Consider some of the costs that we now accept as costs of doing business–paying for time when employees aren’t productive because they’re either out sick or not working to their full capacity; dealing with grievances; continually hiring and training new employees because of turnover; the increasing cost of health insurance and the like. In large part, these costs are associated with people problems that inevitably occur in hierarchical organizations where people have little or no opportunity to participate.
Mounting evidence indicates just how costly these people problems are. Here are some examples:
Authoritarian supervision, coercion and poor employee-to-employee interaction are all causes of stress-related problems in the workplace. (Convoke, August 2003)
As much as 60% of absenteeism is due to stress. If an organization has autocratic management, it is likely driving absenteeism costs up. (Chrysalis, January, 2003)
86% of employees working in traditional hierarchical organizations coped with that culture by reducing the quality of their work. (Linda Duxbury, Carleton University School of Business)
“Management failure was as important in the destruction of the shuttle Columbia and the loss of its crew as the chunk of foam that knocked a hole in its wing…” (New York Times, July 2003)
Have you considered how much money your company spends trying to cope with people problems such as these?
Participative vs. Autocratic Leadership
A growing body of research shows that companies with a participative management style are more financially successful than those with autocratic styles. More and better ideas, free flow of information, improved decisions, higher productivity, higher morale, less absenteeism, lower turnover–all have a positive impact on the bottom line.
A 10-year study of 30 companies published in 1996 demonstrated that “organizations that consistently practice good people management create an environment that reduces–even eliminates–significant workplace stressors–have higher sales, profit, growth and margins” (Dennis Kravetz, 1996)
Companies that institute and support employee involvement and that share information freely perform significantly better than companies that are run autocratically. (Lewin, 1988)
Giving employees the opportunity to participate fully is associated with decreased turnover, increased productivity and improved financial results. (Huselid and Becker, 1995)
Real change that drops to the bottom line requires a shift from the traditional top-down autocratic model to a participative, democratic model. This shift must be accompanied by training in which people learn how to be participative and collaborative–skills most of us have not learned because our families, schools and workplaces are based on the authoritarian model. The good news is that old behaviors can be unlearned and people can learn and integrate the communication and conflict resolution skills that are essential to making participative leadership work.
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