* Academy of Management Executive. 2004, Vol. 18. No.

The limits of organizational

democracy
Jeffrey L. Keir

Executive Overview
Despite decades of encouragement from theorists and consultants, managers have
generally not embraced democratic process as a system of management and decision-
making in organizations. While it is tempting to explain this state of affairs in terms of
managers' reluctance to share power, this article considers the possibility that
democracy's limited success is due to its own limitations as a system of organizational
governance. The article questions two common assumptions: (a) that political democracy
provides a useful model for organizational democracy, and (b) that democratic process is
applicable in all organizations. Close analysis suggests that political democracy provides
little guidance for organizational democracy because its essential characteristics—
accountability to the governed, right of participation, free exchange of information, and
right of representation—are rarely, if ever, supported in organizations. Furthermore, the
basic function of political democracy—legitimization of authority—has no counterpart in
organizations. As for applicability, the article argues that democratic process can only be
successfully implemented where it contributes significantly to competitive advantage and
organizational performance. This depends on several contingency variables, including
the nature of the organization's products and services, the characteristics of its workforce,
and the degree of hierarchical resistance to redistribution of power and control.

The idea of democracy, deeply ingrained in West-
ern culture, is rapidly becoming a global political
and social ideal as well.i It is not surprising, there-
fore, that organizations, particularly those based
in developed economies, should be viewed as nat-
ural settings in which to extend democratic values
and practices. In such societies, established dem-
ocratic norms make command-and-control hierar-
chies, with their obvious power and status differ-
entials, seem anachronistic, even dysfunctional.
The need to adapt to continuously changing cir-
cumstances, a more professional and educated
workforce, and the increasing tendency toward
"free-agent" employment relationships all argue
for a democratic conception of the workplace and
the employing organizations that comprise it.
Some observers, in fact, have concluded that the
adoption of democratic values and practices in
organizations has become politically, and even
morally, inevitable.^
Yet, despite these expectations, proponents of
organizational democracy have generally been
disappointed with the pace and depth of change in
organizations.^ They find that managers—while
embracing the rhetoric of democracy, empower-
ment, and participation—have been reluctant to
share power, grant autonomy, disclose informa-
tion, or include employees in substantive decision-
making.^ For their part, workers have not always
been eager to participate in decision-making when
doing so has resulted in greater task ambiguity
and increased accountability for outcomes.^ If, as
one long-time scholar has observed, democracy in
organizations is something like the emperor's new
clothes—often praised in the abstract, but never
actually seen^—perhaps we need to better under-
stand why such a powerful idea has not had
greater influence on organizational governance
and decision-making.
Have the benefits of organizational democracy
been overstated? Are the benefits real but more
elusive and difficult to realize than first thought?
Or perhaps the best explanation is the one that
comes most easily to mind: managers have simply
and habitually refused to share power and author-
ity. Autocracy, after all, is expedient and gives

81
82 Academy of Management Executive
management a relatively free hand in focusing
organizational resources on its preferred objec-
tives. It is tempting, especially given the scope of
recent executive malfeasance, to view all manage-
rial motives cynically and to assume that any re-
luctance to embrace democracy stems purely from
self-interest and a desire to preserve power.
Have the benefits of organizational
democracy been overstated? Are the
benefits real but more elusive and
difficult to realize than first thought?
Yet, such explanations seem simplistic and in-
complete. Of course managers are self-interested;
organizational reward systems, in fact, depend on
it. But managerial self-interest can take many
forms, and surely perceptive managers recognize
that their own interests would be well served by
the promised benefits of democratic organization:
a committed, empowered workforce taking respon-
sibility for its own performance and for the success
of its employing organization. Clearly more com-
plex factors must be at work than merely the short-
sightedness or greed of managers.
This article considers two related misconcep-
tions that may help to explain why organizational
democracy has not had greater success as a form
of governance and decision-making. The first is an
error in logic that distorts our thinking and colors
our expectations of what democracy in organiza-
tions should look like and how it should work:
namely, the assumption that political democracy
provides an appropriate and useful model on
which to base organizational democracy. The sec-
ond is an error in application that results in well-
intentioned but frustrating efforts to implement or-
ganizational democracy: namely, the assumption
that, as a method of governance and decision-
making, democratic values and practices can be
applied in all organizational settings.
Both errors stem from the same root problem: a
lack of clarity regarding (a) the essential elements
of democratic process, (b) the applicability of these
elements to economic (as opposed to political) or-
ganizations, and (c) the conditions and circum-
stances under which democratic values are likely
to take hold and flourish in organizations. The fact
is, as appealing as democracy may be as a politi-
cal and intellectual construct, organizations are
not societies in the political sense, and manage-
ments are not elected governments. Real differ-
ences exist in the nature of the collective (eco-
nomic organization vs. social polity), in the basis
August
and scope of legitimate power (ownership vs.
elected government), in the individual's role and
responsibilities (employee vs. citizen), and in the
decision-making process through which gover-
nance is maintained.
The first section of the article discusses the ma-
jor conceptual differences between political and
organizational democracy. It argues that, despite
our tendency to generalize from one to the other,
the two forms of democracy share few essential
elements and consequently have less in common
than is often assumed. Because the function of
organizational democracy is different from that of
political democracy, it will only be fully supported
and successfully implemented where it contributes
significantly to competitive advantage and perfor-
mance outcomes. The second section considers the
problems of application and implementation, the
management conditions under which organiza-
tional democracy is likely to take hold, and
whether the effort to instill democratic values and
practices is, in all cases, advisable. The article
concludes with the idea that the decision to organ-
ize democratically is a classic managerial trade-
off; that is, irrespective of philosophical or moral
considerations, the risks and costs of democratic
restructuring must be justified by its potential per-
formance benefits.
Political Democracy As a Model for
Organizational Democracy
The general manager of "Medical Products, Inc.,"
the North American subsidiary of a European mul-
tinational, decided to utilize power-sharing and
self-management as a response to persistent prob-
lems that had begun to undermine organizational
performance. These included an increasingly bu-
reaucratic mindset, infighting and miscommunica-
tion between departments, conflicts regarding de-
cision-making authority and responsibility across
management levels, and, consequently, an inabil-
ity to respond to market changes.'^ As part of this
transformation, a "competency-based hierarchy"
was instituted in which employees, based on their
knowledge of the work and the individuals in-
volved, would select their own cross-functional
teams and business leaders. To implement this
democratic approach, top management first spec-
ified the criteria by which teams were to make
their leadership selections. Management also re-
tained final endorsement of each team's selection
(i.e., team choices were considered recommenda-
tions to management, not binding decisions). And,
to deal with anticipated middle-management resis-
tance, "The message to the middle was clear: We
2004
are going to adopt self-management and a team
orientation. Anyone who doesn't want to play ball
will no longer have a role in the management
hierarchy. "8
Is this 'democracy at work' in the typical corpo-
rate environment? Is this what we mean when we
talk about empowerment? Team members' choices
were constrained by the criteria 'handed down'
from management. Their 'decisions' were merely
recommendations that had to be approved by their
superiors. Middle managers were, in effect, threat-
ened into participating in the process. Viewed
against our common understanding of what de-
mocracy is and how it is supposed to work, man-
agement's actions certainly appear controlling,
manipulative, and autocratic.
