Managing Employee Performance. Employee Participation

Introduction

This paper is intended to offer an overview of how increasing employee participation will lead to increased performance. It is an attempt to explore the impact of increasing employee participation on the overall performance of an organization. The present knowledge economy requires a lot of investment in the human capital of an organization in order to compete effectively. We will first of all look at the different types of employee participation that are being used by employers to increase employee participation. Secondly we take a look at the different forms of employee participation used by employers. We will then take a look at reasons why an employer is willing to use employee participation in an organization to increase performance. Lastly we come up with a conclusion on the impact of employee participation on performance.

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Definition

Employee participation is a practice in which authority is mutually shared among persons who are uneven in the chain of command according to Wagner (1994). Employee participation is a way of enabling employees to take part in the running of an organization because their input is encouraged and eventually used for the overall good of the organization. It makes the employees work harder for their own benefit and that of the organization because the resulting improved performance brings in increased returns to the organization in the form of better profits. It also creates a sense of worth and belonging in the employees making them give more of their services to the organization. Of interest is employee involvement that also encompasses improving place of work policies and increase the result of operational changes beneficial to both the management and the workers. A study by Marchington et al. (1992) they have split the meaning of employee participation into three groups.

The first definition is whereby employees take part in decisions. This is a model whereby personnel gets a share of executive decisions in the firm. Those employees at the lower levels of the organization obtain part in decision-making. The second definition encompasses employees influencing actions that senior managers take. Normally it’s the duty of senior employees in the higher levels of an organization who make decisions that will be implemented. It involves linking organizational decision-making with the opinions and ideas of employees at various levels. It results in Equal authority to decide the result of decisions. In the third definition employees control over decision making. Any process through which a person or group of persons determines what another person or group of persons will do. The nature and level of employee participation depend on the following factors:

  1. Managers and representatives of the employees agree to exchange ideas and opinions.
  2. That employee representatives and managers develop within themselves a positive climate that enhances cooperation.
  3. That management and the employee representatives realize that there exist differing objectives and goals thus there is a need to find ways to pursue both of them simultaneously.
  4. That in the case of disagreements, there set guidelines that will be followed in order to solve the disagreements.

It is important to note that employee performance and the resulting effects on performance are influenced by:

  1. The kind of strategies that management adopts and the industrial relations that an organization thrives in.
  2. How well integrated are the employees and management objectives.
  3. The employees’ perception of management.
  4. How industrial relations structures are set in the place of work.

Miller and Monge (1986) discovered three models of employee participation namely cognitive, contingent and effective. It is worthy to note that employee participation gives rise to employee empowerment. Empowerment involves increasing an employees’ power to make decisions independently without outside interference in the activity that one is performing. Thus empowerment is associated with autonomy and freedom to do as one wishes. Goshal and Bartlett (1997) have described empowerment as a process of individualizing the organizational way of thinking. Empowerment and involvement have been described as components of employee participation as observed by Marshal and Stohl (1993). Employee participation has to be complemented by better communication between the employees and management. For employees to participate more productively there is need for the existence of communication channels that foster quick passing of information both up and down the organization’s hierarchy.

Forms of Employee Participation

There are three main forms of employee participation programs that a firm may use.

The first is Management-led employee participation. It involves giving employees an opportunity to give their ideas, opinions and suggestions during the decision-making process. Such involvement ensures adequate consultations with the best intentions for the overall growth of the organization. Senior management in an organization allows other employees in the lower levels to participate in making decisions that affect the organization. Employees in the lower levels of an organization are the ones who have direct contact with customers and consequently are aware of their needs. They are then in a better position to know how best to meet these needs creating customer satisfaction and eventually increasing profits for the organization.

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The second type is Financially-led employee participation. It encompasses offering employees a form of ownership of the organization. Ownership could be in the form of shareholding or profit-sharing schemes. Such ownership motivates the employees to perform at their best leading to increased overall performance for the whole organization. In profit-sharing, a plan is formulated under which an employer pays eligible employees, as an addition to their normal remuneration, a sum in the form of cash and or shares of the organization. It may also be in the form of a bonus for workers in the company as a result of overall measure of performance. From previous research findings, firms that practiced financial participation realized higher profitability than others that did not have such programs as a result of employee commitment.

