Productivity & Profitability

The Case for Participation in The Workplace and the People Productivity Process™

This report details the rationale behind Gordon Training International’s People Productivity Process™ and reviews research which indicates that increasing participation competencies has resulted in improved financial results.

The concept of a one-way flow of power and influence from the top is no longer a viable model for organizations, and mounting evidence suggests that such management styles result in measurable losses to the companies that cling to them. Gradually replacing the old top-down style is a democratic model in which there is two-way communication, participative decision-making and in which the leadership function is distributed among group members. More and more organizations are moving toward participatory leadership as data supporting increases in profitability and cost-savings continues to mount. 

A significant obstacle, however, hinders the shift away from old management styles in most organizations. The old command-and-control model is easier. A skill-based, democratic leadership model, on the other hand, must be learned, practiced, and continually reinforced.  It’s one thing to embrace the abstract idea of a democratic workplace; in practice, transforming archaic management structures and styles into participatory ones requires a clearly defined set of skills. Today’s leadership training needs to address these skills as an integral part of every corporate change process.  


Gordon Training International’s People Productivity Process™ is based on nearly six decades of research and work that have grown from the theories and applications of Dr. Thomas Gordon, Nobel Peace Prize nominee and founder of the company. Sixty years ago, the autocratic style of management was still so deeply entrenched that a participative, democratic style was seen as revolutionary—even radical.  In the 1950’s, influenced by his mentor, Dr. Carl Rogers, and other psychologists including Kurt Lewin, Rensis Likert, and Abraham Maslow, as well as the philosopher John Dewey, Thomas Gordon created a model of group leadership in which he identified the attitudes and the specific communication and conflict resolution skills leaders must have to create participative, self-directing, self-governing, problem-solving, decision-making groups. 

Gordon believed that a democratic environment not only makes people more productive, it also makes them healthier, both mentally and physically. Gradually, the practice of participative management, has gained a foothold and, while it is still not as widely used as older command-and-control structures, it is now seeing accelerating adoption as it becomes clear that hierarchical leadership has outlived its usefulness in a complex, technological, rapidly changing world.

This shift toward a participative style of management is due in large part to the increasing evidence that management style affects the bottom line. Democracy in the workplace, it turns out, doesn’t just make people “feel better”—it also makes economic sense.

An ongoing review of secondary sources supports the hypothesis that leadership training and development programs that focus on teaching managers the skills it takes to lead participative groups, such as better two-way communication and conflict resolution skills, are positively correlated not only with employee satisfaction, but also with profitability.


In the past three decades, the business community has been pelted with new management buzzwords: “Team-building, empowerment, reengineering, adaptability, lean manufacturing, change management, employee engagement.” Such phrases are well known enough to find their way into popular daily comic strips like Dilbert, which chronicles the employee experience in a large organization, where “managerial trend-surfing” reaches an absurd apex.

After the wave of restructuring that rolled over many large organizations in the late 1990s and early 2000s, executives are left with demands from all sides to increase productivity and efficiency while simultaneously keeping headcounts “lean” and operating budgets leaner.  Highly skilled employees are left feeling less powerful and more cynical in this excruciatingly slow economic recovery. Managers, many of them newly promoted or hired, are responsible for leading people under incredibly difficult conditions and, too often, not given structured tools and strategies to help them do so successfully. They have the technical skills they need, but not the people skills.

After sorting through a confusing array of studies and leadership books, many organizations and managers simply keep on doing things the way they always have.  James O’Toole, vice president of the Aspen Institute and director of the Corporate Leaders Forum, told Fortune magazine, “Ninety-five percent of American managers today say the right thing. Five percent actually do it.”


Democratic practices such as two-way communication, cooperation and collaboration in the workplace are not new concepts.

