Introduction
A company’s long-term success is determined by its ability to provide effective leadership. It is possible for Millennials and Generation Z personnel in the banking sector to continue to benefit from what baby boomers and Generation X have worked so hard to establish. According to Chillakuri (2020), Generation Z is a restless group that seeks quick answers and responses. They admire leaders interested in their work and are prepared to provide them with feedback regularly. They must be heard consistently, mentored, and shown the broader picture. Leadership styles traditionally used in the business sector include authoritarian leadership, participatory leadership, delegation leadership, transactional leadership, and transformational leadership (Kanwal, et al., 2019). Participative leadership is the most effective of these approaches and may be utilized most effectively in a banking setting to help workers grow and care more about the team. This need is especially true in today’s financial climate, as digital-only banks operate in a paperless and branchless format (Stonehouse and Konina, 2020). They, however, appear to be on their way to displacing the old banking system shortly. Because of the possibility of remote working, the problem of caring for a team, where it is possible that the team would never have met in person, becomes a challenge for managers in the banking sector.
The Millennials have emerged as the first generation to be fully digitalized, while Generation Z has given a whole new meaning to the digital world. However, despite obstacles that have paralyzed the globe, such as COVID 19, both generations have maintained a high level of participation. This trend has been observed in all events that influence the corporate and social worlds (Larjovuori, et al., 2018). Even though managing a team of Gen Z employees is much different from leading a team of baby boomers, Generation X, or Millennials, the participatory classic leadership concepts continue to apply across all generations and generations.
Participative leadership
Definition: Respect for one another underpins the Participative Leadership style. At its heart, it proposes that the ideal leadership style considers the opinions of others when making decisions (Gandolfi and Stone, 2018). The involvement and contributions of group members are encouraged by these leaders, who also assist group members in feeling essential and dedicated to the decision-making process. It is possible to integrate these critical concepts in a banking setting to assist employees in growing and caring more about their coworkers and the team. On the other hand, the leader keeps control over the group since they have the authority to allow for the input of others. A participatory approach to decision-making always characterizes this leadership style. It gives employees the ability to have a significant role in managing their enterprises.
History: Over the last few decades, research shows it has become increasingly fashionable to employ participatory leadership methods. In contrast, it has a history that stretches back to the 1930s and 1940s. As a result of this study, renowned behavioral scientist Kurt Lewin demonstrated the value of the participative leadership style in organizations; other researchers later confirmed conclusions (Burnes, 2020). By Lewin and his colleagues, the three primary leadership styles are democratic, laissez-faire, and authoritarian. Ronald Lippitt and Ralph K. White wrote about leadership and group life in their book “Leadership and Group Life” (Alsubaie, 2021). After conducting interviews with corporate executives and employees, Lewin, Lippitt, and White concluded that the democratic leadership style was the most preferred among subordinates.
Participatory leaders understand how to co-create and collaborate effectively with their teams. It is not a leader’s desire to be a hero by proclaiming authority. A participative leader values fostering an atmosphere where individuals can express their minds. This atmosphere, which is particularly important in a remote setting, enables employees to thrive in a virtual workplace and be more productive. Participative leadership has been advocated and emphasized by several experts. Likert is best the author of the Likert Scale, a measurement device that may determine how a particular assumption is accepted. There have been several methods of leadership theory applied to explore it since Lewin, Lippitt, and White’s research was conducted. The trait approach, the behavioral approach, contingency (situational) approaches, the role approach, and the development of leadership are some of the methods that have been developed.
Steps: Participative leadership is often organized around a series of broad steps. The first step is to have a group discussion about it. The leader’s primary responsibility is to monitor the process rather than dictate to the group as a reader. The leader fosters the conversation during a debate about the subject at hand or the choice to be taken. Second, the leader promotes the exchange of information among group members and any external sources that may be required. The group may then discuss ideas that will aid in achieving the team’s objectives and assist one another in their development. The following stage involves processing the thoughts that have been formed as a consequence of the available information. The group’s leader summarizes the facts and thoughts that have been shared. In participatory leadership, the ultimate decision is made by the whole group, considering all the ideas that have been given. Finally, the decision is put into effect by all organization members.
Types: There are four varieties of participatory leadership: consensus, collective, democratic, and autocratic. Consensus is the most common style of participative leadership. In consensus participative leadership, the leader does not have any additional influence over the other group members and instead serves solely as a facilitator for the group’s decision-making process. To conclude, all members of the organization must agree with one another. The same is true with collective participatory leadership, where the whole group bears equal accountability for the decisions. The leader will assist in facilitation, but the process and conclusion are ultimately the responsibility of the entire group. To move forward with a decision, a majority of the group must agree on it.
In democratic participatory leadership, on the other hand, the leader has greater authority than the group as a collective. The group makes ideas and proposals, and a vote on the conclusion may be held, but the final decision concerning what to do rests with the group’s leader. Autocratic participative leadership is comparable to democratic, participatory leadership, except that the leader has authority. The group’s thoughts are given less weight than those of the leader, who is given greater weight. Nonetheless, it is critical to remember that leaders did not govern without regard for their subjects’ well-being. This distinction is critical when contrasting autocratic leadership with totalitarian dictatorships. By participating in systems where the leader makes the ultimate decision, subordinates get the chance to understand why the choice was made and to challenge it.
