ZeePedia buy college essays online


Human Resource Development

<<< Previous LEADERSHIP:ORGANIZATIONAL DEMOCRACY Next >>>
 
img
Human Resource Development (HRM-627)
VU
Lesson 14
LEADERSHIP
Organizational Democracy and Organization Structure Link: Role of Strategic Leadership &
Environmental Uncertainty
Abstract
This theoretical paper focuses on the issue of implementing democratic principles in modern day organizations
facing turbulent and changing environments around them. The paper captures the notion of participatory style
of management through the construct; organizational democracy. It traces the origin of this construct from
theories and philosophies of political democracy. The paper also briefly describes the notion of economic
democracy and why it failed to succeed in the face of partial success of political democracy. The underlying
question which the paper raises is the role of organization structure and strategic leadership style in the
successful implementation of democratic principles in organizations in the face of a turbulent and dynamic
environment. The paper also attempts to raise some thought provoking questions for future research.
INTRODUCTION
People who grew up feeling comfortable and secure working for a manufacturing firm appreciate just how
elusive stability and security are in these days when the companies across the globe are feeling the enormous
impact of globalization on their style of work, leadership, communication, reporting mechanisms, and other
structural and contextual dimensions of present-day companies. There are a number of ways in which
organizations are coping with the reality of globalization and the need for `organizational excellence' focus is
realized to be more than any other time in industrial history. Recent research has identified four threads of
corporate excellence (Daft, 2000, pp. 483). These include, strategic orientation (customer-driven, fast in
responding, ability to establish interorganizational links), top management leadership style (leadership vision, bias
towards action & change), organization design (horizontal structure, empowerment of employees, use of
electronic technology & e-commerce) and, corporate culture (creating a climate of trust, sharing information,
encouraging productivity through people).
The impact of globalization is no doubt different for different industries. The high-velocity industries like
electronics and information technology are probably more exposed to the impact of globalization as compared
to typical manufacturing industries, but in general, the focus on `productivity through people' (Hitt & Ireland,
1999) has largely meant a participatory style of management and decision-making. This paper presents the
notion of organizational democracy to capture the participatory management style within a company and also
examines the relationship between this participatory style and other dimensions of the company like strategic
leadership style and turbulent environment.
HISTORY AND BACKGROUND OF ORGANIZATIONAL DEMOCRACY
The term democracy originated from Greek word demokratia where demo means people, and kratia referring to
power or rule, so democracy means rule of the people (Powley et al. 2004). The Greeks were no doubt the first
to try to build political philosophy theories and Plato equated the three elements of human soul with the three
elements of an ideal or just state (Moore & Bruder, 2001, pp. 266). His notion of democracy is however a
degenerated form of plutocracy which results because, "a society cannot hold wealth in honor and ......
establish self-control in its citizens" (Republic). Aristotle too regarded state as an organism and defined
democracy as an improper rule by many.
Later on, during the period of renaissance, Nicolo Machiavelli's The Prince (1532) was labeled as, "one of the
most famous political treatise of all times" (Moore & Bruder, 2001, pp. 272). In fact Machiavelli established his
reputation as the first one to advocate the notion of power politics. Lock, Rousseau, John Stuart Mill, all
mentioned "liberty" and "happiness" as essential ingredients of good governance.
By 19th Century, Karl Marx (1818 ­ 1883) brought in the issue of "class struggle" in the governance of a
society. He also attacked the foundations of capitalist theories by pointing out that workers produce the
product but don't own it!
Be it in the West or in the "form of varna and jati in Hindu society" (Presby, Struhl & Olsen, 2000, pp. 591) in
East, most of the philosophers who wrote on politics and its philosophy mention the classes in society and the
need for a fair and transparent governance system to bring these classes and factions together in the
formulation of a solid and whole system of political governance.