The third type of employee participation is Representative participation as noted by Ben-Ner and Jones (1995). This one involves participation where employees form a group that expresses their views in a coordinated manner. Collective representation creates a sense of belonging to the employees resulting in improved performance. Representative participation most of the time is through unions that have the mandate to influence decisions made by their members. These unions could be organization-based or industry-based. Farnham and Pimlott (1995) found that workers in the lower levels of an organization and the unskilled and semi-skilled workers in different industries formed groups and unions respectively. Through these groups and unions the employees got represented by their respective leaders and their opinions and ideas were forwarded to higher management during decision-making processes.

Reasons for Using Employee Participation

Below are reasons why an organization will adopt employee participation programs and schemes. First it results in better productivity. Productivity is a measure of performance involving efficiency and effectiveness. An organizational culture that encourages employee involvement results in increased performance because the employees are involved in decision-making and solving problems that affect the organization.

Employers, who ensure that employees are well inspired, often will get the payback with high production and improved quality. Employers who acquire steps to make the most of communication and reduce the impediment of an employee input will boast of a stronger relationship. Participation creates autonomy and freedom thus making the time used in decision making be used in doing something else rather than it being used on numerous consultations and waiting of time as one waits for feedback. Secondly employee participation ensures production of high-quality output. Whether an organization’s output is good or a service, employees who participate in making decisions concerning an organization’s products and implement them will be motivated to produce high-quality products that compete well with others in the market. As noted by Blyton and Turnbull (1994) increasing employee participation was noticed to increase the quality of goods that an organization produced. Employees who got involved in all the stages of production of a good experienced higher esteem and appreciation of their input and as a result produced high-quality goods. If an employee knows that his idea will be used or get involved in the final good, he will make sure the good is of high quality so as to much his expectations.

The third reason is that employee participation encourages commitment from the employees towards the organization. Employee loyalty will guarantee the continued production and running of an organization. According to McNabb and Whitfield (1998), offering employees participation in assessment making, a monetary chance in the performance of the organization, disclosing information about investment plans and the organization’s financial situation and the development of communication channels between management and workers are all seen as encouraging loyalty and commitment. When an employer is assured of his employee’s commitment he is much more able to concentrate on his core business without worrying about employee dissensions or riots. Committed employees usually have the interest of the organization at heart and will go out of their way to ensure that goals are accomplished timely as expected. The fourth reason is that organizations that have employee participation programs had much higher rates of survival compares to other organizations without. This observation was made by Blair et.al (2000). Organizations that had employee participation programs enjoyed continued employee satisfaction which made them have better attitudes towards the organizations they worked in compared to other organizations that did not have employee participation programs.

These employees did not have divided attention over their work and as a result worked with minimum supervision making the organization survive over others as it experienced continued production and consequently continued profit-making. The fifth reason is that employee participation resulted in maximum utilization of skills that employees possess. This was observed by Pendleton et al. (1998) who found that employee participation in decision making allowed employees to fully utilize their skills and knowledge coming up with better-informed decisions. When an employee is allowed to give his opinion regarding any issue, he uses the knowledge that he has to come up with the best winning solution to benefit all who are involved.

Employee participation also allowed an employee to acquire new information and knowledge as he got to interact with other employees apparently that are in higher levels and from those lower than him. Participation encouraged communication hence an employee had increased chances of even meeting with other employees working in the other departments of the firm and as result end up learning more and expanding their scope of information and skills. The sixth reason for employee participation in the growth in employment that it produces. Organizations with employee participation programs had better chances of employing the best in the labor market and thus ensuring the most skilled manpower. This is because people looking for employment will be more willing to be employed in organizations that offered them participation schemes which would bring about job satisfaction. This was discovered by Quarrey and Rosen (1993).

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An employee would prefer to work for a firm that allowed him to maximally utilize his skills and at the same time enjoy autonomy, an environment that offered flexibility and financial incentives either in the form of profit-sharing or employee share ownership. Such a firm would use less time and resources during the hiring process. With increased profits, a firm was then able to even hire more employees as it tries to keep up with the resulting increased production.

