The main goal of an organization is to make profit. Therefore there is need for firm to have a strategy that reflects on its long term goals and this strategy should aim at configuring a firms resources, environment and its employees to enable it to meet its targets of making profits as well as the market demand and market expectations. Normative theory is a subjective, value laden and usually emotional theory that aims at changing the productivity of a business by increasing the welfare of the workers. Positive theory of business analysis on the other hand describes the current status of the firm or an organization without necessarily stressing on the ways to make it better. It is objective and is not emotional. It is based upon sound economic statistic methods and probability and it aims at providing the probable outcomes of taking an alternative decision. A firm must have a good strategy that can be able to address both the normative and positive questions before applying either positive or normative theory in their system. This is because while positive questions can easily be answered and settled using statistical methods, normative questions require their introduction into a firm and observing their outcome. Both normative and positive decision making theories are interlinked. Normative creates a hypothesis regarding people’s behaviors while positive tests the actual behaviors of people through statistical tools and methodologies. To determine whether workers should participate in management, control and profit sharing of an organization and whether this affects productivity, this paper will address this issue from a normative and a positive perspective.
This perspective involves improving the welfare of the workers. It implies that businesses, firms and organizations have a social responsibility. For a business to survive and continue making profits, the interests of the workers must be considered. Workers believe that they could perform better if their working conditions are improved. This perspective focuses on how an organization should look like and what should be done in order for a firm to continue making profit based on value and ethical judgments. This theory incorporates value judgment about how an organization should be and recommends how certain action policies should be undertaken in order to achieve specific goals. It stresses on the desirability of certain aspects of an organization in order to achieve certain goals. Concerning participation of workers in control and profit sharing, this perspective would look at the concern and welfare of the workers. It would therefore propose that if the all desires and welfare of the workers are met, the productivity would increase. That is to say, if the workers were involved in decision making, are incorporated I decision making and profit sharing, their work output would be more efficient and therefore the productivity of the organization would increase. This theory does not require scientific evidence to prove this.
Positive theory perspective
Though normative and positive statements are parallel, both statements must be combined in order to have a policy statement. The normative part involves deciding on what goals are desirable while the positive part involves deciding on the ways and means of achieving these goals. This perspective focuses on how an organization should look like and what should be done in order for a firm to continue making profit based on scientific formula, factual information and statistics. It includes describing, developing and testing of economic theories. This value free economics focuses specifically on facts and cause and effects relationship. In this regard it will focus on the facts or worker involvement in control, decision making and profit sharing in an organization. It establishes scientific behavior of the economy and therefore does not make emotional decisions. The decision by management to involve the workers in profit sharing or to give them part ownership of the firm is not based on the need to help the workers by improving their welfare but is based on the need of the organizations management to increase productivity and hence make more profits. Unlike in normative theory where the concern and care of the management on the welfare of the workers increases productivity, positive theory stresses the need of the organization first. The management therefore performs statistical and economic evaluation on the ways to best achieve this. If involvement of employees in the management of the organization and in profit sharing proves to be the best way to achieve maximum profit, the management embraces it. There are many studies which have been varied out and which prove that worker involvement increases productivity of an organization. Conte (1998) carried out a comprehensive study on the effects of productivity when workers participate in management, profit sharing and when they are part owners. The results of the findings are that profit sharing led to increased productivity of the firm. Other studies have shown that profit sharing leads to an increase in productivity as compared to their involvement in decision making (Estrin, 1987). Because these facts have been proven, workers should be involved in profit sharing as this has been shown to increase the productivity.