40
img
Human Resource Development (HRM-627)
VU
The 20th Century is therefore labeled as the "century of democracy" as the older versions of democracy
improved in quality and further experience was gained in governance through democracy and one can witness
that from 1985 to 2000, the number of most democratic countries in the world increased from 44 to 82 and the
number of authoritarian regimes declined from 67 to 26 (Ringen, 2004).
Economic democracy, on the other hand has not witnessed such successful proliferation as its political
counterpart. Though it seems logical that economic democracy follows from the democratic principles and that
economic power should also be under the democratic control but in contrast to political democracy, economic
democracy, "does not appear to be something people are ready to take to the streets and fight for" (Ringen,
2004). In the same article on distributional theory of economic democracy, Ringen (2004) captures the failure
of economic democracy in the following way:
"Various attempts can be identified through the last century of subordinating economic resources and activities
to political control, all failures. The extreme case is that of Soviet-style command economy......British style
nationalization of heavy industry......French socialists' move under President Mitterrand to nationalize major
banks......Swedish idea of bringing capital under democratic control".
All of these above mentioned endeavors enjoyed brief success but none lasted long.
The advocates of the concept of Inclusive Democracy recognize this failure and are of the view that, "the
world is in a multidimensional crisis, caused by concentration of power in the hands of various elites, as a result
of the establishment of the economic system of market/growth economy, its political complement in the from
of representative democracy" (Gezerlis, 2003). The principle of political democratic equality understood as
"one man one vote" does not probably apply to economic democracy and a recent case study of political
decision-making in Skanderburg, a small town in Denmark only confirms this (Sorensen & Torfing, 2003).
Even the modern political democracy is seem to be under attack from factors like, "commercialization of
education, media consolidation, news uniformity......extension of application of psychology from the
cultivation of consumer tastes to the cultivation of political ideology and voter perception......and a consumer
culture that has elevated material wealth to be all, end all" (Swaney, 2003).
It would now be interesting to pose the question: Why various efforts and experiments to launch economic
democracy failed? Why the theory that political control over the economy would be conducive to economic
efficiency did not work?
The answers to these questions seem to lie in the "big tradeoff" of the economist Arthur Okum, according to
which citizens in democratic societies value both prosperity and equality, they want equality but not at the cost
of prosperity (Ringen, 2004). Slowly and gradually issues like poverty, income inequality have been absorbed in
the society with little or no political resistance. Political equality has been somewhat achieved in equal rights
and the universal vote (at least in the developed countries) while economic equality has been given up, even in
these advanced societies, as it not possible without incurring prohibitive costs. Can we imagine a society where
everyone has the same economic power? The answer to this question seems to be no as it's understood that
real economies are comprised of different classes of people with uneven economic power, in contrast to
political power, which is more or less equal as one man has only one vote, whatever his/her economic
resources may be. Society has an upper, middle and lower class in terms of income and prosperity, though each
person within these classes has the same political power of one vote. Laclau noted earlier that, "power which is
equally distributed among all members of the community is no power at all" (Marchart, 2003), one can infer
that the control and acquisition of economic resources is power as it is not equally distributed across any
society in the world.
The political democracy, on the other hand, has seen some success and is probably one of the reasons of
successful integration of the `melting pot' culture of America as it has forged a single nation from people of
remarkably diverse racial, religious, and ethnic origins through democratic principles and participatory
democracy (Braceras, 2005). Political democracy has to its credit the adoption of Civil Rights Act of 1964 to
redress and to eliminate inequality in the treatment of Black Americans. Samuel Loescher while examining the
merits of a corporate progressive value added-tax to induce spin-offs by corporate giants to enlarge pluralism,
notes the same merits of political democracy in including people to rise, but voices the above mentioned `big
tradeoff' question when he asks, "would adoption of any of these alternatives (tax incentives) be as
economically efficient a use of citizens' `love' for our democratic environment as a massive citizens' campaign
for tax incentives to limit corporate power?" (Loescher, 1979).
The next natural question to rise is: If economic democracy has failed due to non homogenous society in terms
of income inequality and class struggle, can organizational democracy succeed in organizations?
