Contents
Rights and Responsibilities of Decision Making
Components of Participative Decision Making
Management Implications
|
Employee-ownership companies each choose their own levels and kinds of participation, but they all must manage
people’s expectations about decision making. Drawing on their day-to-day experience owning
goods and other property, employee-owners expect a degree of decision-making authority. In fact, one academic
commentator notes that “it would not be uncommon for the employee-owner to equate ownership
with governance.” [1]
Companies that manage decision making explicitly and wisely can, over time, tap a greater share of their
work force’s human potential. Companies that do not consciously address people’s expectations may
well find increasing cynicism and distrust. This article provides conceptual tools and hard data to better
manage decision making.
Rights and Responsibilities of Decision Making
The desire to have a degree of input in decision making almost invariably arises when ownership of a company
is broadly shared with employees. The expectation of a right to participate in decisions is deeply rooted in Western
beliefs about ownership, and, by extension, employee-ownership.
Decision making, however, is a complex, multi-dimensional issue. While people may be clear that they expect
increased authority to make decisions, they may be less clear about the full meaning and implications of such authority.
Data collected from the Ownership Culture Survey or
OCS suggest that a central feature of decision making that many people overlook are the specific responsibilities
that decision-making authority entails. While ownership often does bring new rights, responsibilities are equally important
to a healthy ownership culture.
The concept of balance is central to our model of ownership culture. An ideal ownership culture has strong
decision-making rights paired with strong decision-making responsibilities. Figure 1 illustrates measures of decision
making from eight companies in the OCS database. Each pair of bars represents one company: the bar on the left
represents its “rights score” and the one on the right side is its “responsibilities score.” (100 represents the maximum.)
The graphic suggests that companies with higher rights scores tend to have higher responsibilities scores as well. (The
correlation coefficient is 0.71.) While this analysis is correlational and not causal, these results are consistent with our
theoretical orientation that rights and responsibilities tend to mirror one another.
Figure 1 also shows companies that are “out of balance.” Companies F, G, and H have nearly identical responsibilities
scores, but different rights scores. Company F is slightly “rights heavy,” company G is balanced (though not strong),
and company H is slightly “responsibilities heavy.” Our experience suggests that companies F and H are experiencing
particular dissonance that needs to be addressed. We will return to company H below.
Components of Participative Decision Making
Given the complexity of the decision-making process, the OCS separates it into components. Specifically, we
posit two types of decision-making responsibilities and three types of decision-making rights.
The first responsibility of decision makers is to take their authority seriously. We call this “active voice.”
They should invest the time, energy and thought required to make the best decision possible. They need to commit
to attending meetings, gathering information, and investigating alternatives. [2]
The second responsibility borne by decision makers is “responsible voice,” the key component of which is
recognizing other people’s expertise. [3] There need to be clear and
accepted boundaries between decision makers, recalling Robert Frost’s familiar aphorism that
“good fences make good neighbors.” With any given decision, it should be clear to all concerned
who makes the final call, who provides input and who receives information after the fact.
Producing this clarity is a major ownership culture challenge. This challenge is a process that
involves changes in both structures and attitudes. A set of training materials called
Frontiers and Boundaries: Managing Ownership Expectations
elaborates on the structural dimensions of this approach, which we label “Corporate
Constitutionalism.”
The kinds of decisions over which employee-owners potentially have rights fall into three
categories.[4]
1. Autonomy refers to decisions relating to the performance of day-to-day
job activities. Every day, employees make choices about rework, production speed, and
prioritization of tasks-this is the area they should expect the most freedom to make
decisions.[5]
2. The second category is participation, which refers to input over
local decisions. Depending on the company, this might be at the level of work team,
division, or shift, and can include activities such as team hiring or planning work
flow.[6]
3. By influence we mean company-wide decisions, such as acquisitions
or strategic direction. Non-managers should generally expect to have the lowest level of
input on these issues.[7]
The justification for employees having most control over decisions closest to their own
jobs is based on two principles. First, people should contribute to those decisions
which they will directly implement. Second, they should contribute to those decisions
which they best understand.
The Ownership Culture Survey measures
the three types of decision making. Figure 2 shows the overall scores for Autonomy,
Participation, and Influence for the companies in the OCS database.
In each case, the scores represent the extent to which employees perceive themselves
as exercising these rights. Each score consists of a composite of several survey items-
see the end notes for examples of the specific items used.
As expected, the chart shows that scores do tend to be highest for autonomy, lower for
participation, and lowest for company-wide influence.
Management Implications
A brief case study will illustrate these components of decision making and how
understanding them can promote effective management. We return to company H,
the responsibilities-heavy company of Figure 1. Employees at company H sensed
that, despite their motivation and abilities to contribute to the company’s
decision-making process, they were largely excluded.
Breaking decision-making rights down into components helps clarify the
situation. Participation scores were relatively strong. (Plant managers
had recently involved people in work scheduling.) On the other hand, Autonomy
and Influence scores were both very low. Supervisors were widely
perceived as micromanaging, and the work force felt that strategic decisions
“came out of a black box.”
As a result, company H took two steps: first, they implemented training to
help supervisors adjust to a new “coaching” role; second, they began inviting
two employees each quarter to observe board meetings. The results of their
actions are not yet clear, but managers are optimistic.
Survey results indicate a few general lessons for companies.
Building a participative culture is a multi-stage process.
A company that hopes to develop a strong ownership culture will try to
provide the opportunities and training needed to strengthen involvement at the
levels of Autonomy, Participation, and Influence. Companies
should, in general, begin with an emphasis on local decisions and gradually
determine if they wish to expand into higher level decisions.
Participative decision making pays off. When involved
in decision making, employees report higher levels of work effort, customer
orientation, and problem-solving. [8]
Rights and responsibilities reinforce one another. They
should advance in coordination to ensure that the company maintains balance,
so employee-owners accept decision-making responsibilities while they enjoy
new opportunities to use their skills and knowledge in improving their
company.
The Ownership Culture Reports are a series of working papers
published by Ownership Associates, Inc. Other issues available on the web include:
Trust and Ownership: Trust in Managers and Trust in Ownership, No. 1, May 8, 1998.
Ownership Cynics, No. 3, July 9, 1999.
Ownership and Motivation: What Does Ownership Mean to Employees?, No. 4, January 17, 2001.
Visit the Ownership Culture Report main page for more
information or to sign up for a free subscription.
Endnotes