Incorporation of workers in decision making, ownership and profit can lead to an increase in the productivity of a firm. It is well known that entrepreneurs are the most motivated, productive and efficient workers. Their motivation arises from money influence. Therefore money is the greatest motivator of any worker. Once motivated, a worker becomes more efficient and this increases the productivity of a firm. The reason why entrepreneurs and self employed people will always be motivated is because the rewards they obtain from their businesses depend on their efforts and on performance of their businesses. Therefore ownership of a business will provoke the owner to work hard so as to increase the compensation that is obtained from the business. The same case applies to workers in an organization or a firm. To increase efficiency and productivity, the workers must be part of the organization. When the workers are part of the firm either through share ownership or otherwise, they will be motivated hence will work harder in order to get more money for both themselves and their families. By enabling the workers to be part of a business and also involving them in decision making and in profit sharing, a firm fulfills the desires of the workers and therefore it commits its self to moral principles. The commitment of a firm to the general concerns of the workers and the involvement in profit sharing leads to the development of mutual trust and cooperation from the workers and this leads to improvement in productivity.
Employees should be allowed to earn money from their efforts and not given money. By gaining a share of the profit for every production that they make, the workers will yearn to work even harder. Profit sharing will lead to overall change of the view of workers towards work. They would work more as this will lead to more pay and therefore the firm’s productivity will increase. This is because most workers will do what they want to do or what they are motivated to do.
Employees are the most important aspect of an organization. This is because they are the only part of an organization structure that cannot be copied. Competitors can copy the organizational structure, product and even technology but they cannot copy a well motivated and a highly charged workforce. Therefore motivated workers are core to the competitive advantage of a company. In today’s world, it is not the education and the competency of the top management that determine the productivity and the competitively of a business but it is the workforce. Employee involvement in the control of a business will also enable them to make major decisions on their own without necessarily consulting a senior person. By being part of the firm, the employees will be responsible and more creative and therefore they will involve themselves in activity that aim at improving the way things are done in that firm. Involving workers as shareholders makes them act, work and behave like investors interested in their investment and also as a member of the work force whose efforts and efficiencies will impact on his or her investment. This will in turn be beneficial to the firm as it will improve on the work design and lead to an increase the productivity (Gyan-Baffour, 1999).
Another benefit incurred by the firm is that worker share ownership and profit sharing involves tying wages to the profits. This means that the payments that the firm will pay the workers will be based on the performance of the workers. The workers participating in this scheme are also able to save on the income tax. Therefore they are able to save more. Share ownership also instills an element of economic literacy on the importance of shares and investment to the general workforce. This in turn encourages more investment in other firms and this is important for the growth of the economy. The performance at the work place is affected by the personal life of an employee. If the employee is comfortable and is living a comfortable life due to profit sharing, then his or her performance at the work place will be good and this will increase the productivity of a firm.
Workforce is diverse and involves people of different age, gender, ethnicity, religion, race, class and sexual orientation. These differences may make a firm to be slow in incorporating workers in management and control of an organization. However the management can change its approach to ensure that diversity does not affect its goals of incorporating workers in profit sharing and control of the organization (Shapiro, 2000). Negative ethnicity and racial discrimination may impact negatively on the efforts of a firm to incorporate workers in its control. This is because negative ethnicity and racial discrimination may affect an employee’s attendance and attachment to a firm (Jones, 2009). A strong attachment to a firm by a worker results from decreased withdrawal behavior in terms of absenteeism and turnover. This may be affected by discrimination in terms or race, religion, gender and age. There is usually a positive relationship between an employee commitment to an organization and achievement of desired goals.
There are some critics who propose that incorporation of workers in the control of the firm and also in profit sharing do not increase the productivity of a firm. Some of these critics claim that it is difficult to create a cooperative and trustful environment between the workers and the management. The schemes are unfavorable and unsuitable in harsh economic times e.g. during recession. During this time, the organization may be running at a loss and this will therefore mean that the workers will also share in the losses. This in turn affects the personal earnings of the employee.
The profit sharing schemes are mostly found in companies which are mature and well established. Therefore, this scheme is only limited to those companies which can be able to contribute to the profit sharing trust.
An individual’s merit, effort and performance are not appreciated in terms of remuneration. This is because the pay for all the workers moves up or down at the same rate. Due to the orientation towards profit, a firm’s overall quality may be compromised.