41
img
Human Resource Development (HRM-627)
VU
ORGANIZATIONAL DEMOCRACY
The idea of political democracy, as we have already seen, is deeply ingrained in Western culture. It is not
surprising therefore if the organizations based in the Western economies are viewed as natural setting in which
to extend democratic values and practices (Kerr, 2004). Organizational democracy means that members of an
organization participate in the processes of organizing and governance (Harrison et al. 2004). There is no doubt
that the idea of applying democratic principles to organizations is appealing. It is argued that increase `voice'
(Fenwick, 2005) of the employees ( as a result of democratic principles) would lead to higher level of
organizational commitment which would further improve implementation rates of the decisions made, reduce
dysfunctional behavior in employees and upgrade their skills and abilities due to more participation which
would ultimately lead to improved organizational performance and productivity.
But the literature also points out that organizational democracy practices do not reach out the lowest
employees as they are not in a position to capture the `big picture' of organizational governance and hence the
quality of their decisions will be compromised and not up to the mark of organizational requirements
(Harrison, et al. 2004). It is also mentioned that organizational democracy is a time consuming process which
demands sweeping changes, and fierce resistance from various worker groups and clash of interest of different
corporate players would make it even more time consuming and difficult to implement in the organizations.
Organizations are after all much like societies in the sense that they are not homogenous and parallel the rich,
middle and poor classes of society as top, middle and lower management hierarchies in organizations. In real
economies there is a surplus and no equality (Ringen, 2004) and similarly in organizations there is profit with
minimum equality among organizational members. If economic democracy has failed in society, in the face of
success of political democracy, can we not assume that democracy in organizations, which are structured more
or less like societies, is doomed for failure as well? Is it not the nature of an organizational person to grasp
power rather than sharing it or giving it up?
These questions at least caution us to the fact that trying to blindly duplicate political democracy in
organizations will end up in failure and trouble. The recent researchers define corporate democracy as,
"referring to a system of democratic governance embedded in a supportive organizational structure that includes
shared residual claims by all members in combination with democratic decision-making rules" (Harrison, et al.
2004).
We can see that this definition of organizational democracy is subject to `supporting organizational structures'
as a main moderating variable which will decide the fate of the application of democratic principles in
organizations. The conceptual and structural differences among different organizations are explained aptly in
the following paragraph:
"Some (organizations) are truly command-and-control organizations where attempts by employees or managers
to be more democratic are disparaged by owners and senior executives......A few organizations are built not
just on democratic principles but are in fact `democratically designed communities' where ownership,
employment and business processes are all aligned to create viable entities that achieve a high level of
results......While larger organizations have difficulty transitioning to a full democracy, many smaller companies
have embraced a systemic approach called `open book management'" (Caimano, 2004).
In the nutshell, the organizational democracy principles can be summarized as follows:
 Participative management practices
 Increased `voice' of employees
 Focus on change
The basic theory underlying my proposed model of organizational democracy implementation in organizations
is based on the interaction between its structural and contextual dimensions. Organizational dimensions fall into
two categories: structural and contextual. Structural dimensions provide labels to describe the internal
characteristics of an organization and include degree of formalization, specialization, centralization in decision-
making, breadth of the span of control and, length and width of the hierarchy, while the contextual dimensions
characterize the whole organization, including its size, technology, environment, and goals (Daft, 2000, pp. 16,
17 & 18). These dimensions of organizations design interact with one another as shown in Figure 1.
42
img
Human Resource Development (HRM-627)
VU
Size
Environment
Goals
Structure
Culture
Technology
1. Formalization
2. Specialization
3. Hierarchy
4. Centralization
Figure 1: Interacting Contextual and Structural Dimensions of Organization Design
Adapted from Daft, 2000, pp. 17: Organization Theory & Design
The above shown interaction of the contextual and structural dimensions of the organization determine the
unique design of that organization and research has proved that these dimensions or variables are
interdependent, e.g., large organization size, a routine technology, and a stable environment all tend to create an
organization that has greater formalization, specialization, and centralization (Daft, 2000, pp. 20) or mechanistic
structure (Daft, 2000, pp. 144; Sharfritz & Ott, 2001, pp. 201). Similarly, a medium size, a non-routine
technology, and a turbulent and dynamic environment tend to create an organization that has lesser
formalization, specialization, and centralization or in other words, an organic structure.
