Any successful company has a solid foundation of people. Companies can have the best products and services that have a ton of money, but it cannot be at its best without the employees behind it. Good business leaders value their employees more than anything, as they build the business up with their skills and service. More importantly, they hold a pool of knowledge that even the business owner might lack—but this knowledge usually remained untapped. Show Business owners make a lot of decisions, but sometimes, even through years of experience, people still lack knowledge in some areas. Additionally, businesses constantly need fresh ideas to keep from getting stale. This is where Participative Decision-Making comes in. PDM is the basic concept of power-sharing within an organization, where employers encourage employees to share and participate in decision-making. Imagine your boss genuinely asking for your opinion on a decision. Doesn’t it feel empowering and motivating? That’s why PDM is useful for HR departments—it can increase employee engagement because employees can feel that they and their views are valued and respected. For an employer, PDM is valuable to the organization because of the number of different ideas and opinions that they can acquire through it. Just several people from different walks of life can help a team achieve its goals, enhance relationships within the workplace, and induce constant learning. Researchers have found more benefits of PDM including:
There’s no one-size-fits-all style to PDM, though. There are different types of Participative Decision-Making, as decisions are made differently in each organization. Let’s take a look at each one and see which one you can apply to your company: Democratic Leadership. This is the type of leadership style in which members are encouraged to share their ideas and then synthesizes the available information into the best possible decision. Researchers have found that this style is usually the most effective and leads to better contributions from the group, as it produces a work environment that employees can feel good about—because they know their opinion counts and they can bring a real difference to the organization. Autocratic Style. Here, the leader takes the employees’ opinions, collects them and facilitates the conversation, but takes control and responsibility of the final decision. This is most effective during crises and emergencies where decisions have to be made quickly. Consensus. In the consensus participative decision-making style, the leader gives up complete control of the decision and leaves it to the members of the group to conclude the majority decision. Doing this requires teamwork, trust, and communication (and time, because it takes a while)—but it usually brings out the best decisions since it is well thought out. Consensus style improves goal-setting, problem-solving, and team-building among groups. Delegated by Expertise. Of course, not everyone is an expert at everything. Everyone has their area of expertise. Here, the leader delegates the responsibility to the expert of their area of concern so they can arrive at the best outcome. This style of decision-making process can help the group feel more creative and engaged in the process. Choosing the right style for your organization shouldn’t be a one-off. As HR practitioners, we always have to be mindful of the dynamics in our organization so we can decide on the right participative decision-making style (depending on the situation) that will improve our employee engagement and ensure that everyone in the company feels valued and respected. Participative decision-making (PDM) is the extent to which employers allow or encourage employees to share or participate in organizational decision-making.[1] According to Cotton et al., the format of PDM could be formal or informal.[2] In addition, the degree of participation could range from zero to 100% in different participative management (PM) stages.[2][3] PDM is one of many ways in which an organization can make decisions. The leader must think of the best possible way that will allow the organization to achieve the best results. According to Abraham Maslow, workers need to feel a sense of belonging to an organization (see Maslow's hierarchy of needs). Introduction"Participative management (PM) is known by many names including shared leadership, employee empowerment, employee involvement, participative decision-making, dispersed leadership, open-book management, or industrial democracy".[4]
The primary aim of PDM is for the organization to benefit from the "perceived motivational effects of increased employee involvement"[6] AdvantagesPM is important where a large number of stakeholders are involved from different walks of life, coming together to make a decision which may benefit everyone. Some examples are decisions for the environment, health care, anti-animal cruelty and other similar situations. In this case, everyone can be involved, from experts, NGOs, government agencies, to volunteers and members of public. However, organizations may benefit from the perceived motivational influences of employees. When employees participate in the decision-making process, they may improve understanding and perceptions among colleagues and superiors, and enhance personnel value in the organization. Participatory decision-making by the top management team can ensure the completeness of decision-making and may increase team member commitment to final decisions. In a participative decision-making process each team member has an opportunity to share their perspectives, voice their ideas and tap their skills to improve team effectiveness and efficiency. Participatory decision-making can have a wide array of organizational benefits. Researchers have found that PDM may positively impact the following:
By sharing decision-making with other employees, participants may eventually achieve organization objectives that influence them.[7] In this process, PDM can be used as a tool that may enhance relationships in the organization, increase employee work incentives, and increase the rate of information circulation across the organization[8] OutcomesThe outcomes are various in PDM. In the aspect of employees, PDM refers to job satisfaction and performance, which are usually recognized as commitment and productivity[9] In the aspect of employers, PDM is evolved into decision quality and efficiency that influenced by multiple and differential mixed layers in terms of information access, level of participation, processes and dimensions in PDM. Research primarily focuses on the work satisfaction and performance of employees in PDM.[2][10][11][7] Different measurement systems were applied to identify the two items and the relevant properties. If they are measured with different processes in PDM, the relationship is as described below:[10]