Considered from management's perspective,
however, these same actions do not seem unrea-
sonable. Employees were new to this process and
had never before been asked to make these kinds
of decisions. Furthermore, the cross-functional
teams had been formed despite a history of conflict
and suspicion between departments. It was not
clear how the teams would work together or if
powerful functional managers would encourage or
discourage their subordinates from working con-
structively as team members. This was important
because an early failure might undermine subse-
quent stages and therefore the entire self-manage-
ment experiment. For this reason, top management
felt that it needed to send a strong signal that it
was committed to the change process, primarily for
the benefit of functional middle managers whose
resistance in the past had undermined earlier
change initiatives.
Organizational democracy is, in fact,
fundamentally different from political
democracy.
The point of this example is not to criticize (or
applaud) Medical Products' management, nor to
prove that democracy cannot work in organiza-
tions, but to show that organizational democracy
is, in fact, fundamentally different from political
democracy. Democratic process in organizations is
motivated by different needs and serves different
purposes than it does in the political context. The
motive in this case was not, after all, to give voice
to employees nor to legitimize the authority of
team leaders but to improve competitive perfor-
mance. Thus, the selection criteria were specified
by management to insure that the interests of the
business were represented in the decision, not the
interests of employees.
Kerr 83
Organizational democracy also requires a differ-
ent relationship between the collective and the
individual, one in which the individual does not
simply walk away after voting but must stay ac-
tively engaged in insuring the success of both the
immediate decision and the company. Thus, top
management's insistence that middle managers
support the new structure was based on the under-
standing that democratic decisions in the eco-
nomic organization, unlike those in the political
realm, require ongoing, active commitment by or-
ganization members if they are to be implemented
successfully. Mere passive acceptance or passive-
aggressive resistance would certainly insure the
failure of this fragile experiment.
Political and organizational democracy also dif-
fer in that those governing in organizations (i.e.,
management) are not accountable to an electorate,
as are governors in the political sphere. Instead,
they are accountable to multiple stakeholders,
none of whom is likely to tolerate a degradation of
organizational performance for the sake of demo-
cratic process. Thus, in the Medical Products case,
management retained final approval of employee
decisions because, ultimately, management was
legally and ethically accountable to stakeholders
(including employees) for the performance of those
team leaders as well as the overall performance of
the organization.
Political vs. Organizational Democracy
To understand the differences between political
and organizational democracy (and why political
democracy may be a misleading model for organi-
zations), it is helpful first to identify the defining
characteristics of democratic process as they are
generally understood. There are four: accountabil-
ity to the governed, equal right of participation,
free exchange of information, and representation
of the governed.
The principle that most clearly and essen-
tially distinguishes democracy from other forms of
governance is accountability. In democratically
organized collectives, those governing are made
accountable to those governed through the mech-
anism of participation. In participatory democracy,
citizens influence decisions that affect them first
through their direct involvement in decision-
making, and second, through the election of offi-
cials. In the more common representative democ-
racy, citizens indirectly influence decisions by
electing representatives and officials who are
charged with representing citizens' interests in the
decision-making process. In both variations, par-
ticipation in the electoral process gives citizens the
84 Academy of Management Executive August

means to hold officials and representatives ac-
countable to the will of the electorate.
Democracy also is generally understood to mean
that participatory rights are evenly distributed;
that is, each person, regardless of social, eco-
nomic, or political standing, has one vote—no
more, no less. Furthermore, in order for participa-
tion to be meaningful, democracy is generally as-
sociated with the free exchange of information (an
informed electorate is a condition of democratic
process), either through public media or through
direct personal interchange.
Functionally, political democracy serves two ba-
sic purposes. First, and especially in participatory
democracy, broad involvement in policy formula-
tion may result in qualitatively better policies. To
the extent that particular citizens bring specialized
knowledge to the decision-making process, the
outcome is likely to be better than if left to non-
specialized officials alone. Even in representative
democracy, citizen input may increase the under-
standing and sensitivity of representatives to di-
verse viewpoints, thus resulting in better decision
outcomes.
The second and more important function of po-
litical democracy is to establish and preserve the
legitimacy of the governance process by producing
decision outcomes that represent the interests of
the governed. Whether or not democratic process
produces the highest quality or most efficient out-
come, an outcome decided by the majority of voters
is perceived to be representative, fair, and equita-
ble, and therefore legitimate. Perceived legitimacy
is critical to the acceptance of specific policies, to
the acceptance of the overall governance process,
and thus to the maintenance of societal and polit-
ical functioning.
The Collective: Economic Organization vs. Social
Polity
To what extent are these basic characteristics of
democracy found in organizations? Does democ-
racy mean the same thing in the organizational
context as it does in the political? In general, the
answer to these questions is no; expectations and
even definitions of democracy are significantly dif-
ferent in the two contexts, as shown in Table 1.
Accountability to the Governed
Whereas the basic function of the electoral process
in the polity is to legitimize the selection of offi-
cials, there is rarely, if ever, an analogous situa-
tion in economic organizations. Organization
members may participate in a wide range of deci-
sions, usually based on members' specialized
knowledge (i.e., issues pertaining to the work it-
self), or specialized interests (e.g., work-life issues
such as benefits, training, work schedules, etc.).
However, even in highly participative organiza-
tions, employee participation in the selection of
executives and managers is far less likely. In those
unusual cases where employees do have influence
on the appointment of managers, it is likely to be
greatest at the lowest hierarchical levels (e.g.,
first-line supervision) and least at executive levels.
Furthermore, employee participation in the initial

Table 1
A Comparison of Essential Democratic Characteristics in Two Contexts

Democratic Characteristics In the Political Context In the Organizational Context

1. Accountability to the Governed: Accountability is periodic, through Accountability is rare or nonexistent.

Those governing are accountable to elections.
those governed through an electoral
process.
2. Equal Right of Participation: Participation is legally guaranteed to Participation is controlled by
Every qualified member of the polity citizens. management.
is entitled to one vote, regardless of
economic or social standing.
3. Free Exchange of Information: Access and exchange are legally Access and exchange are controlled by
The polity is entitled to guaranteed (subject to security limits). management.
unconstrained access to and
exchange of information.
4. flepresenfaiion of fhe Governed: Representation is guaranteed through Representation is incidental or
The government maintains an electoral process. nonexistent.
legitimacy only to the extent that the
interests of the electorate are
represented in its decisions and
policies.
2004
selection does not insure ongoing or periodic ac-
countability of the supervisor to employees. Ab-
sent employee participation in the appointment,
evaluation, and/or removal of managers, the ac-
countability of managers to employees is severely
reduced.^
Distribution of Participation Rights
In democratically organized polities, the right to
participate in the electoral process is generally
based on objective criteria such as citizenship, res-
idency, or property ownership. Once the criteria
are met, however, participation rights are usually
distributed equally, i.e., one vote per individual
regardless of amount of property held, length of
residency, etc. The individual's social or economic
status does not increase or decrease his/her par-
ticipation right. By contrast, the essential hierar-
chical nature of most organizations means that
participation rights are unequally distributed,
with higher-level individuals retaining greater in-
fluence over all substantive policy decisions and
lower-level individuals retaining little or none.
More importantly, the most basic policy decision,
i.e., whether or not employees have the right to
participate in a given decision, is left to the discre-
tion of managers and executives.
Free Exchange of Information
Without information, an electorate cannot make
informed choices, and the participatory process
becomes meaningless. Thus, the freedom to dis-
seminate information (through the press or other
media) and the freedom to exchange information
(through congregation or personal interaction) are
considered crucial rights within a democracy.