Figure
2:
Theoretical
Organic
Framework
Structure
Linking
Successful
Organizational
Implement
Democracy to
ation of
Organization
organizations'
Organizati
al Democracy
Structure,
onal
Principles
Strategic
Democracy
Leadership
Empowering
Style
and
Strategic
Turbulent
Leadership
Environment.
Double-arrows
indicate
interdependencies
.
Turbulent
Environment
43
img
Human Resource Development (HRM-627)
VU
The underlying theory of my proposed model for successful implementation of organizational democracy is
therefore, embedded in the current literature on organizational theory. Since organizational democracy requires
participative style of management, the best suited structure to achieve this would be a free flowing organic
structure and not the rigid mechanistic structure. In the sections to follow, I will address how successful
implementation of organizational democracy depends on the presence of supportive organizational structure
and two additional variables; strategic leadership style and change (captured by the environmental uncertainty).
My proposed model is shown in Figure 2. This figure is not meant to be a full-blown theoretical model, but it
does summarize and integrate some of the findings of the previous research, along with my structure-based
predictions. For example, my contention on the connection between successful implementation of
organizational democracy and organization structure is that the relationship between the two would be
augmented in the presence of two additional variables; a dynamic strategic leadership on top of an organic
structure and with a turbulent environment around the organization.
The link of organizational democracy with supportive organizational structure, strategic leadership and
turbulent environment is now described in some detail.
Supportive Organization Structures and Organizational Democracy
Most organizational theorists like Taylor and Perrow have determined two definitions of organization structure
and have evolved the concept of mechanistic versus organic structures (Kennedy, 1983; Ambrose & Schminke,
2003).
Organizations have a mechanistic or organic structure not because they like to have one, it is because of a
particular type of product/service which the organizations is offering and to the degree of environmental
stability or the lack of it, around that organization which defines and imposes the structural requirements on
the organizations. Burns and Stalker observed that external environment was related to the internal
management structure to the extent that when external environment was stable, the internal organization was
characterized by rules, procedures and a clear hierarchy of authority. The opposite was observed to be true
when the external environment confronting an organization was complex and dynamic. These organizations
tended to have loose, free-flowing and adaptive organic structure (Daft, 2000, pp. 144). Various authors and
researchers in the field of organization theory have developed sets of characteristics which are intrinsic to
mechanistic and organic structure. The following table summarizes some of these characteristics:
Table 1
Mechanistic Structure
Organic Structure
1. Tasks are broken down into specialized
1. Employee contribute to the common tasks of
separate parts
the department
2. Tasks are rigidly defined
2. Tasks are adjusted and redefined through
teamwork
3. There is a strict hierarchy of authority and 3. There's less hierarchy of control and authority,
control, rules are many
there are few rules
4. Knowledge and control of tasks are 4. Knowledge and control are located anywhere
centralized
in the organization
5. Communication is vertical
5. Communication is horizontal
Source: Adapted from Richard L. Daft, 7th edition, 2001
These two above mentioned structures are in reality the two formally contrasted forms of management
systems, a mechanistic management system which is appropriate in stable conditions and the organic form
which is appropriate to changing conditions (Shafritz & Ott, 2001, pp. 201- 201).
Michael Porter's framework of competitive strategies of either low cost leadership or differentiation also
captures the same structural differences among organizations as a result of their interaction with the
environment. His low cost leadership strategy where the organization aggressively seeks efficient facilities,
pursue cost reduction, and uses tight controls to produce the product more efficiently (Daft, 2001, pp. 60) is
clearly more suitable for mechanistic organizations rather than organic forms where the strategy of
differentiation, characterized by organizational attempts to distinguish their products or services from others,
would be more suitable.
