by way of tied and untied funds under various budgetary heads for implementing various

schemes.
This is an essential pre-requisite for each tier of the Panchayati Raj system to prepare plans for
its areas of responsibility, as defined through Activity Mapping, and then for all these plans,
along with plans of municipalities, to be "consolidated" by the District Planning Committees
(DPC) as mandated by Article 243 ZD of the Constitution.
It needs to be underlined that the Constitution does not provide for DPCs to prepare district plans
on their own, but to "consolidate" local area plans drawn up at lower tiers in both rural and urban
areas of each district (A different provision of the Constitution covers district planning for
Metropolitan areas).
Lesson-22
Participative Management

Participative Management refers to as an open form of management where employees are

actively involved in organization’s decision making process. The concept is applied by the
managers who understand the importance to human intellect and seek a strong relationship with
their employees. They understand that the employees are the facilitators who deal directly with
the customers and satisfy their needs. To beat the competition in market and to stay ahead of the
competition, this form of management has been adopted by many organizations. They welcome
the innovative ideas, concepts and thoughts from the employees and involve them in decision
making process.
Participative Management can also be termed as ‘Industrial Democracy’, ‘Co-
determination’, ‘Employee Involvement’ as well as ‘Participative Decision Making’. The
concept of employee participation in organization’s decision making is not new. However, the
idea couldn’t gain that much popularity among organizations. Studies have shown that only 3-5
percent of organizations have actually implemented this concept in their daily operations.
Though the theory of participative management is as old as the institution of employees and
employers still it is not applied by a large proportion of organizations.
The idea behind employee involvement at every stage of decision making is absolutely straight.
Open and honest communication always produces good results both for organization as well as
workers. Freedom and transparency in company’s operations take it to the next level and
strengthens the basis of the organization. On the other hand, there are several companies that
straightway rule out the possibility of participative decision making process. According to them,
employees misuse their freedom of expression and participation in decision making as it
provides higher status to employees and empowers them.
However, there are many companies who have embraced this particular style of management and
are now getting positive results. Toyota is the best example. The company has been following
suggestion schemes and employee involvement procedures for over a decade now. The
management receives almost 2,000,000 suggestions and ideas every year and around 95 percent
of these are implemented by the company. Who is not aware of Toyota’s success rate? Around
five thousand improvements per year have made Toyota one of the fastest growing organizations
globally. The need is to develop and implement a comprehensive company policy and everything
works well.

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British Airways is another great example of participatory management. During economic
downsizing, employees’ suggestions helped them cut annual cost of their operations by 4.5
million pounds. This is just unbelievable. The company would have suffered from huge losses,
had it not adopted employees’ suggestions. It is right to some extent that employees can misuse
industrial democracy but with a proper management of HR functions, this problem can be solved
and the operations of organization can be taken to the next level.
Satyam is another great example. It has been implementing company-wide suggestion scheme,
‘The Idea Junction’, since 2001. A real-time web-based portal is present in Intranet that can be
accessed by all its employees all across the globe to support the entire life cycle of an idea right
from its generation till its implementation. The main idea behind adopting this management style
was to create values and bring sense of belongingness in the employees through ideas,
suggestions and complaints. The whole procedure is backed by a strong and comprehensive
reward policy that encourages employees to perform better each time.
Employee participation at each level of decision making process is not at all harmful if managed
efficiently. The whole process can be well coordinated and controlled by the sincere and honest
efforts of human resource managers.

PARTICIPATIVE MANAGEMENT

Participative (or participatory) management, otherwise known as employee involvement or

participative decision making, encourages the involvement of stakeholders at all levels of an
organization in the analysis of problems, development of strategies, and implementation of

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solutions. Employees are invited to share in the decision-making process of the firm by
participating in activities such as setting goals, determining work schedules, and making
suggestions. Other forms of participative management include increasing the responsibility of
employees (job enrichment); forming self-managed teams, quality circles, or quality-of-work-life
committees; and soliciting survey feedback. Participative management, however, involves more
than allowing employees to take part in making decisions. It also involves management treating
the ideas and suggestions of employees with consideration and respect. The most extensive form
of participative management is direct employee ownership of a company.
Four processes influence participation. These processes create employee involvement as they are
pushed down to the lowest levels in an organization. The farther down these processes move, the
higher the level of involvement by employees. The four processes include:

1. Information sharing, which is concerned with keeping employees informed about the
economic status of the company.
2. Training, which involves raising the skill levels of employees and offering development
opportunities that allow them to apply new skills to make effective decisions regarding
the organization as a whole.
3. Employee decision making, which can take many forms, from determining work
schedules to deciding on budgets or processes.
4. Rewards, which should be tied to suggestions and ideas as well as performance.

BENEFITS OF PARTICIPATIVE
MANAGEMENT
A participative management style offers various benefits at all levels of the organization. By
creating a sense of ownership in the company, participative management instills a sense of pride
and motivates employees to increase productivity in order to achieve their goals. Employees who
participate in the decisions of the company feel like they are a part of a team with a common
goal, and find their sense of self-esteem and creative fulfillment heightened.
Managers who use a participative style find that employees are more receptive to change than in
situations in which they have no voice. Changes are implemented more effectively when
employees have input and make contributions to decisions. Participation keeps employees
informed of upcoming events so they will be aware of potential changes. The organization can
then place itself in a proactive mode instead of a reactive one, as managers are able to quickly
identify areas of concern and turn to employees for solutions.
Participation helps employees gain a wider view of the organization. Through training,
development opportunities, and information sharing, employees can acquire the conceptual skills
needed to become effective managers or top executives. It also increases the commitment of
employees to the organization and the decisions they make.
Creativity and innovation are two important benefits of participative management. By allowing a
diverse group of employees to have input into decisions, the organization benefits from
the synergy that comes from a wider choice of options. When all employees, instead of just
managers or executives, are given the opportunity to participate, the chances are increased that a
valid and unique idea will be suggested.

