Participative management theory: strengths, weaknesses, and productivity evidence

Participative Management: analysis and literature review of a 1930's theory -- Does it still have relevance 21st century management

What are the strengths and weaknesses of this theory?

One of the strengths of the theory of participative management is that it enables organizations to eliminate unneccaary and costly layers of managerial bureaucracy. Through deploying the concept of team leadership and work teams, it can empower employees to make immediate, practical decisions rather than relying upon management. Thus, it creates a leaner managerial structure and a greater sense of loyalty to the organization when employees can be responsible for everything from hiring, firing, corrective action, budgeting, education and performance appraisals. Work teams are encouraged, with participative management, to "set goals that are congruent with those of the organization and develop goal implementation strategies." (Warner, 1998)

But particpatory management is not beloved by all management theorists. "The author of a book published in 1957 pointed out that employees for the most part have few needs related to greater productivity. He said this might explain why production increases more under directive than under participative leadership." (Taylor, 1986) Robert Lear of The Chief Executive (1992) peer-reviewed journal contends that participative management attempts have stimied productivity. Writing of the previous decade's infatuation with Japanese management theory, he notes "later in 1984, an extensive analysis of research data comparing participative management and productivity in Germany, Japan, and the United States found little evidence that a participative style resulted in any productivity increase -- at least in the United States." Participatory management may be culturally bound and more sucessful in nations such as Japan, with a high loyalty ethic to the collective. Moreover, when "dictatorial, hierarchical management is out," and managers coordinate rather than make decisions, "our companies have a whole wave of young managers who were raised permissively by their parents and went to progressive schools. They are only criticized occasionally and, certainly, never overruled. (Lear, 1992)

What research has validated this theory?

Management research always attempst to find a definite relationship between productivity and management style, whether authoritarian or particiapatory. "The problem is that some researchers have determined that authoritarian management is more productive." Others have found that participative management "leads to increased productivity," and both contrasting conclusions often come from similarly-conducted studies (Taylor, 1996) A 1953 examination of several boys' clubs concluded that productivity was somewhat greater under autocratic rather than democratic leadership. The opposite finding was validated in 1955, of the same boy's club. (Taylor, 1996)

The former Secretary of State, George P. Schultz was involved in an early 1950s study that reported a 41 per cent productivity gain during the first year of increased employee participation in one company. But field research described in 1956 showed hierarchically controlled groups achieving a greater increase in productivity than participatively controlled groups. But Staw and Epstien (2000) have noted that "a core assumption of institutional theory is that organizations act to enhance or protect their legitimacy," when a theory is newly put into practice, as in the Schultz study. (citing Scoff, 1995) This highlights difficulty of creating unbiased empirical tests of participatory theory to "measure directly any gains in legitimacy received by the organization." (Staw & Epstien 2000)

Once an organization has made an initial commitment to participatory management and work teams, a financial as well as an ideological commitment, there is an incentive to show that this commitment has been salutary on the part of management.

What are some examples of how this theory has been applied?

Robert Lear notes that in Japan, participatory management was deployed to great success in companies such as Toyota, enhanced by the strong collective ethos in Japanese society in general. Health care organizations have used work teams to enhance hospital autonomy, and hospitals "report increased cost savings and productivity and improved employee morale," with such a leadership style. (Warner, 1992) Experience with a hospital productivity improvement model developed in 1984 and implemented in a respiratory therapy department supported the notion that participative management is a vehicle for productivity improvement. (Taylor, 1996) However, organizations with less cohesive or professionally united staffs may not report such benefits -- again, the use of participatory leadership seems contingent upon such factors as professionalism, financial and loyalty incentives offered to the employees by the organization, and the character of the employees because of their shared culture.

Annotated Bibliography

Lear, Robert. (Sept 1992) "Dead Horses on the Company Lawn: fast decision making by avoiding a tendency to overrely on a participative or self-empowered approach to management - Speaking Out." The Chief Executive. Retrieved at Find Articles on 16 Aug 2005

http://www.findarticles.com/p/articles/mi_m4070/is_n79/ai_13606625

A critical look at participatory management in action, particularly in recent years, as it has become influenced by Japanese corporate management philosophy, and, in the author's view, created a sense of stagnancy and a lack of firmness in organizational decision making.

Mittler, James E. (Fall 2002) "It's not the management quality -- it's action." Journal for Quality and Participation. Retrieved at Find Articles on 16 Aug 2005

http://www.findarticles.com/p/articles/mi_qa3616/is_200210/ai_n9096483

"Survival of the fittest' overview of managerial styles, suggesting that employees gravitate to the marketplace that best 'suits them,' that is suits their unique needs as employees.

Staw, Barry M. & Lisa Epstein. (Sept 2000) "What Bandwagons Bring: Effects of Popular Management Techniques on Corporate Performance, Reputation, and CEO Pay

Administrative Science Quarterly. Retrieved at Find Articles on 16 Aug 2005

http://www.findarticles.com/p/articles/mi_m4035/is_3_45/ai_68217155

An explanation of participatory management research and overview of management research in general. Stresses the difficulty of obtaining unbiased research in management practice in general.

Taylor, Joe E. (May 1986) "Participatory management lifts lab productivity." Medical Laboratory Observer. Retrieved at Find Articles on 16 Aug 2005

http://www.findarticles.com/p/articles/mi_m3230/is_v18/ai_4193939

A discussion of how despite the ability to find empirical data, organizations continue to search for singular managerial theories to explain employee performance. The article contains an overview of participatory management research studies and the evolution of the theory.

Warner, Susan. (May 1998) "Beyond Participative management." Nursing Management. Retrieved at Find Articles on 16 Aug 2005 http://www.findarticles.com/p/articles/mi_qa3619/is_199805/ai_n8804493

A generally positive view of the theory, as it is specifically deployed in the context of health care organizations. The article also contains some suggestions for using participatory management in the health care field in a 21st century organizational context.