Application in the Banking Services Business
Because business enterprises and other organizations are comprised of a large number of specialists, they are well-suited to the participatory leadership approach. Participative leaders may be productive in business regardless of their position as CEO or project manager if they surround themselves with experienced players. Organizations or businesses interested in applying participatory leadership practices can explore the spectrum of collective responsibility and power. The participative method works best with well-versed professionals in their fields and who can carry out their obligations with the most negligible supervision. According to this, employees in the banking sector and associated organizations should be encouraged to care more about their coworkers and team. Participatory leadership may be used in a banking setting to encourage employees to care more about their coworkers and team.
First and foremost, today’s banking industry is comprised of employees who are extremely technologically savvy. Managers who had trouble accommodating millennials now face another challenge in incorporating Generation Z into the teams. The new generation is the first generation to have grown up in the digital age. They are projected to drive technological adoption and disruption in the workplace and the economy (Nawaz, 2020). A desire to try something new is one of the reasons that many of them are joining startups and new-age enterprises in the first place. Their engagement is essential to keep these workers happy at work, and it may result in the formation of a strong team that genuinely cares about one another and the company.
The digital edge also presents a new challenge for banking sector managers who want to build teams with members who are both productive and enthusiastic about their work. At the same time, the adoption of new disruptive technologies in an environment of digital transformation increases the need to rethink leadership in businesses (Keow 2021). It also underscores the importance of the human being as the guiding principle in technical innovation, according to the World Economic Forum. The use of participative leadership, which is a leadership method that places actual people at the center of the leadership process, can aid in the resolution of these issues since it allows leaders to build working environments that are suited to the requirements of their employees.
What does it help employees thrive and form teams that care about one another?
Employee buy-in: One of the essential factors in keeping the finest personnel is the concept of employee buy-in. As a result of participatory leadership, workers feel a sense of belonging and are more inclined to support the organization’s goals. In addition to the organization, cooperation has been shown to promote employee satisfaction and improve business outcomes. Working in groups provides employees with additional possibilities to express their innovative ideas while also providing a better feeling of belonging. Finally, if people are involved in the decision-making process, they will be more willing to implement the changes.
Employees who feel like part of a team will have better morale than those who feel like they are working in a silo. Lower-level members of the group benefit from participatory leadership because they have a stronger sense of belonging (Rimmer, 2019). Employees with solid morale are more engaged, motivated, and productive, which is critical. They are willing to put in long hours and are more productive in their jobs than their counterparts. Employees who have poor morale, on the other hand, are less engaged and have higher rates of depression and heart disease. According to the American Psychological Association, this can cause low performance and mental illnesses such as stress and depression (Chenneville and Schwartz-Mette, 2020). Therefore, it is crucial while determining an employee’s prosperity.
Collective thinking: When we embrace collective thinking, we embrace more than just a variety of viewpoints on a single topic of interest. By including a diverse range of perspectives and ideas in the conversation, leadership increases the likelihood of receiving innovative and creative thinking. Problems may be handled in unexpected ways by incorporating input from all levels of the business, which may surprise even the most experienced executives.
A company’s capacity to prevent employee turnover, or the number of individuals who quit their jobs in a given period, whether they do so freely or are forced to leave their jobs, is characterized as employee retention (Chiat and Panatik, 2019). When leaders take the time to hear what members say, they will feel appreciated. As a result, group members are more likely to remain with an organization that values their contributions. They will have a strong sense of devotion to the company. Furthermore, feeling appreciated is associated with increased productivity.
Unity: Participative leadership encourages everyone to contribute to the company’s success by including them in the process. This unity can aid in developing a sense of belonging and oneness. On the other hand, some organizations encourage rivalry just under their industry’s existence (Shore and Chung, 2021). Participants who may be in direct competition for clients or internal opportunities are more likely to experience a sense of belonging when the entire group is working toward a similar objective. Workplace freedom refers to the fact that the individual is no longer required to function from a specific location or workplace. When group members have a say in decision-making processes, they often require less administration and monitoring when putting the decision’s conclusion into action. The commitment to promoting workers’ progress begins with the provision of freedom and autonomy in their job.
Leadership Development: For employees to truly flourish, they have to exhibit leadership skills. This development is a process that assists individuals in developing their potential to operate in leadership roles within organizations. Participative leadership provides the development of key leadership traits in leaders already in place while providing an environment to learn from other teammates (Bertrand, 2018). Since the rapidity with which technology has transformed the way we do business, today’s leaders must be enlisted to succeed. Through participatory leadership, a leader develops a strong sense of interest and curiosity about new trends and a readiness to listen, interact, and communicate with internal and external stakeholders. These improvements are made possible by providing employees with the opportunity to engage and, as a result, join forces with them. One cannot learn about every rising trend in the industry if one remains in a bubble of isolation.
