INTERNATIONAL JOURNAL Of ACADEMIC RESEARCH

Vol. 3. No. 5. September, 2011, II Part

RELATIONSHIP BETWEEN MANAGEMENT STYLE AND ORGANIZATIONAL PERFORMANCE: A CASE STUDY FROM PAKISTAN
Maryam Rafiq , Dr. Saeed-ul-Hassan Chishti
1 2 1 2

MS at Szabist University, Islamabad, Assistant Prof. International Islamic University Islamabad (PAKISTAN) ABSTRACT

This was a descriptive study carried out in different banks of Islamabad. Instruments were used data collection tools. The participants of the study consisted of 100 people. The study revealed an impact of participative management on employee job satisfaction and performance. The research point out there is strong positive relationship among participative management and employee performance. However results show positive moderate relationship between participative management and employee satisfaction. The findings suggest that participative management apply more influence on employee performance than it does on employee job satisfaction. Participative management has considerable strong to moderate outcomes on employee job satisfaction and performance respectively. Key words: Management style, organizational performance, Employee satisfaction 1. BACKGROUND OF THE STUDY The concept of employees participation refers to, in general, the participation of the employees with non-managerial functions in the process of making decisions in the organization (Joseph & Franklin, 1974), considering an interests union between the employer and the employee (Alutto & Acito, 1974), in achieving the long term objectives for the organization and for the persons that work in the organization (Camelia, 2008). The participative management style involves a wide cross-sectional employees in various important decision-making of the organization (Sashkin, 1984). Yohe and Hatfield (2003) states that participative management style involve employee input, allowing the employees to resolve work-related issues. Participative management is utilized to improve work practices, productivity, and organizational performance (Vroom, 1960; Guthri, 2001).Many scholars argue (e.g Wagner, 1994; Finchman & Rhodes, 1994; Scott-Ladd et al. 2006; Bhatti & Qureshi, 2007) that employee participation is likely to increase job satisfaction and performance. Initially, it appears that participative management may lead to high employee job satisfaction and it does seem eminently logical that a happy employee is a better employee which may perform well in the organization. However, thousands of studies have been carried out seeking to establish a positive and unmistakable correlation between participative management, employee job satisfaction and performance with nothing conclusive being proven. The unfortunate consequence of this lack of a clear cause and effect relationship, as Dogan (2009) notes, is that when management discovers there is no guarantee of a one-to-one correlation between participative management, employee job satisfaction and performance interest usually wanes. The investigations studied (presented below) shows that the results about the relationship between participative management and employee job satisfaction and performance are mixed. This relationship is neither certain nor well understood. It has remain unresolved, and inconsistencies in the broader literature on participation make it reasonable for theorists to question whether research has shown evidence of substantial relationships between participative management and satisfaction or performance. The research basically aims at resolving the question that "Does the participative approach to management pay off in terms of employee job satisfaction and performance?" Research results in this area would clarify the relationship. Participative Management Style Participative management has been a growing area of enquiry and debate ever since the seminal work by Lewin and his colleagues. Participative management has been called the "third managerial revolution" (Alutto & Acito, 1974). Scholars have noted that it has become a major social, political and economic issue throughout the world, in a variety of organizational environments (Vroom, 1960). In recent years, the concept of participative management has become a focal point of interest among both scholars and practitioners of administration. Its acceptance has coincided with the increasing contribution of the behavioral science to managerial thought (Powell & Schlacter, 1971). Reportedly there has been a growing movement towards more "participative" methods of decision making. Academicians and practitioners have endorsed participative methods in areas as different as the organization of work and government regulation (Cooke, 1994). Participative management, employee job satisfaction and performance have received considerable attention from psychologists, sociologists and various management scientists. Three thousand studies have been done on these topics by the time Locke prepared his study nearly 20 years ago (Locke & Schweiger, 1979). Organizational change and innovation are not simply a matter of front end planning and back end implementation. Similarly, participation is not just about decision-making process that starts with executive decisions and