Employee participation produces positive benefits for an organization as employees feel important and recognized. They enjoy more autonomy and freedom to utilize their skills and knowledge towards achieving of goals of the organization. Employees enjoy a better understanding of how the organization works because management keeps them informed of any activities that they need to know and their impacts on the organization. Participation creates a sense of belonging amongst the employees making them a valuable resource to an organization. Improved performance was thus realized both financially through increased profits and in the overall output as the firm produced more goods.

Essentially, employee participation is employer-driven and unitary in the relations with employees. Marchington et al. (1992) argue that during the previous decade, there has been a rebirth of business concern of improving communication with employees and the eventual involvement of employees in the workplace. According to the six factors exist that form noteworthy importance to employee participation and employee involvement.

Employee Participation makes the employee’s performance improve hence becoming more dedicated to their organization’s success. Also the managers will end up performing better because making decisions is shared resulting in better ones than those they would have made on their own. Employee participation also creates greater trust between managers and employees. This is because managers and workers will keep on consulting each other on matters that are affecting the organization. The employees will not feel left out on the ongoings of the organization.

Employee participation will also result in a reduced misunderstanding in the organization because frequent consultations increase employee job satisfaction. According to Towers (1993) employee participation through profit-sharing and share ownership by the employees helps to boost individual recognition with the organization resulting in commitment on the part of the employees towards corporate success. According to Farnham (1993), worker participation supports business success. This is accomplished by nurturing trust and a common obligation to an organization’s aim. He also noted that employee –participation demonstrated high opinion for an individual employee and enabled employees to acquire greatest job satisfaction.

Conclusion

Employee participation resulted in greater effectiveness, performance and output. Employers usually believe in possible profits that can be achieved as a result of a motivated worker. This is because a motivated employee produces at his best ensuring both efficiency and quality are upheld. Through employee participation, an employer is assured of his employee’s commitment. This means that production at his organization doesn’t stop ensuring continued profit realization. This augers well with the shareholders of the organization who are after shareholder maximization. Improved quality of products an organization is able to make will enable it to develop a positive brand placing it better in the market thus it is able to compete effectively.

Bibliography

Ben-Ner, A. and Jones, D.C. (1995), Employee participation, ownership and productivity, Industrial Relations 34.4: 532-554.

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Blyton, P. and Turnbull, P. (1994), The Dynamics of Employee Relations, Macmillan Press, London.

Farnham, D. (1993), Employee Relations Exeter, Short Run Press.

Farnham, D. & Pimlott, J. (1995), Understanding Industrial Relations. Cassell Pub.

Marchington, M. and Goodman, J. (1992) New Development in Employee Involvement, Department of Employment Research, Series No.2.

Towers, B. (1993) A Handbook of Industrial Relations Practice, Kogan Page Limited, London.

Wagner, John A. (1994) Participation’s effects on performance and satisfaction: A reconsideration of research evidence, Academy of Management Review.

Hyman, J. and Mason, B. (1995) Managing employee investment and participation, Sage Publications, London.

McNabb, R. and Whitefield, K. (1998), The impact of financial participation and employee involvement in financial performance, Scottish Journal of Political Economy.

Blair, Margaret, Douglas and Blasi (2000), Is employee ownership an unstable form? Or a stabilizing force? The Brookings Institution.

Pendelton, Andrew, Nicholas Wilson, and Mike Wright. (1998), The perception and effects of share ownership: Empirical evidence from employee buy-outs, British Journal of industrial relations vol. 36(1), 22-24.

Quarrey, M. and Rosen, C. (1993), Employee ownership and corporate performance. Oakland, CA: National center for employee ownership.

Miller, K. and Monge, P. (1986), Participation, satisfaction and productivity: a meta- analysis review, Academy of Management journal 29, pp727-753.

Goshal, S. and Bartlett, C.A. (1997), The Individualized Corporation, A fundamentally new approach to management, Harper Collins, New York.

Marshal, A.A and Stohl, C. (1993), Participating as participating: A Network Approach, Communication monographs 60, pp137-157.

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