Within the typical economic organization, how-
ever, management controls the type of information
that is collected, how that information is arrayed
and interpreted, and to whom it is disseminated.
Management can interpret and present informa-
tion that supports its agenda and withhold infor-
mation that does not. There is no equivalent in
organizations to the weekly televised press confer-
ence in which employees (or their representatives)
have an opportunity to probe or question the deci-
sions of management. Shareholder and financial
analyst meetings in publicly held corporations
come closest to this idea, but these meetings are
not held for the benefit of the governed, who are
typically not even in attendance.
Kerr 85
The Right of Representation
The fundamental premise in democratically organ-
ized polities is the right of the electorate to be
represented in political decisions. Decisions are
viewed as legitimate only to the extent that they
are seen as conforming to and serving the interests
of the electorate. Thus, the role of democratic pro-
cess is to legitimize decisions by ensuring that the
will and voice of the electorate are heard. By peri-
odically practicing democracy (i.e., by informing
the electorate, eliciting its choices, and abiding by
its preferences), the polity renews, protects, and
legitimizes itself. In effect, democratic process in
the polity is both means and end. By contrast, the
role of democratic process in the economic organi-
zation is to produce economic value. The struc-
tures, routines, policies, and procedures of the or-
ganization are specified means through which an
end is accomplished. The role of democratic pro-
cess in this context is twofold: to improve decision
outcomes by increasing the diversity of inputs, and
to increase employee commitment to decision out-
comes through participation.
The role of democratic process in the
economic organization is to produce
economic value.
The important distinction between democratic
process in organizations and in polities^ is that
democracy in organizations is used to further the
ends of the organization, not to insure representa-
tion of members' interests or the perceived legiti-
macy of decisions. Whereas in polities there is no
expectation that citizens will participate in imple-
menting decisions once they have been made
(other than by accepting them as legitimate), there
is the very real expectation in organizations that
successful implementation of decisions requires
the active commitment of organization members.
Here again, it is important to recognize the funda-
mentally different functions of political and organ-
izational democracy. If representation of member
interests does occur through organizational de-
mocracy, it is secondary to the primary purpose of
improving and obtaining commitment to decisions
and policies.
It seems, then, that several basic characteristics
normally associated with democracy in the social
polity are severely limited in the economic organi-
zation. In the typical organization, employees can-
not hold management accountable, management
86 Academy of Management Executive
decides w^hen and if employees can participate in
decision-making, information and congregation
are restricted, and the interests of employees are
represented secondarily or not at all.
While these characteristics may be typical of
economic organizations, the question remains as
to whether they are necessary for those organiza-
tions to function effectively. Why have economic
organizations retained these features while politi-
cal structures and processes have evolved toward
presumably more advanced democratic models?
Explanations frequently revolve around the idea of
limited information or perspective. Managerial ac-
countability to employees, for example, is not fea-
sible because lower-level employees do not have
the information (i.e., experience, understanding,
perspective) to participate meaningfully in the se-
lection, evaluation, or termination of executives
(though they may have sufficient perspective to
choose and evaluate first-line supervisors). For the
same reason, participation rights are unevenly
distributed (i.e., managers have far greater influ-
ence over a far wider range of decisions) because
employees do not have a sufficiently broad per-
spective to participate beyond their specific areas
of expertise. And, given their typically limited ac-
cess to information, employees may not fully un-
derstand the organization-wide implications of a
particular decision.
Given their typically limited access to
iniormation, employees may not fully
understand the organization-wide
implications of a particular decision.
But, if information and perspective are so neces-
sary, how do we explain the fact that political
democracy encourages and depends on the broad-
est possible participation of citizens in the critical
decisions of their polities? Why are citizens as-
sumed to have the requisite information and un-
derstanding while employees are not? Certainly
few would seriously argue that citizens are better
informed about the complex issues facing their
polities than employees are about their compa-
nies. The answer seems to lie not in the relative
qualifications of employees versus citizens but in
two factors that fundamentally separate and de-
fine political and organizational democracy as dif-
ferent governance systems. They are the source of
legitimate power and the relationship of the indi-
vidual to the collective.
August
Legitimate Power: Ownership vs. Elected
Government
In the democratic polity, the authority to govern
flows from the governed through the electoral pro-
cess. Thus, legitimacy can derive only from the
exercise of the electoral process and only from the
electorate. The right to participate in the electoral
process depends on membership (i.e., citizenship),
which, in turn, depends on commitment to the pol-
ity, a commitment that is either assumed by virtue
of birthright or demonstrated through ceremony,
physical residence, and, in some cases, property
ownership. By contrast, in the economic organiza-
tion, the authority to govern derives directly from
legal ownership of the economic entity itself. In the
case of the owner-managed organization, the
owner has the right to control all decisions except
where there are legal (or union) constraints. In the
case of the professionally managed organization,
the manager's authority derives indirectly from
ownership, through appointment by the principal.
If, as noted earlier, the primary function of dem-
ocratic process is the legitimization of authority,
then democratic process in the economic organiza-
tion clearly has a different purpose altogether,
since legitimacy derives not from an organization's
members but from legal ownership of the entity.
Management retains its authority (and its legiti-
macy) by representing the interests of stakeholders
in general, not the interests of organization mem-
bers in particular. From the stakeholder perspec-
tive, in fact, it might be argued that "too much"
democracy (i.e., too much representation of em-
ployee interests) must inevitably come at the ex-
pense of the organization's other stakeholders.
The Relationship of the Individual to the
Collective: Employee vs. Citizen
In the political context, the individual's relation-
ship to the collective is essentially transactional.
The citizen is an occasional actor whose basic
function is (a) to fund the activities of the collective
(typically through broad-based tax programs) and
(b) to participate in the selection of representatives
and officials (through the electoral process). While
a relative handful of individuals pursue an active,
ongoing involvement with the political leadership
of the polity, the vast majority of citizens are pas-
sive participants, maintaining no ongoing rela-
tionship with the polity or with each other. i° In
contrast to the Jeffersonian ideal of an informed
electorate that bases its choices on sound informa-
tion and thoughtful deliberation, today's voter is
often poorly informed and easily manipulated
2004 Kerr
through orchestrated marketing campaigns and
carefully prepared sound bites.
In the organizational context, on the other hand,
the individual is required to maintain an ongoing
relational connection to the collective. Through a
combination of training and experience, the em-
ployee accumulates specific knowledge and may
be, in fact, the best source of expertise on a given
issue. Thus, the employee's relationship to the or-
ganization is rooted in the myriad daily inter-
actions that comprise the employee's role and
contribute to the employee's knowledge base. Fur-
thermore, the employee's personal interests (e.g.,
security, income growth, career advancement) are
at least as dependent on the actions of manage-
ment as the interests of the citizen are dependent
on the actions of elected officials. It seems, there-
fore, that the employee, by virtue of role, responsi-
bilities, knowledge, and self-interest, is generally
better prepared and more motivated than the citi-
zen to participate in a democratic process, despite
the fact that few of the characteristics we associate
with political democracy seem to exist in organi-
zations.
The employee, by virtue of role,
responsibilities, knowledge, and self-
interest, is generally better prepared and
more motivated than the citizen to
participate in a democratic process.