DisadvantagesOne of the primary risks in any participative decision-making or power-sharing process is that the desire on the part of the management for more inclusive participation is not genuine. In the words of Arnstein,
When PDM takes place in a team setting, it can cause many disadvantages. These can be anything from social pressures to conform to group domination, where one person takes control of the group and urges everyone to follow their standpoints. With ideas coming from many people, time can be an issue. The meeting might end and good ideas go unheard. Possible negative outcomes of PDM are high costs, inefficiency, indecisiveness and incompetence.[15] With participation comes dilemmas. Van der Helm, an independent futurist based in the Hague, The Netherlands, outlines ten major disadvantages in form of dilemma.[16] According to him, there are ten such dilemmas and the only way to deal with them is to use foresight. Ten dilemmas:
Types
Decisions are made differently within organizations having diverse environments. A PDM style includes any type of decision transfer from a superior to their subordinates.[17] PDM may take many forms and can run the gamut from informal suggestion systems to direct high involvement at the policy and administrative level. Most researchers agree that PDM is not a unitary concept. Somech[18] delineates five aspects of PDM: decision domain, degree of participation, structure, target of participation, and rationale for the process. Steinheider, Bayerl and Wuestewald cited Huang as separating PDM into informal and formal types.[4] Ledford[18] distinguishes between three types of PDM: Suggestion Involvement, Job Involvement, and High Involvement. High involvement PDM entails power and information sharing, as well as advanced human resource development practices. DemocraticDemocratic leadership, also known as participative leadership, is a type of leadership style in which members of the group take a more participative role in the decision-making process. Researchers have found that this leadership style is usually one of the most effective and leads to higher productivity, better contributions from group members, and increased group morale.[19] The democratic leadership style involves facilitating the conversation, encouraging people to share their ideas, and then synthesizing all the available information into the best possible decision. The democratic leader must also be able to communicate that decision back to the group to bring unity to the plan is chosen.[20] The democratic leader delegates authority, encourages participation, and relies on personal power (expert and referent power) to manage subordinates. The subordinates with democratic leadership:
When the workplace is ready for democratic leaders, the style produces a work environment that employees can feel good about. Workers feel that their opinion counts, and because of that feeling they are more committed to achieving the goals and objectives of the organization.[22] AutocraticIn an autocratic participative decision-making style, similar to the collective style, the leader takes control of and responsibility for the final decision. The difference is that in an autocratic style, members of the organizations are not included and the final outcome is the responsibility of the leader. This is the best style to use in an emergency when an immediate decision is needed.[23] ConsensusIn a consensus participative decision-making style, the leader gives up complete control and responsibility of the decision and leaves it to the members of the organization. Everyone must agree and come to the same decision. This might take a while, but the decisions are among the best since it involves the ideas and skills of many other people. Teamwork is important in this style and brings members closer together while trust and communication increase.[citation needed] Delegated by expertiseDecision makers cannot be experts in all fields. In such situations, the decision maker delegates full or partial responsibility of decision-making for a particular area of concern, to the expert on the team for best management outcomes. The participative leader retains the responsibility of final compilation of the draft responses from all. Such delegation is work specific and singular. It depends on the decision maker to compile the expert reports for the final response. Advantages of this type of decision-making process makes the group members feel engaged in the process, more motivated and creative. Expertise brings focused and result oriented solutions for BATNA (Best alternative to a negotiated agreement) as and when necessary. Best management outcomes are obtained by utilizing this strategy. An authoritative decision maker would have a higher rate of success than the Democratic decision maker. This strategy would be a disaster, when applied incorrectly or inappropriately is a major disadvantage.[citation needed] Concepts and methodsDimensionsAfter Lewin's early research on PDM in 1947, scholars started to explore different dimensions of PDM.[11] In 1988, it was indicated that six dimensions of PDM had been recognized and analyzed.[2] Those six dimensions are as follows:
Based on previous literature, Black and Gregersen also defined six different dimensions of PDM—rationale, structure, form, decision issues, degree of involvement and decision process—which can be seen in the table below:.[10]
Additionally, employee outcomes can also be evaluated according to six criteria:[7]
ForesightSome important constraints:[16]
Diamond modelAccording to Oostvogels' review[28] of the book "Facilitator's Guide to Participatory Decision-making" by Sam Kaner et al.,[29] the book is based on a concept called "The Diamond of Participatory Decision-making" which "... is a schematic representation of the different stages in time through which a team has to move in order to develop a solution that is satisfactory to all." Vigilant interaction theoryAccording to Papa et al., the vigilant interaction theory states that the quality of the group as a decision-making team is dependent upon the group's attentiveness during interaction.[30] Critical thinking is important for all group members in order to come up with the best possible solution to the decision. Four questions that should be asked:
Role of informationTo make a good decision, there needs to be a good amount of information to base the outcome on. Information can include anything from charts and surveys to past sales reports and prior research. When making a decision primarily based on the information you are given from your organization, one can come to a conclusion in four different ways.
