THE EFFECT OF EMPLOYEE PARTICIPATION IN DECISION MAKING ON ORGANIZATIONAL PERFORMANCE

CHAPTER ONE

INTRODUCTION

1.1 BACKGROUND TO THE STUDY

Participation of employee describes the involvement of employee in decision making which is concerned with shared decision making in the work situation [Mitchell, 1973]. [Locke & Schweiger, 1979] defines employee participation as a joint decision making between managers and subordinates. According to [Noah, 2008] it is a special form of delegation in which the subordinate gain greater control, freedom of choice with respect to bridging the communication gap between the management and workers. It refers to the degree of employee involvement in organization’s strategic planning activities. A company can have deep or shallow employee participation in decision making [Barringer & Bleudorn, 1999]. The employee participation in the planning process leads to potential innovation, which may facilitates opportunity and recognition in the organization [Zivkovic et al, 2009].

Managers provide opportunities for participation of subordinates in decision making on the basis of their merits as it has been proved by researchers to have improved organizational performance [Witte, 1980; Sagie & Aycon, 2003] The advantages of employee participation in an organization: 1. It increases employee’s morale and enhances the productivity [Chang& Lorenzi, 1983] 2. It provide employees the opportunity to use their intellectual which will lead to better decisions for the organization [Williamson, 2008] 3. Employee participation contributes to trust and sense of control[Chang& Lorenzi, 1983] 4. As a result of employee participation, resources required to monitor employee can be minimized thus reduced cost [Arthur, 1994; Spreitzes &Mishra, 1999] 5. Employee participation in an organization maximizes the view points and give diversity of perspectives [Kemelgor, 2002] There are too many evidences that shows organizational’s performance increase with the increase in employee participation [Arthur, 1994; Da & Lewin, 1993; Denninson & Mishra, 1995; Productivity is the performance measure encompassing both efficiency and effectiveness, high performing and effective organization posses a culture of encouraging employee participation. Therefore, employees are more willing to get involved in decision making process, like goal setting, problem solving activities which results in higher performance [ Hellriegel, Slocum & Woodman 1998]. Encourage more modern participative style of management raise employee productivity and satisfaction even with low compensation rates [Madison, Wisconsin, 2000]. Job satisfaction increases productivity through high quality motivation and through increasing working capabilities at the time of implementation [Miller & Mange, 1986]. These were the evidences that participative working environment has more substantial effects on workers’ productivity.