Adaptability to change: Today’s professionals are both loud and collaborative, which allows them to function well in groups. They have been conditioned to a technical world where things change on a whim. Under the impact of participatory leadership, a leader may establish an atmosphere conducive to employee success while teaching them how to care for and respect one another. The behaviorist perspective also supports these. In psychology, it is sometimes referred to as behavioral psychology.
A theory of learning believes all behaviors are learned by contact with the territory and interaction with the surrounding environment. Observable stimulus-response behaviors are the primary issue in behaviorism. Leaders may sift through these patterns, notably what leaders can accomplish (Brandal and Thorsen, 2018). Participation-inducing behaviors and a flourishing culture may be fostered through effective leadership. It is more probable that employees will care for and support one another if they witness a member who is growing in strength.
Difficulties in putting participatory leadership into practice
Slow: The participatory leadership style might take a long time to become established. A lengthy procedure might involve putting together a big group, soliciting ideas and opinions, considering potential courses of action, and finally expressing the choice. However, in today’s age of technology and massive data processing, it is possible to overcome this difficulty. The use of technology allows managers to replicate findings that would have taken days in the past in a matter of seconds, saving valuable time.
Social pressure: Social pressure is caused by a variety of factors, including the need to fit in, poor self-esteem, fear of rejection, and, most importantly, the desire to feel comfortable and secure in the company of others. Lower-level group members may experience social pressure to comply with the preferences of the majority of the group or the desires of their superiors. It might be challenging to reach a democratic conclusion in some situations. On the other hand, great leaders can effectively control this process by regulating the social expectations of the group. Additionally, managers might use psychology professionals to assist members in caring more about one another and the organization overall. It can be time-consuming and expensive because of the amount of time that the participatory leadership style might require. Members of the group are unable to fulfill their daily obligations.
Sabotage: In today’s competitive business environment, opponents might act in all types of manner to hamper or hurt the decision-making process. Furthermore, if a determined individual is not dealt with properly, the entire process can be ruined instantly. Someone who has a personal vendetta against a team member or believes that alone knows what is best for the community can make participation in a participatory process extremely difficult. It may be necessary to use both tact and harshness in dealing with this scenario (Looi and Keightley, 2019). Similarly, incitement can make it difficult for members to truly care for each other.
Inefficiency: Organizational challenges can cause instability in the team. For example, any time and resources can be utilized to organize a large group of individuals and effectively gather views and ideas. Another source of inefficiency is the risk of being unable to make a choice. Furthermore, participatory management can only be effective if staff are ready to participate. Many factors may influence employees’ willingness to express their opinions. Perhaps they are naturally timid, do not enjoy group discussions, do not have enough information on the issue to contribute, or are simply disinterested in the conversation. In any event, managers will not achieve the desired objectives unless they have a motivated staff.
Conclusion
Today’s employees like leaders that are invested in their job and are willing to offer regular feedback. The most effective of these ways is participative leadership, which may be used most effectively in a banking context to help employees improve and develop a greater sense of team commitment. Banks that are entirely digital function in a paperless and branchless environment. They do, however, look to be on the verge of displacing the traditional banking system shortly.
Due to the potential of remote work, managers in the banking sector have the task of caring for a team that may never meet in person. At its core, participatory leadership asserts that the ideal leadership style takes people’s perspectives into account while making choices. The leaders of Gen Z employees promote group members’ engagement and contributions. Definition of participative leadership: Respect for one another is at the heart of Participative Leadership. Participative leadership is a decision-making process that involves all stakeholders. It enables employees to have a substantial part in the management of their businesses. Democratic, laissez-faire, and authoritarian are participative leaders’ three basic leadership styles. Participatory leadership dates back to the 1930s and 1940s.
Participatory leadership is frequently structured in terms of a sequence of significant phases. Participatory autocratic leadership is equivalent to democratic, participative leadership. Regardless of their position as CEO or project manager, participative leaders may be fruitful in the company if they surround themselves with experienced players. Leaders may use participatory leadership in the banking industry to motivate employees to have a greater sense of responsibility for their coworkers and team. The banking business of today is made up of very technologically aware people. The next generation of leaders will be responsible for the youngest age, dubbed Generation Z. Application in the Financial Services Industry Participative leadership is a style of leadership that puts actual people at the center of the process. It enables leaders to create work environments tailored to their workers’ needs. Participatory leadership instills a sense of belonging in employees and increases their willingness to support the organization’s aims. The digital edge creates new challenges for banking industry executives seeking to establish teams that are both productive and excited about their job. According to experts, participatory leadership can contribute to resolving these challenges.
Participative leadership enables the development of critical leadership characteristics in already-established leaders. A leader develops a strong sense of interest and curiosity about emerging trends through participative leadership. By including employees in the process, participative leadership enables everyone to contribute to the company’s success. Through participative leadership, a leader may create an environment favorable to employee performance. Employees are more likely to care for and support one another if they see a member improve in strength. Managers may now repeat discoveries that formerly took days in seconds, saving substantial time. Great leaders may influence this process by managing the group’s social expectations. Managers may hire psychologists to help members develop a greater sense of responsibility for one another and the business. It can be time-consuming and costly due to the time required for participatory leadership. Organizational difficulties might contribute to team instability. Numerous variables might affect an employee’s desire to communicate their ideas.
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