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ends up with employees deciding to accept or reject a change. It is more about formulating important decisions outside the planning process and on specific basis by both the management and employees (Perillo, 2008). Participative management can be described as a process in which employees are engaged as motivated co-producers of a better future. It speaks of mutual trust where employees are acknowledged as valuable contributors and co-owners to help develop better decisions. Participative management and autocratic management style are contrary to each other (McCaffry et al., 1995). In evaluation, the participatory approach has been defined as "social research that involves trained evaluation personnel (or research specialist) and practice-based decision makers working in partnership. This approach implies collaboration between facilitators, researchers, or professional evaluators and those who have stakes in the program, project development, or entity. Thus, all groups whose interests are affected by the objective of the evaluation must be involved (Julnes, 2001). In todays intensely competitive global environment, there is a strong demand for workforce participation in organizational decision making to enhance individual performance enabling the achievement of higher productivity of an organization. One aspect of workforce participation is job satisfaction. Job satisfaction in general is defined as how many employees like or dislike their work and the extent to which their expectations concerning work have been fulfilled (Dogan, 2009). Locke (1979) has defined job satisfaction as a pleasurable positive emotional state resulting from the appraisal of ones job experiences. It is considered as positive affect of employees toward their jobs or job situations. Many advocate this definition as it has captured the effective nature of job satisfaction, which is something more like a feeling about ones job rather than their thoughts about it (Finchman & Rhodes, 1994). Job satisfaction is simply as the affective orientation that an employee has towards his or her work (Alutto & Acito, 1974). In other words, it is an affective reaction to a job that results from the comparison of perceived outcomes with those that are desired (Creevy, 1998). Furthermore, it is defined as the degree to which employees enjoy their jobs (John, 1994). Shortly, job satisfaction describes the feelings, attitudes or preferences of individuals regarding work (John, 1994). Researchers perceive job satisfaction as a general attitude, rather than specific or actual (Julnes, 2001). Therefore, job satisfaction varies across different jobs due to different personality attributes and dispositions, nature of job(McCaffry et al,. 1995), positive affectivity, time gap between different job satisfaction surveys, self-esteem and locus of control (Cam elia, 2008). Income, occupation and age had significant effects on job satisfaction at = 0.05 (Guthri, 2001). Huang et al. (2009) study shows that there are approaches of measuring job satisfactionsingle overall feeling towards the job or separate feelings towards different job facets. There is confusion over the exact definition of performance. However it is considered as an important criterion for organizational outcomes and success. The most commonly recognized theories of job performance are given by John P. Campbell and colleagues. According to psychological perspective, Campbell and colleagues described job performance as an individual level variable. Job performance is most commonly referred as whether a person performs their job well (http://en.wikipedia.org). Previous researches propose that participation in decision making affects work practices, rewards and conditions and these are associated with job satisfaction and effective performance. When employees affect the preexistence to work effort, such as problem solving, locus of knowledge, goal setting, satisfaction and performance are improved (Kim, 2002). Further it is discussed that the process is strengthened when employees needs are satisfied and put in towards attaining organizational goals and this as a result would add to satisfaction and employee performance (Scott-Ladd et al., 2006). 2. RESEARCH METHODOLOGY It was descriptive study. The study was conducted in different banks of Islamabad. 2.1. Objectives of the Study Objectives of the study were to: 1. Find relationship between management style and organizational performance 2. Assess link between organizational performance and employee satisfaction 2.2. Sample of the Study The sample was selected by using convenience sampling where the data collection was done from the employees of private banks who were conveniently available to provide it. Sample considered was 100 employees from private banks in Islamabad/Rawalpindi. Private Banks were only selected as participative management styles are more implicated in private banks than in public banks of Pakistan. 2.3. Instrument A single questionnaire (See Appendix) was distributed which was adapted from Scott, Bishop& Chen (2003); Kim (2002). The questions were carefully worded to avoid misinterpretation. The questionnaire layout was formatted in logical manner to ensure a higher response rate. Structured questionnaire were designed. Questionnaire includes only closed-ended questions. Questionnaire was comprised over three sections; first part consisted of questions in order to analyze the participative management style used in organization. The second part of questionnaire consisted of questions in order to identify job satisfaction of the employees. The third part includes assessing the job performance of employees.

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Data were collected from five private banks of Islamabad/Rawalpindi region through questionnaire. A pilot survey was done on 50 employees of these banks. Reliability of questionnaire was checked through Cronbachs Alpha that measures how well a set of items measures a single un-dimensional latent construct. The calculated Cronbach's Alpha was 0.894 for 27 items which is presented in Table 1. This value shows that there was consistency among the items and the questionnaire was reliable. Table 1. Reliability Statistics Cronbach's Alpha .894 N of Items 27

Results were analyzed by using the statistical analysis software named Statistical Package for the Social Science (SPSS) version 18.0. The demographic data included name of organization, department, designation, gender, age of respondents, duration of job. Correlation and linear regression tests were applied to analyze the variables where employee job satisfaction (JS) and performance (EP) were treated as dependent variable while participative management (PM) was considered as independent variable. Table 2. Descriptive Statistics Std. Deviation .49603 .50781