It is likely that these two factors—differences in
the source of legitimate power and differences in
the role of the individual—together account for a
good deal of the frustration among proponents of
organizational democracy. On the one hand, em-
ployees are, if anything, more deserving of the
benefits of democracy than are citizens and better
equipped to make a contribution through partici-
pation. Yet, for managers governing organizations,
the need to share power and decision-making is
simply not as compelling as it is for political gov-
ernors whose authority can be legitimized only
through democratic process. While the potential
benefits of democracy (better decisions and stron-
ger implementation) are certainly attractive to
managers, they are not guaranteed and, in fact,
can only be realized at considerable cost and risk.
To summarize, this analysis has argued that the
defining characteristics of democracy as practiced
in the political sphere—accountability to the gov-
erned, a transparent electoral process, equal dis-
tribution of participation rights, free access to in-
formation and congregation, and the right to
87
representation—are not only absent in the majority
of economic organizations but are unlikely to be
instituted any time soon. This is true for two rea-
sons, one conceptual and the other practical.
First, the compelling incentive for establishing
political democracy—the legitimization of author-
ity—has no true counterpart in the economic or-
ganization where legitimacy of authority derives
from ownership rather than from the electorate.
This leaves the promise of enhanced organi-
zational performance (through better decisions
and increased employee commitment) as the pri-
mary managerial incentive for instilling demo-
cratic process.
Second, while better decisions and increased
commitment are unquestionably valuable and im-
portant objectives, organizational democracy is
likely to be viewed by managers as a demanding
and risky method for achieving them. For the great
majority of organizations, building the infrastruc-
ture (i.e., the values, policies, and procedures) nec-
essary to support and implement democratic prac-
tice will require profound and difficult changes,
and even a well-intentioned manager might rea-
sonably conclude that the challenges and risks
outweigh the rewards.'' Given its fiduciary respon-
sibility to maximize the performance of the assets
it controls, management can only commit to dem-
ocratic process where there is a high probability of
successful implementation and enhanced perfor-
mance outcomes. Understanding these conditions
is the question we turn to next.
Implementing Organizational Democracy:
Promises and Pitfalls
According to Purser and Cabana,
The self-managing organization requires a
radical change in the design and manage-
ment of the enterprise. The shift to self-
management involves uprooting work ar-
rangements and authority structures that
have enjoyed immunity from fundamental
change under the protection of a dominant
hierarchy. Deep, system-wide, and demo-
cratic change can cause distress, anger, and
resistance among those who have become ac-
customed to the status
Arguments for organizational democracy essen-
tially fall into one of two categories. Organiza-
tional democracy is either the right thing to do on
moral or philosophical grounds, or it is the smart
thing to do on managerial grounds. Arguments in
the first category tend to revolve around the idea
 Academy of Management Executive
that autocratic (i.e., management-centered) organi-
zational models are exploitive and demeaning to
employees. This perspective considers employees
to be critical stakeholders with valid claims on
organizational outcomes (both intrinsic and extrin-
sic) and decision processes.'^ Implicit in this view
is the idea that organizations are socio-political
entities (i.e., "polities"), and, given the superiority
of democracy as a governance system for polities,
it follows that organizations should be governed
democratically as well.^*
The managerial perspective, on the other hand,
though unconcerned with the legitimizing function
of democracy, is quite concerned with democracy
as a means of enhancing firm performance
through increased employee input and commit-
ment. Implicit in this view is the notion of organi-
zations as economic entities and managers as
executors charged with maximizing the value-
creating capacity of their organizations. Managers
are therefore ambivalent about organizational de-
mocracy. On the one hand, there is the promise
that empowerment and participation can aid man-
agement as it pursues its organizational ob-
jectives. On the other, there is the threat that de-
mocracy may dilute managerial control and
compromise organizational performance since em-
ployees may make decisions and commit to goals
that are different from management's.'^
In addition to control risks, management faces
two additional sets of obstacles. First are the
daunting operational challenges involved in insti-
tuting democratic policies and procedures. What
structural changes will be necessary to support
democratic process? Which decisions and issues
should be opened to employee participation? How
should the information necessary for meaningful
participation be disseminated? What sort of formal
or informal decision process should be used? How
much and what type of training will be required to
prepare the organization for participation in deci-
sion-making? And, regardless of how well-inten-
tioned management may be in resolving these
questions, its decisions are likely to be scrutinized
by skeptical employees intent on finding evidence
of management's duplicity.'^
Next are the resistance issues that are likely to
arise from various constituencies. Middle manag-
ers are likely to be concerned about the new role
that empowerment imposes on them, the new
skills demanded, and the loss of traditional au-
thority. Lower-level employees are likely to feel
their own ambivalence, drawn to the promise of an
expanded role, yet concerned about the demands,
accountabilities, and ambiguities that a demo-
cratic regime would entail. And top managers, ul-
August
timately responsible for organizational results,
may be less than enthused about the prospect of
democratic experiments on their watch. As Chris
Argyris notes, CEO's may love empowerment in
theory, ". . .but the command-and-control model is
what they trust and know best.''^'
A democratic experiment, whether ultimately
successful or not, is likely to be initially disruptive
to the organization's work processes and to its so-
cial and political subsystems. Even assuming
wholehearted support of the new regime by all
participants and eventual success, there is a high
probability that democracy's benefits will not be
immediately apparent and that its first version will
require considerable adjustment before it equals
the performance of the system it is replacing. This
delay in visible benefits is risky in that it may, if it
is lengthy, undermine support for the change effort
and for the managers sponsoring it. Of course,
there is also the possibility that the experi-
ment will never receive adequate support from
participants, or that serious mistakes will be made
during implementation. As a result, it may never
deliver its promised benefits or expected perfor-
mance levels and, in the long term, may sour the
organization's appetite for future improvement
initiatives.
A democratic experiment, whether
ultimately successful or not, is likely to
be initially disruptive to the
organization's work processes and to its
social and political subsystems.
Making the Business Case for Organizational
Democracy
How then does management recognize when the
potential benefits of organizational democracy are
worth the risks? The first requirement is to be clear
about what the benefits will be. Exactly how and
where will democratic process contribute to com-
petitive advantage and performance outcomes?
While proponents rarely discuss organizational
democracy in contingency terms (the assumption
seems to be that it is universally applicable), man-
agement can afford no such luxury. Instead, man-
agement has an obligation to think carefully about
potential costs and benefits, and the probabilities
of success, given the specific circumstances of the
organization for which it is responsible. To make
the case for democratic process, management
must answer two essential questions:
1. "If we do this, what will it buy us in the mar-
2004 Kerr
ketplace?" (Assuming that we master it, will dem-
ocratic process provide competitive advantage in
the markets in which w^e compete?)
2. "Can we do this?" (Assuming that the benefits
are worth it, can the organization learn to function
effectively as a highly participative system based
on democratic values and practices?)
The connection between these two questions is
obvious. Without the promise of significant com-
petitive advantage, management will not main-
tain commitment and sponsorship through the
inevitable resistance, mistakes, and disappoint-
ments, and the transformation to democratic pro-
cess will fail. Not surprisingly, the intensity and
persistence of management's effort will depend on
the quality of the incentive. In effect, "Can we do
it?" is heavily dependent on "What will it buy us?"
It follows, then, that the organization's commit-
ment to implementing democratic values and prac-
tices will be greatest in settings in which those
values and practices produce the greatest compet-
itive and performance benefit.