Broadly speaking, one can conclude that organizations with an efficiency focus would be more prone to have a
mechanistic form and organizations which focus on effectiveness (or are less concerned with efficiency) would
44
img
Human Resource Development (HRM-627)
VU
do better with an organic structure. In a business context, increased efficiency can result from providing greater
output for a fixed set of inputs, by marinating output at reduced levels of input or combining the two
approaches, the inputs are generally seen as costs which are usually minimized in order to achieve efficiency
(Bronn et al. 2005). Other researchers have also defined organizational efficiency as cost-effectiveness or value
for money (Smith & Street, 2005; Lear & Fowler, 1997) and as fostering, "intra firm compromises
economically" (Gellner, Frick & Sadowski, 1997). It is also mentioned in the literature that corporate efficiency
is measured in terms of productivity because increased productivity leads to more competitive cost structure
and the ability to offer more competitive products and services (Chowdhury, 2005).
The discussion so far has yielded that organizational democracy cannot be blindly applied across all
organizations. There seem to be some prerequisites or some, "internal conditions that facilitate......democratic
organizations" (Rothschild & Whitt, 1986, pp. 172). I now enlist some of these prerequisites of organizational
democracy:
1. a more provisional sense of temporality towards organizations than that of bureaucracy
2. a climate (culture) in which constructive mutual and self-criticism can flourish
3. small size
4. homogenous membership in terms of backgrounds and values
5. a turbulent and dynamic environment around the organization so that the organization's main focus in
innovation and idea generation (differentiation) rather than efficiency (cost leadership)
6. a team culture
7. an internal environment where employees trust each other and this trust is emanating from the
leadership of the organization
8. a horizontal and flat organization as opposed to a tall and vertical one
A comparison of the above mentioned prerequisites with the structural characteristics mentioned in Table 1
clearly demonstrates that organic organizations with horizontal communication, employee participation, less
vertical hierarchies and decentralization would be much more suited for the practice of democratic principles
than a large and tall bureaucratic organization.
Even in organic organizations the assumption that organizational democracy would work like political
democracy is a far fetched idea. The top management of organizations is not elected representatives like
members of a politically elected government and employees, specially the lower cadre employees, cannot be
expected to understand the longer-term repercussions of their decisions and hence the quality of these
decisions can be challenged. But organizational democracy in large and bureaucratic organizations seems just
out of question. In mechanistic organizations it's not the people but rules and procedures and their meticulous
implementation which makes possible the successful realization of a cost leadership strategy in their intensely
competitive but relatively stable environments. There is little scope for `participatory' management systems in
mechanistic organizations and hence little scope for the practice of democratic principles in these
organizations.
On the basis of the discussion so far, following is the first proposition of this paper:
Proposition 1: Organizational democracy would be implemented more successfully in organizations with an organic structure.