Role of technologyA new kind of participative decision-making is communication through the computer, sometimes referred to as "Decision-making through Computer-Mediated Technology". Although a relatively new approach, this way can involve endless possibilities in order to reach a major organizational decision. There is a significant increase in more active and equal member participation. Individuals can talk to many other individuals at any time, regardless of geographic location and time zone. An organization can come together on a virtual site developed to make it easier to share ideas, share presentations and even have a chat room where anyone can add their input. Through a chat room, members of the organizations are able to see what everyone says and no one is blocked from offering their ideas. This method also allows for a convenient archival of past decision-making activities.[31] Some disadvantages of computer-mediated meetings are that sometimes feedback can be slow or there can be many conversations under way at the same time, causing confusion. Flaming (Internet) is another computer-mediated problem which occurs when a person uses inappropriate behavior or language while interacting with another person online. Additionally, members also feel less personal and related to their team members.[31] ApplicationsWhile PDM could conceivably be used in nearly any arena requiring decision-making, the specific examples below help to demonstrate that PDM is being used, where it is being used, and how that is occurring. EnvironmentAlthough participation in environmental decision-making processes can be granted or attained in many ways, and at many levels, one pivotal international instance establishing the rights of individuals to participate came via the Rio Declaration in 1992. In Principle 10, that declaration sets out that "[e]nvironmental decisions are best handled with the participation of all concerned citizens …" who have "... appropriate access to information concerning the environment held by public authorities …" who are then rightly afforded "… opportunity to participate in decision-making processes".[32] In Northern Germany, while regulations have been changed to favor more participative forms of decision-making, planning approval decisions for wind farms are still mostly centralized. However, in the implementation of the Water Framework Directive for River Basin Management, stakeholder advisory groups were formed, which provide input to working groups, to whom authority to decide issues by consensus has been delegated by the Federal Ministry of Agriculture, Environment, and Rural Areas.[33] China has long had a reputation for centralized control of most aspects of daily life. However, since the introduction and success of market reforms, other areas including those linked to the environment have experienced increased openness toward participatory decision-making. In the case of pricing, management, and provision of water services, the Chinese authorities have experimented with public hearings as a way of acclimatizing citizens to the changes in approach and opportunities for their participation, such that "…hundreds of formal public hearings on water tariffs have been organized within 30 provinces, excluding Tibet".[34] Holley (2010) discusses a review of the extent to which the aims of new environmental governance (NEG) in Australia, including provisions for increased public participation, are being realized. After examining programs at the national and state levels, it was concluded that "…in all but the most rare cases, there were substantial difficulties in fully satisfying the participatory aspirations of the three NEG programs."[35] While progress is being made in many areas to increase participation in environmental decision-making, as evidenced in Holley's example above, much work remains to be done. FinanceIn our modern world, PDM in business field of finance are mostly base on the three categories: Autocratic, Collective-participative and consensus participative. Most of the financial organization practices the first category which is the Autocratic; this is because leaders have little or no trust for their employees. The Autocratic category of Decision Making allow the leader to make decision entirely on his or her own without any impute from others and take full responsibility for that decision. This style of decision-making is usually the best choice in case of emergency according to leadershipmanagement.com the decision maker may lose credibility if the decisions lead to a negative result. Collective-Participative decision-making is mostly practice after the Autocratic produced a negative result in an organization, the leaders may use this style of participative decision-making to fix the problem. Though the Collective-Participative decision-making is one of the best styles in business decision-making, they seem to be less practiced in our modern organization. The modern organization leaders does not care much about their employees ideas but they do care much about the organization profitability, they also believe that making decision in this manner consume much time and may delay the organization from generating profit. Consensus style of participative decision-making is the less practiced style of decision-making in our financial organization because it consumes much time and requires much forbearance according to leadershipmanagment.com. MedicineIn medicine, patient participation in decision-making is commonly known as 'shared decision-making' (SDM). Non-profit organizationsOne particular issue is that of maintaining freedom of access to public information. See also
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