The Work of the Organization
Table 2 presents a number of factors that affect the
degree to which democratic process will enhance
an organization's competitive advantage. Primary
among them is the nature of the organization's
work. Democratic process may provide more or
less advantage, depending on the value-adding
activities performed by the firm and the types of
products and services it sells to customers and
clients. For example, democratic process in a de-
sign firm, ad agency, or consultancy is likely to
contribute more to competitive advantage than the
same level of democracy would in a fast-food res-
taurant or bottling plant. This is not to say that
democratic process will produce no benefits in
these settings but that the opportunities for partic-
ipation (and therefore the benefits of democratic
Table 2
Some Factors Affecting the Degree of Successful Implementation of Democratic Process in
Business Organizations
The Work of the Organization
To what extent will the work of the organization—its products, services, and value-adding activities—be enhanced through
democratic values and practices?
The Nature of the Workforce
Are the talents and attitudes of the workforce such that they will be more fully engaged and exploited under democratic values
and practices?
The Existing Organization
How costly will it be to overcome hierarchical resistance, and what is the risk that the transition to democratic values and
practices will not be supported by critical constituencies?
The Commitment of Management
To what extent is policy-level management prepared for and committed to the transition to democratic values and practices?
89
process) are likely to be fewer where the work is
more structured and routine and greater where the
work requires more innovative and creative input
from employees. After all, whether in organiza-
tions or in politics, the essential premise of democ-
racy is that people have a right to participate in
decisions. It stands to reason, then, that democra-
cy's relative advantage over other forms of deci-
sion-making will be proportional to the amount of
decision-making that actually occurs in a given
setting.
Democratic Process at Hewlett-Packard
Hewlett-Packard, a firm that is frequently cited as
a pioneer of democratic management, provides a
useful example of the relationship between the
nature of the organization's work and the compet-
itive value of democratic process. HP started in
1939 as a developer and manufacturer of electronic
test and measurement instruments.^^ The electron-
ics industry was just beginning to grow rapidly,
and the creativity of other electronics companies
(HP's primary customer group) worked as a stimu-
lant to HP's own inventiveness. The company's
product line expanded rapidly as it responded to
the industry's need for new technical tools to ad-
dress increasingly sophisticated challenges. Gov-
ernment contracts also became an important
source of business and learning for HP as both
World War II and the Korean War prompted the
military to utilize the latest electronic technolo-
gies in the form of communications equipment,
radar-jamming devices, and microwave genera-
tors. These contracts helped the company develop
skills that put it in the forefront of technical devel-
opments in these product categories and pro-
vided valuable experience for post-war commercial
markets.
Some attribute HP's early success to being in the
right place at the right time. However, it is impor-
90 Academy of Management Executive
tant to recognize that, while the environment may
have provided the demand for novel technical so-
lutions, management made a conscious decision to
define the organization's work as responding to
that demand with a stream of innovative products,
rather than simply turning out large batches of one
or two successful designs. Furthermore, a critical
element in HP's success was the founders' early
insight that diversity of output requires a coordi-
nated diversity of inputs that can best be achieved
through open, collaborative, and participative
management processes. HP became as famous for
its employee-centered management systems and
culture as for its groundbreaking products. The
"HP Way" de-emphasized hierarchy and encour-
aged open-door communications, collaboration
and teamwork, respect for and trust in the individ-
ual, and the nurturance of talent and creativity. For
the early HP, innovation was how the organization
added value and why customers bought its prod-
ucts. Thus, the ability to fully stimulate and exploit
its intellectual resources through participative
management systems was a critical competitive
capability that enhanced performance.
For the early HP, innovation was how the
organization added value and why
customers bought its products.
Democratic Process at Southwest Airlines
The airline business provides a distinct contrast to
the early days of electronics. It is an industry in
which government regulations, safety protocols,
established routines, and formal procedures play a
dominant role in structuring the work of employ-
ees. Yet despite these characteristics. Southwest
Airlines has also developed a reputation for its
participative management style, its emphasis on
self-control and individual initiative rather than
bureaucracy, and its democratic, non-hierarchical
culture.^3 Employees are selected for their ability to
simultaneously express their individuality while
working within the bounds of a highly structured
environment. Ground station managers are trained
and encouraged to "own" their stations and to take
the initiative to solve problems creatively rather
than seek instructions or permission. Employees
are cross-trained to increase productivity and task
variety. Participation in problem solving is ex-
pected, and everyone benefits through profit-
sharing and stock purchase plans. Unions are con-
sidered partners rather than adversaries, and
Southwest enjoys the best labor relations in the
industry.
August
For Southwest, the work of the organization is to
cycle through its routines as uneventfully and ef-
ficiently as possible. Consistency, reliability, and
efficiency are how the organization adds value
and why customers buy the service. Creativity and
innovation may be important, but they are ancil-
lary to the service—tools for getting the system
and the customer back on track, for re-establishing
equilibrium after delays, overbooked flights, missed
connections, etc. Innovation and creativity can
surely enhance Southwest's product, but they are
not Southwest's product, in the same sense that
they are Hewlett-Packard's.
Why, then, is democratic process such an inte-
gral part of Southwest's structure and culture? The
answer again goes back to how the organization
defines and approaches its work. Southwest does
not compete by innovating but by attaining the
highest level of efficiency in its industry. Its com-
plex formula for accomplishing efficiency includes
investments in physical assets but is even more
dependent on the motivation and commitment of
its workforce. Southwest's industry-leading cost
structure derives directly from the industry-lead-
ing productivity of its workforce. By working
harder, more flexibly, and more collaboratively.
Southwest employees put more planes and more
passengers in the air (per employee) than do its
competitors.20 Yet, at the same time, the flying ex-
perience cannot feel rushed or "cheap" to passen-
gers, nor can operating or maintenance standards
be compromised. Southwest delivers a unique (but
safe and efficient) flying experience by allowing
and encouraging its carefully selected employees
to interact with customers in highly personal and
idiosyncratic ways. Through informality, humor,
and sheer energy. Southwest "brands" its service
with a personality that is a reflection of both the
collective personality of the organization and the
individual personalities of its employees. To work
in this way, employees must, first, thoroughly un-
derstand the boundaries of their own discretion
and then feel empowered to operate confidently
and creatively within those boundaries.
In an industry in which every tangible asset can
eventually be matched by competitors, an advan-
tage that resides in the values, attitudes, and train-
ing of the workforce is a unique and powerful com-
petitive weapon. But it is only through democratic
process that such an advantage can be realized
and exploited. Employees must have the motiva-
tion, ability, and confidence to act with initiative
and independence, yet still maintain strategic and
organizational coherence.
There is a common lesson from these two very
different companies: Democratic practices allow
2004
and encourage greater and more diverse inputs
from organization members. Thus, they will con-
tribute positively to an organization's performance
where, due either to competitive pressure or to
strategy, the organization's output must be diverse
and original. In such settings, the transition to
democratic process will be less traumatic and on-
going organizational support will be more sub-
stantial and consistent. On the other hand, where
the work or strategy of the organization demands
standardization of output, democratic practices
will contribute less to competitive advantage and,
consequently, will be less easily accepted and less
strongly supported.
The Nature of the Workforce
Another factor likely to affect the relationship be-
tween democratic process and competitive advan-
tage is the nature of the organization's workforce.
Democratic process may provide more or less ad-
vantage, depending on the ability and motivation
of the workforce to participate in the flow of infor-
mation and decisions. For example, where employ-
ees bring specialized or proprietary knowledge to
the organization, the competitive effect of demo-
cratic process is likely to be greater than where the
knowledge or experience base of employees is ho-
mogeneous and congruent with that of the organi-
zation. Because specialized knowledge increases
the diversity of inputs, externally trained employ-
ees have the potential to make more novel contri-
butions than those trained within the organization.