45
Table of Contents:
  1. INTRODUCTION TO HUMAN RESOURCE DEVELOPMENT:The Concept and its Dimensions, Targets of Development
  2. FOUNDATIONS OF HUMAN BEHAVIOR:Attitudes, Personality, Emotional Intelligence
  3. PERCEPTION:Attribution Theory, Shortcuts Frequently Used in Judging Others
  4. INTRINSIC MOTIVATION:Why Choose Big Five Framework?, THE OUTCOME OF FIVE FACTOR MODEL
  5. FIVE FACTOR MODEL:The Basis of Intrinsically Motivated Behavior, Intrinsic Motivation and Values
  6. MOTIVATION:EARLY THEORIES OF MOTIVATION, Designing Motivating Jobs
  7. The Motivation Process:HOW TO MOTIVATE A DIVERSE WORKFORCE?,
  8. INTERPERSONAL COMMUNICATION:PRINCIPLES OF INTERPERSONAL COMMUNICATION
  9. THE WORLD BEYOND WORDS:DIFFERENCES BETWEEN VERBAL AND NONVERBAL COMMUNICATION, MINDFUL LISTENING
  10. TRANSACTIONAL ANALYSIS:EGO STATES, Parent Ego State, Child Ego State
  11. TYPES OF TRANSACTIONS:Complementary Transactions, Crossed Transactions, Ulterior Transactions
  12. NEURO-LINGUISTIC-PROGRAMMING
  13. CREATE YOUR OWN BLUEPRINT
  14. LEADERSHIP:ORGANIZATIONAL DEMOCRACY
  15. LEADERSHIP:Environment and Strategic Leadership Link, Concluding Remarks
  16. UNDERSTANDING GROUP BEHAVIOR:Stages of Group Development, Advantages of Group Decision Making
  17. UNDERSTANDING TEAM BEHAVIOR:TYPES OF TEAMS, Characteristics of Effective Teams,
  18. EMOTIONAL FACET:PHYSICAL FACET
  19. HUMAN RESOURCE DEVELOPMENT & THE ROLE OF GOVERNACE:Rule of Law, Transparency,
  20. HUMAN RESOURCE DEVELOPMENT:The Concept and Its Dimensions, Targets of Development
  21. HUMAN DEVELOPMENT INDEX (HDI):Methodology,
  22. REPORTS:Criticisms of Freedom House Methodology, GROSS NATIONAL HAPPINESS
  23. SECTORS OF A SOCIETY: SOME BASIC CONCEPTS:PUBLIC SECTOR, PRIVATE SECTOR
  24. NON GOVERNMENTAL ORGANIZATIONS (NGOS):Types, Methods, Management, Citizen organization
  25. HEALTH SECTOR:Health Impact of the Lebanon Crisis, Main Challenges,
  26. A STUDY ON QUALITY OF PRIMARY EDUCATION BACKGROUND AND RATIONALE
  27. ADULT EDUCATION:Lifelong learning
  28. THE PRACTICAL PERSPECTIVE OF ADULT EDUCATION:Problems of Adult Literacy, Strategies for Educating Adults for the Future
  29. TECHNICAL & VOCATIONAL EDUCATION:VET Internationally, Technical Schools
  30. ASSESSING THE LINK BETWEEN INTELLECTUAL CAPITAL FORMATION AND PERFORMANCE OF A UNIVERSITY
  31. SCIENCE & TECHNOLOGY EDUCATION:Social responsibility, Curriculum content
  32. ENVIRONMENT:Dark Greens and Light Greens, Environmental policy instruments
  33. HDI AND GENDER SENSITIVITY:Gender Empowerment Measure
  34. THE PLIGHT OF INDIAN WOMEN:
  35. ENTREPRENEURSHIP:Characteristics of entrepreneurship, Advantages of Entrepreneurship
  36. A REVISIT OF MODULE I & II
  37. HUMAN DEVELOPMENT & ECONOMIC GROWTH (1975 TO 2003):
  38. PUBLIC PRIVATE PARTNERSHIP:Origins, The Desired Outcomes of PPPs
  39. PRINCIPLES OF PUBLIC PRIVATE PARTNERSHIP (PPP):Situation in Pakistan,
  40. DEVOLUTION REFORMS A NEW SYSTEM OF GOVERNMENT:
  41. GOOD GOVERNANCE:Participation, Rule of law, Accountability
  42. MACROECONOMIC PROFILE OF A COUNTRY: EXAMPLE ECONOMY OF PAKISTAN
  43. COORDINATION IN GOVERNANCE: AN EXAMPLE OF EU, The OMC in Social Inclusion
  44. MOBILIZING REGIONAL EDUCATIONAL RESOURCES: THE ASEAN UNIVERSITY NETWORK, A CASE STUDY
  45. GOVERNMENT PRIORITIES AND POLICIES:Role of Government, Socio Cultural Factors in Implementing HRD Programs