PM JS Valid N (listwise)

N Mean 300 3.378 8 300 3.650 6 300

The table 6 indicated that the Pearson correlation coefficient was 0.485; the significance level or (p value) was 0.000. The correlation between participative management and employee satisfaction was 48.5%. It shows positive moderate correlation between the variables. Table 3. Correlations PM 1 JS .485* * .000 1

PM

Pearson Correlation Sig. (2-tailed) Pearson Correlation Sig. (2-tailed)

JS

.485* * .000

**.Correlation is significant at the 0.01 level (2-tailed). The model summary table 3 reports a statistics that measures goodness of fit. This table includes the multiple correlation coefficients, R, its square R2, and an adjusted version of this coefficient. The multiple correlation coefficient, R =.485, indicates that there was a moderate correlation between participative management and employee satisfaction. In terms of variability in observed employee satisfaction accounted for by the fitted model, this amounts to a proportion of R2 =0.235, or 23.5%. It means that there was 23.5% of the variation in employee satisfaction (dependent variable) can be explained by the participative management (independent variable). This shows a positive and moderate relationship between the two variables. The adjusted R2 is an improved estimation of R2 in the population. Use of this adjusted measure leads to a revised estimate that 23.3% of the variability in employee satisfaction in the population can be explained by participative management variable. According to the regression model, the mean deviation is zero (positive and negative deviations cancel each other out). In the table error value was 0.44486 that is not very high. Durbin Watson is 1.621, measuring the auto correlation between independent variables. It is in the acceptable range i.e. 1.5-2.5.

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In todays competitive world every organization is trying to achieve its competitive edge and it is possible only through its human resource. To satisfy the employees and to motivate them to perform better at work has been the area of concern for many practitioners (Guthrie, 2001). One method used is through participative management style where employees are involved in the decision making of the organization. Researchers and academician are interested to find the impact of participative management in different areas of the organization. The study reveals the impact of participative management on employee job satisfaction and performance. Regression analysis was carried out separately for each dependent variable (employee job satisfaction and performance). The research point out there is strong positive relationship among participative management and employee performance. However results show positive moderate relationship between participative management and employee satisfaction. The findings suggest that participative management apply more influence on employee performance than it does on employee job satisfaction. Participative management has considerable strong to moderate outcomes on employee job satisfaction and performance respectively. REFERENCES 1. Alutto J. & Acito F. (1974). Decisional participation and sources of job satisfaction: A study of manufacturing personnel. The Academy of Management Journal, 17(1), 160-167. Retrieved March 15, 2010, from JSTOR Database, http://www.jstor.org 2. Bhatti K. K., Qureshi T. M. (2007). Impact of employee participation on job satisfaction, employee commitment and employee productivity. International Review of Business Research Papers, 3(2), 54-68. Retrieved Feburary 20, 2010 from www.bizresearchpapers.com 3. Camelia S. (2008). The problems of the participative decision process in business management. Munich Personal RePEc Archive. Retrieved February 25, 2010 from http://mpra.ub.unimuenchen.de/ 4. Dogan H. (2009). A comparative study for employee job satisfaction in aydin municipality and nazilli municipality. Ege Academic Review, 9(2), 423-433. Retrieved April 02, 2010 from http://eab.ege.edu.tr 5. Finchman R., Rhodes P.S. (1994). Motivation and job satisfaction. The individual, work and organization-Behavioral studies for business and management. Oxford: Oxford University Press, Inc., 1994. 6. Guthri J. (2001).High-involvement work practices, turnover, and productivity: Evidence from New Zealand. Academy of Management, 44(1), 180-190. Retrieved March 17,2010, from JSTOR Database, http://www.jstor.org 7. Sashkin M. (1984). Participative management is an ethical imperative. Organizational Dynamics, 12(4), 4-22. Retrieved March 12, 2010,from Wiley Inter Science Database, http://www.intersciencewiley.com 8. Scott-Ladd B., Travaglione A. & Marshall V. (2006). Causal inferences between participation in decision making, task attributes, work effort, rewards, job satisfaction and commitment. Leadership & Organization Development Journal, 27(5), 399-414. Retrieved April 02, 2010, from Emerald database, http://www.emeraldinsight.com 9. Vroom V.H. (1960).Some Personality Determinants of the effects of participation. Prentice-Hall, Englewood Cliffs, N.J. 10. Wagner, John III. (1994). Participations effects on performance and satisfaction: A reconsideration of research evidence. The Academy of Management Review, 19(2), 312-330. Retrieved March 26,2010, from JSTOR Database, http://www.jstor.org

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