To fully realize this potential, however, requires a
participative, collaborative decision process that
fully draws out and exploits the talents of the
workforce.
Democratic process may provide more or
less advantage, depending on the ability
and motivation of the workforce to
participate in the flow of information and
decisions.
Hewlett-Packard again provides a useful exam-
ple of the relationship between the nature of the
workforce and the competitive value of democratic
process. In the early days of its development, HP
took advantage of the creative ferment in the elec-
tronics community by bringing a number of indi-
viduals into the company specifically for their in-
ventions or expertise in a technical specialty.
Some of the company's most successful products
(e.g., the famous HP engineering and financial cal-
Kerr 91
culators) came about as a result of hiring individ-
uals who, on their own, had already made substan-
tial progress in that specific technology. HP also
developed relationships with Stanford, Cal Tech,
and other technical schools in order to gain access
to the brightest young engineers with the latest
training. The company sponsored basic academic
research, gave substantial grants and gifts, and
maintained close ties with leading academic and
industry researchers in order to identify and "im-
port" the most promising individuals and ideas as
they developed. It should be recognized, however,
that the success of HP's importation strategy was
dependent not only on its ability to identify and
recruit talent, but on its ability to manage the in-
tegration of new and in-house capabilities. In this
regard, it was HP's participative and collaborative
work processes that allowed it to effectively lever-
age the intellectual resources it had acquired.^i
For Southwest Airlines, the value of democratic
process has less to do with the intellectual at-
tributes of its workforce and more to do with the
socio-emotional. For its strategy to work, the com-
pany needs to be able to recruit individuals who
are outgoing and have a need for social approval,
who are empathetic and service-oriented, and yet
who have enough independence of mind and spirit
to take initiative when novel situations arise.22
Southwest's controls are cultural rather than bu-
reaucratic. It therefore needs organization mem-
bers who are responsive to social norms and ex-
pectations rather than to rules and regulations:
employees who will pitch in because co-workers
are "drowning," because passengers are needy, or
because the organization's interests or reputation
are at stake. Such individuals are motivated not
just to belong but to actively contribute to the or-
ganizations to which they belong. In effect, they
wan* to give; and participative, collaborative,
democratic organizations allow and encourage
such contributions.
Again, despite the differences in these two work-
forces, there is a similar lesson to be learned re-
garding the contribution of democratic process to
competitive advantage. Because it more fully en-
gages and exploits the individual, democratic pro-
cess will be most valuable where the organiza-
tion's workforce possesses unique capabilities and
attributes. The more talented or committed the
workforce, the more valuable democratic process
is likely to be to the organization's competitive
position. By the same logic, the less unique or
committed the workforce, the less competitive ad-
vantage the organization is likely to derive from
democratic process.23
92 Academy of Management Executive
The Existing Organization
Just as management must be clear about the po-
tential benefits of implementing democratic pro-
cess, it must also be realistic about potential costs.
What are the likely impediments to successful im-
plementation, and what will it take to overcome
them? Are there circumstances so challenging that
it does not pay to proceed despite the possible
benefits? Because the shift to democratic process
is, fundamentally, a redistribution of power and
authority, much of the cost and risk of implemen-
tation will be incurred in the process of confronting
the organization's existing management structure.
An organization's hierarchy has a pervasive ef-
fect on the locus of its decision-making, the distri-
bution of power and authority, the flow of informa-
tion, and the amount of discretion that employees
have in their jobs. The greater the number of peo-
ple threatened by a redistribution of authority, the
greater the resistance is likely to be and the
greater the chance of a collective response. It is
likely that the companies that would most benefit
from democratic process are exactly those that will
have the most difficulty implementing it. To the
extent that democratic process is synonymous with
the reduction of hierarchy and the redistribution of
power, authority, information, and status, it should
be expected that those organizations with the
steepest hierarchies will generate the most resis-
tance to the change and the least ongoing support
for it.
It is likely that the companies that would
most benefit from democratic process are
exactly those that will have the most
difficulty implementing it.
It is not uncommon for resistant managers to
undermine the transition to democratic process by
subtly limiting the information available to deci-
sion-making teams, by holding them to unrealistic
expectations, by failing to provide necessary re-
sources, or by abandoning them as they attempt to
work through their new tasks and responsibili-
ties.24 Even where employee teams are encouraged
to make decisions, their conclusions are often
taken by management (including top manage-
ment) as merely the starting point for its own de-
liberation rather than as true decision outcomes.
Researchers have found that while the authority to
make routine, programmed decisions at the sub-
unit or individual level may be delegated, the con-
sequential, non-routine decisions are firmly re-
tained by management. Impatient with the pace of
August
employee decision-making, especially in the early
stages of the transition, managers will often revert
to form, arguing that "in this particular case" the
decision needs to be made quickly.^^
Management Commitment and the Inevitability
of Rising Expectations
Management's commitment to the goal of demo-
cratic process is itself an important contingency
variable. It is not uncommon for organizations
to underestimate the time and resources needed to
support the transition to democratic decision-
making. Without fully understanding the need for
training and preparation, management may pull
back too quickly, leaving an authority vacuum that
employees are not yet ready to fill. Preparation of
middle management is often overlooked as well,
despite the fact that middle managers can play a
critical role in either supporting or undermining
the transition. Middle managers need to be intro-
duced to their new responsibilities but also to the
new opportunities that will become available to
them.26
The challenges of moving from bureaucratic
structure to democratic process are formidable
enough to discourage even those managers who
are convinced of the potential benefits. In fact,
managements often become disillusioned with
democratic process as transition obstacles and dif-
ficulties begin to emerge in earnest. Rather than
work persistently through the inevitable com-
plaints, anxieties, and performance glitches, they
retreat to watered-down, half-hearted versions of
their original objectives. The potential benefits are
never realized (though many of the costs are), the
hierarchy reasserts itself, and employees end up
more cynical about management's integrity and
competence than before the experiment began.^''
Though experienced consultants warn against
the idea that organizational democracy can be
done "a little bit at a time," management's ten-
dency, quite naturally, is to commit slowly; that is,
to reduce risk by experimenting with democracy on
a small scale rather than take on the organiza-
tion's entire decision-making apparatus. Limited
applications of democratic process run into the
problem of rising employee expectations and
eventual resentment when those expectations are
not met. It soon becomes apparent to employees,
for example, that their participation is limited to
low-risk or highly programmed decisions, or that
their decisions outcomes are merely recommenda-
tions. Whereas such limitations may be acceptable
in the early stages of the transition while employ-
ees are still learning their new roles, a "little bit" of
2004
democracy tends to whet the appetite for greater
influence in a wider range of decision situations.^s
Single-location experiments also tend to be less
than successful. Even where the democratically
managed plant or division has consistently and
visibly outperformed its peers, the tendency has
been for the larger organization to reject the trans-
plant, sometimes with considerable hostility, and
eventually force it back into the traditional struc-
tural pattern.29
If limited approaches inevitably fall victim to
systemic rejection or rising employee expecta-
tions, does that mean that management must take
an all-or-nothing, organization-wide plunge to
have any chance of success? Obviously, if this is
the case, it raises the stakes considerably for man-
agement and makes the decision even more
fraught with risk. Worse yet, since most experi-
ments in organizational democracy will require
the services of an experienced consultant, manag-
ers face the additional discomfort of depen-
dency—responsible for the outcome but neither
sure of the destination nor in control of the journey.