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REQUIREMENTS OF PARTICIPATIVE
MANAGEMENT
A common misconception by managers is that participative management involves simply asking
employees to participate or make suggestions. Effective programs involve more than just a
suggestion box. In order for participative management to work, several issues must be resolved
and several requirements must be met. First, managers must be willing to relinquish some control
to their workers; managers must feel secure in their position in order for participation to be
successful. Often managers do not realize that employees' respect for them will increase instead
of decrease when they implement a participative management style.
The success of participative management depends on careful planning and a slow, phased
approach. Changing employees' ideas about management takes time, as does any successful
attempt at a total cultural change from a democratic or autocratic style of management to a
participative style. Long-term employees may resist changes, not believing they will last. In
order for participation to be effective, managers must be genuine and honest in implementing the
program. Many employees will need to consistently see proof that their ideas will be accepted or
at least seriously considered. The employees must be able to trust their managers and feel they
are respected.
Successful participation requires managers to approach employee involvement with an open
mind. They must be open to new ideas and alternatives in order for participative management to
work. It is important to remember that although the manager may not agree with every idea or
suggestion an employee makes, how those ideas are received is critical to the success of
participative management.
Employees must also be willing to participate and share their ideas. Participative management
does not work with employees who are passive or simply do not care. Many times employees do
not have the skills or information necessary to make good suggestions or decisions. In this case it
is important to provide them with information or training so they can make informed choices.
Encouragement should be offered in order to accustom employees to the participative approach.
One way to help employees engage in the decision-making process is by knowing their
individual strengths and capitalizing on them. By guiding employees toward areas in which they
are knowledgeable, a manager can help to ensure their success.
Before expecting employees to make valuable contributions, managers should provide them with
the criteria that their input must meet. This will aid in discarding ideas or suggestions that cannot
be implemented, are not feasible, or are too expensive. Managers should also give employees
time to think about ideas or alternative decisions. Employees often do not do their most creative
thinking on the spot.
Another important element for implementing a successful participative management style is the
visible integration of employees' suggestions into the final decision or implementation.
Employees need to know that they have made a contribution. Offering employees a choice in the
final decision is important because it increases their commitment, motivation, and job
satisfaction. Sometimes even just presenting several alternatives and allowing employees to
choose from them is as effective as if they thought of the alternatives themselves. If the
employees' first choice is not feasible, management might ask for an alternative rather than
rejecting the employee input. When an idea or decision is not acceptable, managers should
provide an explanation. If management repeatedly strikes down employee ideas without
implementing them, employees will begin to distrust management, thus halting participation. The

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key is to build employee confidence so their ideas and decisions become more creative and
sound.

CONCERNS
Participative management is not a magic cure for all that ails an organization. Managers should
carefully weigh the pros and the cons before implementing this style of management. Managers
must realize that changes will not take effect overnight and will require consistency and patience
before employees will begin to see that management is serious about employee involvement.
Participative management is probably the most difficult style of management to practice. It is
challenging not only for managers but for employees as well.
While it is important that management allows employees to participate in decision making and
encourages involvement in the organization's direction, managers must be cognizant of the
potential for employees to spend more time formulating suggestions and less time completing
their work. Upper-level management will not support a participative management program if
they believe employees are not meeting their daily or weekly goals. Some suggestions for
overcoming this potential problem are to set aside a particular time each week for workers to
meet with management in order to share their ideas, or to allow them to work on their ideas
during less busy times of the day or week. Another idea that works for some managers is to
allow employees to set up individual appointments to discuss ideas or suggestions.
Managers should remember that participative management is not always the appropriate way to
handle a given situation. Employees often respect a manager that uses his or her authority and
makes decisions when it is necessary. There are times when, as a manager, it is important to be
in charge, make a decision, and then accept the responsibility for the choices made. For example,
participative management is probably not appropriate when disciplinary action is needed.
When managers look upon their own jobs as a privilege instead of as a responsibility, they will
fail at making participative management work. They will be less willing to turn over some of the
decision-making responsibility to subordinates. Another reason that participative management
fails is that managers do not realize it is not the same as delegating or simply shifting
responsibility. Participation alone has no value; it is only an effective tool if it is used to solve
problems and meet goals. Some managers believe that inviting employees to join in meetings
and form committees will create a successful participative management program. However, these
measures are only successful when employees' ideas are accepted by management and
implemented.
The larger the organization, the more difficult it becomes to institute a participative management
style. Large organizations have more layers and levels, which complicate effective
communication and make it difficult to register the opinions and suggestions of a diverse group
of employees and managers. Critics argue that unions are often more effective than participative
management in responding to employee needs because union efforts can cut through bureaucratic
organizations more quickly.
Participative management programs can be threatened by office politics. Due to hidden agendas
and peer pressure, employees may keep their opinions to themselves and refuse to tell a manager
if they feel an idea will not work. Managers also play a part in politics when they implement
participative management programs to impress their own bosses but have no intention of seeing
them through.
Many companies have experienced the positive effects of participative management. Employees
are more committed and experience more job satisfaction when they are allowed to participate in

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