act before its competitors.

The biggest and the most valuable advantage of empowering employees is the quick and responsive decision making. The process of decision making speeds up as the employees empowered to make day-to-day decisions without the approval of the top management. Also, the top management does not have detailed knowledge of the operations conducted by individuals, letting the employees decide lessens the workload of the management (Thornburg, 1993). The management and the HR should continue promoting participative management, even if the employees at the bottom level make mistakes in the beginning. Employees are investments of an organization and the mistakes made by them should be looked at as training costs rather than losses. The only problem and issue firms need to deal with is the effective way of empowering every level of their organization. Firms can resolve this issue through research and study, and once they have reached the optimal way of implementing employee empowerment they will start reaping the benefits. The firms need to adapt participative management and employee participation because after all employees don’t make organizations, they are the organization.

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References

Aguinis, Herman. Performance Management. NJ: Prentice Hall, 2009.

Alessandra, Tony., and Phillip L. Hunsaker. The New Art Of Managing People: Person-to-person Skills, Guidelines, And Techniques Every Manager Needs To Guide, Direct, And Motivate The Team. New York: Free Press, 2008.

Armstrong, M. and Baron, A. “Managing performance: performance management in action.” London: Chartered Institute of Personnel and Development. 2004.

Bhatti, Komal Khalid,. and Tahir Masood Qureshi. “Impact of Employee Participation On Job Satisfaction, Employee Commitment And Employee Productivity.” International Review of Business Research Papers, Vol.3, No.2 (2007): pp. 54 – 68

Bryson, Alex, and Millward, N. Employee Involvement in Small Firms: a review of the literature. London UK: Policy Studies Institute, 1997.

Cannell, Mike. “Performance management: an overview.” 2009. Web.

Gathright, Fiona., and Juliet Rodman. “Incentives Will Increase Employee Participation.” 365 Days of Wellness. BlogSpot. 2008. Web.

Kessler, I. and J. Purcell. “Performance related pay: objectives and application.” Human Resource Management Journal, Vol. 2, No. 3 (1992): pp. 16 – 33.

Liden, Robert C., Sandy J. Wayne, and Lisa Bradway. “Connections make the difference.” HR Magazine, 2009. Web.

Nerdinger, Friedemann W,. “Employee Participation and Organizational Culture.” German Journal of Human Resource Research, Vol. 22, No. 2 (2008): pp. 107 – 110.

Shields, John. Managing Employee Performance and Reward: Concepts, Practices, Strategies. UK: Cambridge University Press, 2007.

Stanton, Edwin S. “Employee Participation: A Critical Evaluation and Suggestions for Management Practice” SAM Advanced Management Journal, Vol. 58 (1993).

Summers, Juliette., and Jeff Hyman. Employee participation and company performance: A review of the literature. York: Joseph Rowntree Foundation, University of Aberdeen, 2005.

Thornbug, Linda. “Can employee participation programs really work?” HR Magazine, 1993. Web.

Wood, Stephen. “Employee Empowerment – the Key to Improving Performance & Promoting Innovation.” PowerPoint Presentation to The Future of Manufacturing in Ireland Conference: the Role of Partnership, 2007, Royal Hospital Kilmainham.

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