These factors in themselves may go a long way
toward explaining the reluctance of managements
to embrace organizational democracy more enthu-
siastically than they have thus far.
Reconciling Management Practice with
Democratic Process: Concluding Thoughts
This article was motivated by a desire to under-
stand why, despite decades of encouragement by
theorists and consultants, managers have not
more enthusiastically embraced democracy as a
system of organizational governance and decision
making. While it is tempting to simply blame man-
agerial intransigence and shortsightedness, this
article has considered the possibility that manag-
ers may have good reason to be cautious.
The "problem" with organizational democracy is
that it is not a trivial or superficial adjustment.
Anyone who examines the idea thoughtfully even-
tually comes to the realization that democracy, if
fully (and correctly) implemented, entails profound
changes to the way in which most organizations
function. It requires a fundamiental redistribution
of responsibility, authority, power, and resources
that affects every member of the organization and
the relationships between them. It is also not an
easy system to live with once established. In place
of straightforward commands and controls, every
interaction is a potential negotiation, every deci-
sion a potential political moment. Democracy is,
after all, a famously messy and time-consuming
decision process that is made even messier in the
Kerr 93
organizational version by the sheer frequency and
variety of participative opportunities. Furthermore,
it is an "unnatural act." No one with power natu-
rally gives it up, and no rational person trades in
an efficient decision process for one that is almost
guaranteed to be less so. So why do managers do it?
Democracy is, after all, a famously messy
and time-consuming decision process
that is made even messier in the
organizational version by the sheer
frequency and variety of participative
opportunities. Furthermore, it is an
"unnatural act."
It is interesting that the success stories associ-
ated with organizational democracy seem to fall
into two categories. The first consists of the rela-
tively few organizations that, like Hewlett-Packard
or Southwest Airlines, were built from inception on
a foundation of democratic values and practices.
Founders in both companies went to great lengths
to preserve the participative work processes and
employee-centered culture that characterize many
firms in their earliest stages but are typically lost
in growth. Consequently, managers in these
firms never had to decide if democratic restructur-
ing was necessary, never had to overcome the
resistance of an entrenched hierarchy nor the
changeover effects that accompany a shift to
democratic process. The absence of these costs, in
conjunction with the advantages that democratic
process brought to their competitive positions, re-
sulted in strong reinforcement of the values and
practices that were in place from the beginning.3°
The other category of success stories—and the
one that is more generally instructive—consists
of organizations that changed from traditional
hierarchies to democratic structures. Two common
features seem to characterize these firms. The first
is that almost invariably these organizations
adopted democratic process in reaction to a
perceived performance crisis. Moreover, while the
crisis aspect may have been immediate or very
recent, the perceived causes were viewed as long-
term, embedded problems. The other striking fea-
ture is the extent to which these firms committed to
full organizational democracy. At least as re-
ported, these were not timid or tentative experi-
ments but complete conversions to democratic val-
ues and practices motivated by the belief that
these companies were truly in jeopardy.
The lesson to be drawn is simple but important.
94 Academy of Management Executive
Organizational democracy is not a panacea; it ful-
fills its promise only under certain conditions and
circumstances, and those limitations need to be
recognized and respected. First, the function of or-
ganizational democracy must be understood and
acknowledged. In the organizational setting, the
role of democratic process is to enhance the com-
petitiveness and performance of the organization.
Done for other reasons or without sufficient perfor-
mance justification, the democratic experiment
will be an expensive failure. Second, the benefits
of democratic process can be realized only if the
system is implemented successfully, and that can
happen only if management is willing to go the
distance in supporting it. This is not a trivial com-
mittment. The logistical, political, and administra-
tive obstacles are formidable and the resource de-
mands long-lasting. Management must realize
that its own credibility is a resource that may be
consumed as well.
Third, management's commitment can be gained
and sustained only if it sees clearly how democratic
process can enhance competitive advantage. The
potential contribution of democratic process to com-
petitive advantage depends substantially on the na-
ture of the organization's work, the value-adding ac-
tivities it performs, the products and services it offers
to its customers, and the improvement that demo-
cratic process can bring to these outputs. Not all work
has an equal potential for absorbing the diverse and
innovative inputs that democratic process stimu-
lates. Similarly, not all workforces have an equal
potential to contribute diverse and innovative inputs.
The benefit of democratic process to competitive ad-
vantage therefore will also depend on the nature of
the workforce, its motivation and ability to function
in a highly participative environment, and the diver-
sity of talent, experience, and training that employ-
ees bring to the organization.
In the final analysis, the slow proliferation of
organizational democracy probably has less to do
with managers' desire to hoard power and re-
sources and more to do with their generally ratio-
nal consideration of costs and benefits. The deci-
sion to implement a transition to democratic
process needs to be made carefully and rationally,
of course, because the stakes are significant and
the consequences visible. But it is not inherently
different from the major decisions with which man-
agers normally deal. Buried within the political,
philosophical, and ethical overtones that democ-
racy generates is basically a decision about how to
motivate and maximize organizational perfor-
mance.
August
Acknowledgments
The author would like to thank Rachel Devins of Collaborative
Change, Inc., Bill Werther and John Mezias, both of the Univer-
sity of Miami, and two anonymous reviewers for insightful
comments on earlier versions of this article.
Endnotes
^ In their Survey of Global Political Change in the 20"' Cen-
tury, Freedom House reports that 58 per cent of the world's
population (120 of 192 sovereign nations) now lives under dem-
ocratically elected political regimes. In 1950, the proportion was
only 31 per cent (22 of 80 sovereign nations). As recently as 1986,
only 66 nations enjoyed democratically elected governments.
http:llwwv/.freedomhouse.org/reports/century.html.
^ Collins, D. 1997. The ethical superiority and inevitability of
participatory management as an organizational system. Orga-
nization Science. 8(5): 489-509.
•^ For commentary on the difficulties of implementing power-
sharing systems, see Forrester, R. 2000. Empowerment: Rejuve-
nating a potent idea. The Academy of Management Executive.
14(3): 67-81; Randolph, W. A. 2000. Re-thinking empowerment:
Why is it so hard to achieve? Organizafionai Dynamics, 29(2):
94-107; and Collins, D. 1997. Two cheers for empowerment:
Some critical reflections. Leadership & Organization Develop-
ment Journal. 18(1): 23.
'^ Cunningham, I., and Hyman, J. 1999. The poverty of empow-
erment? A critical case study. Personnel Review. 28(3): 192;
Klagge, J. 1998. The empowerment squeeze—Views from the
middle management position. The Journal of Management De-
velopment. 17(8): 548; Marsh, R. M. 1992. The difference between
participation and power in Japanese factories. Industrial & La-
bor Relations Review. 45(2): 250-257.
^Randolph, W. A., & Sashkin, S. 2002. Can organizational
empowerment work in multinational settings? The Academy of
Management Executive, 16(1): 102-115; Wilkinson, A. 1998. Em-
powerment: Theory and practice. Personnel Review, 27(1): 40;
Cunningham, L, Hyman, J., & Baldry, C. 1996. Empowerment:
The power to do what? Industrial Relations Journal, 27(2): 143-
154.
^ Argyris, C. 1998. Empowerment: The emperor's new clothes.
Harvard Business Review, 76(3): 98-105.
^ "Medical Products, Inc." is a disguised company name. It is
based on a description in Purser, R. E., & Cabana, S. The self-
managing organization: How leading companies are transform-
ing the v/ork of teams for real impact. 1998. New York: The Free
Press.
^ Ibid., 322.
^ A polity is defined by the fact that its members participate
in and are governed by a formal political process. It is different
from the idea of society, however. Societies are social groups
that may or may not have a formal political process. "Polity"
emphasizes the political and legal aspects of a group, while
"society" emphasizes the social and cultural.
'° It is worth noting that although shareholders in publicly
held firms vote to elect the board of directors, this is not in any
way analogous to democratic process. First, shareholders are
not organization members, i.e., they are not "governed" in the
sense that they are bound to follow, as are employees, the
directives and policies of management. Second, shareholders
typically have no influence on nominations for board member-
ship and little or no information on the individuals that are
nominated, thus rendering their votes pointless. Finally, share-
holders vote on the board of directors; they do not vote directly
on the appointment of specific managers except in cases where
2004
the m a n a g e r is also a board member whose term is up for
renewal. Therefore, in practical terms, it is only the largest
institutional shareholders that have the power to hold manage-
ment accountable for its actions and performance.
^' Only 51.3 per cent of the country's voting-age adults
elected the current U.S. president. Historically, the voting-age
percentage participating in U.S. presidential elections has
ranged from 49 per cent (1924 and 1996) to 63 per cent (1960).
(http://w-w-w./airvo(e.org/furnout/pre(urn.hfm). See also Watten-
berg, M.T. 1994. The decline of American political parties. 1952-
1992. Cambridge: Harvard University Press.
'^Han, T-S., & Chiu, S-F. 2000. Industrial democracy and
institutional environments: A comparison of Germany and Tai-
wan. Economic and Industrial Democracy. 21(2): 147; Kirkman,
B. L., & Rosen, B. 1999. Beyond self-management: Antecedents
and consequences of team empowerment. Academy of Manage-
ment Journal. 42(1): 58-74.
'^ Purser & Cabana, op. cit., 38.
'" Also, Rousseau, D. M., & Shperling, Z. 2003. Pieces of the
action: Ownership and the changing employment relationship.
Academy of Management Review, 28(4): 553-570.
'^ Collins, op. cit.
'^ Mills, P. K., & Ungson, G. R. 2003. Reassessing the limits of
structural empowerment: Organizational constitution and trust
as controls. Academy of Management Review. 28(1): 143-152;
Robinson, R. 1997. Loosening the reins without losing control.
Empowerment in organizations. 5(2): 67.
" Beirne, M. 1999. Managing to empower? A healthy review
of resources and constraints. European Management Journal.
17(2): 218-225; Collins, D. 1996. Whither democracy? Lost de-
bates in management empowerment. Empowerment in Organi-
zations. 4(1): 12-24.
'® Argyris, op. cit., 98.
'^ Information on Hewlett-Packard in this and the following
paragraph comes from Packard, D. The HP way: How Bill
Hewlett and I built our company. 1996. New York: HarperBusi-
ness, a division of HarperCollins Publishers.
^° Information on Southwest Airlines in this and the following
paragraph comes from Hofer, J. G. 2003. The Southwest AirJines
way. New York: McGraw-Hill.
" For the first quarters of 2001 and 2002, passengers boarded
per employee for Southwest were 604 and 510 respectively. The
average for nine other major carriers was 298 in both years.
Costs per seat/mile for the same two periods were $7.65 and
$7.29 for Southwest versus industry averages of $10.52 and
$10.62 respectively. (Source: Heskett, J. L. 2003. Southwest Air-
lines 2002: An industry under siege. Case #9-803-133, Harvard
Business School Publishing, Boston, MA.)
^^ Packard, op. cit.
^^ Hofer, op. cit.
^''There is a question of cause and effect with regard to
organizational democracy and workforce characteristics. While
it is true that democratic process will be easier to install and
maintain in organizations that enjoy capable, committed work-
forces, it is also true that workforces are likely to become more
capable and committed as a result of democratic values and
practices. High-discretion/high-involvement jobs will likely be
experienced by employees as more stimulating and satisfying,
thus making the organization a more appealing employer and
attracting a more capable workforce better qualified to partic-
ipate in a democratic process. Furthermore, because such jobs
present employees with a greater variety of challenges and
decisions, the workforce is likely to grow into its role as an
active, committed, and capable participant in the decisions of
JiTerr 95
the organization. See, for example. Leach, D. L., Wall, T. D., &
Jackson, P. R. 2003. The effect of empowerment on job knowl-
edge: An empirical test involving operators of complex technol-
ogy. Journal of Occupational and Organizational Psychology.
76, Part 1: 27-52.
^^ For empirical research on the various ways in which mid-
dle managers undermine team-based organizations, see Bren-
nan, M. 1992. Mismanagement and quality circles: How middle
managers influence direct participation. Management Deci-
sion. 30(6), 35-45; Fenton-O'Creevy, M. 1998. Employee involve-
ment and the middle manager: Evidence from a survey of orga-
nizations. Journal of Organizational Behavior. 19(1), 67-84; and
Collom, E. 2003. Two classes and one vision: Managers' and
workers' attitudes toward workplace democracy. Work and Oc-
cupations. 30(1): 62-96.
^^ Klagge, op. cit.; Marsh, op. cit.
^^ For a discussion of the critical role of middle managers in
supporting decision-making teams, see MacNeil, C. M. 2003.
Line managers: Facilitators of knowledge sharing in teams.
Employee Relations. 25(3): 294-307. In his study of the responses
of 250 middle managers to restructuring, downsizing, and em-
powerment initiatives (White-collar blues: Management loyal-
ties in an age of corporate restructuring. 1995. New York: Basic
Books), Charles Heckscher describes both the failures and suc-
cesses of corporations in preparing middle managers for their
new roles and responsibilities in these settings. Also, the need
for preparation and organizational resources devoted to the
transition is discussed in Foster-Fishman, P. G., & Keys, C. 1995.
The inserted pyramid: How a well-meaning attempt to initiate
employee empowerment ran afoul of the culture of a public
bureaucracy. Academy of Management Journal. Special Issue:
Best Papers Proceedings, 364-368.
^^ See Purser & Cabana, op. cit.. Chapter 5 (Revolutions Gone
Sour) for several detailed descriptions of failed or aborted at-
tempts to instill democratic process in organizations. Also, Fos-
ter-Fishman & Keys, op. cit.
^ Paul, R. J., Niehoff, B. P., & Turnley, W. H. 2000. Empower-
ment, expectations, and the psychological contract—Managing
the dilemmas and gaining the advantages. Journal of Socio-
Economics. 29(5): 471.
^° Purser & Cabana, op. cit., 28, provide a description of the
well-known General Foods pet-food plant in Topeka, KS, which,
despite being the highest performing plant (in year-to-year
productivity gains) in the corporate system for 17 years, was
subject to continuous ridicule, hostility, and ill-treatment by the
rest of the corporation until it was finally sold.
^^ Packard, op. cit.; Hofer, op. cit.
Jeffrey L. Kerr is associate pro-
fessor of strategic management
at the University of Miami
School of Business Administra-
tion. He received his Ph.D. in
strategic management from the
Pennsylvania State University.
His research interests are in the
areas of strategy implementa-
tion, organization design, and
adaptation. Contact: jkerr@
miami.edu.