Elton Mayo and the Hawthorne Experiments

As early as 1928, Elton Mayo conducted the now-famous Hawthorne Experiments at Western Electric, in which a group of workers was allowed to work as a team and participate in decisions affecting their work without coercive supervision. Mayo’s basic findings were that workers had a strong need to communicate and to collaborate with each other and that such collaboration did not happen by accident–it had to be learned and developed.  As Mayo put it, “Authority…in actual exercise demands a capacity for vision and wise guidance that must be re-achieved daily: Since the cooperation of others is a vital element in it, social understanding and social skill are involved equally with technical knowledge and capacity…”. (emphasis added)

Kurt Lewin’s Leadership Studies

In 1938, Kurt Lewin, Ronald Lippitt, and Ralph White of theUniversityofIowaconducted a classic study, “Leadership and Group Life.” They compared different modes of leadership: autocratic, laissez faire, and democratic and they found that each style produced measurably different climates. The study also found that a democratic style of leadership was superior to either an autocratic or permissive style and concluded that groups with democratic leadership exhibited more group initiative, originality, cohesion, cooperation and task-oriented behavior and less aggression, tension, hostility and dependence on the leader than other types of leadership.  

Further, it was Lewin’s contention that, while people have autocracy imposed on them from outside, they have to learn how to be democratic. (emphasis added)

Rensis Likert’s Management Research

In examining different leadership styles, Likert found that to achieve maximum profitability, good relationships with employees and high productivity, organizations need to make optimum use of their human assets.   

Likert’s research showed that a participative system (as opposed to authoritarian ones) was the most effective model to achieve both the goal of making a profit and the goal of concern for employees.   This participative system was characterized as one in which leaders have confidence in their workers, where goals are agreed on collaboratively, where employees at all levels feel responsible for the company’s goals, and where there is communication and cooperative teamwork. 


Drive: The Surprising Truth About What Motivates Us

In 2009, Daniel H. Pink reinterprets, re-visualizes and re-energizes much of what we know (or thought we knew) about human motivation and how that is expressed in modern organizations. Building on the work of Herzberg, Deming and others, he repudiates the notion of rewards and punishment as viable management tools. He substitutes intrinsic motivation created in open, nurturing environments created by leaders who understand how human beings really think and work. Today’s leaders need, more than ever, to understand and embrace the skills that allow them to create and sustain the kinds of work environments that encourage independent thought, autonomy, and creativity. Not surprisingly, organizations that do this are more successful financially.

The Fifth Discipline

In 1990, Peter Senge, director of the Center for Organizational Learning at MIT’s Sloan School of Management, published The Fifth Discipline: The Art and Practice of the Learning Organization, in which he contended that the organization of the future was one in which…

(P)eople continually expand their capacity to create the results they truly desire, where new and expansive patterns of thinking are nurtured, where collective aspiration is set free, and where people are continually learning how to learn together….The organizations that will truly excel in the future will be the organizations that discover how to tap people’s commitment and capacity to learn at all levels in an organization.

Senge’s work presents a vision of leaders as “designers, stewards, and teachers.” Their job is to make it possible for employees to “continually expand their capabilities to understand complexity, clarify vision, and improve shared mental models.”

In 1991, Robert Greenleaf in his book The Servant as Leader, suggested that companies transform themselves into “servant organizations.” Leaders of such organizations would, among other things, listen receptively to individuals, develop empathy and acceptance, reward awareness and perception, and build community in the workplace.

Emotional Intelligence

On August 18, 2011 CareerBuilder released the results of a survey that found 71 percent of employers say they value emotional intelligence over IQ. Even five years ago such an assertion would have been the subject of ridicule. Since his groundbreaking work, however, much has changed in corporateAmerica. Some argue that it has been too little and too late.

In 1995, Daniel Goleman popularized and expanded on the concept of emotional intelligence which had been described several years earlier by John Mayer and Peter Salovey.  In his book, Emotional Intelligence, Goleman explored the reasons behind an apparent paradox: Some of the most successful people are not necessarily those with a high IQ but rather, those who had a set of five concrete traits and skills: self-awareness, self-regulation, motivation, empathy, and social skills. 

Goleman further applied his research to the workplace in Working with Emotional Intelligence, in which he explained why it was important for leaders and managers to develop emotional skills. “A leader’s strengths or weaknesses in emotional competence can be measured in the gain or loss to the organization of the fullest talents of those they manage.” Goleman concludes that the most effective leaders tend to possess a high EQ.


The Center for Creative Leadership

The Center for Creative Leadership, in a study published in 2010, noted that employee engagement is very high but companies are now faced with a challenge to keep those employees as the economy recovers, “What can employers do to promote retention? While compensation, benefits and development opportunities matter, the World Leadership Study shows the employee-manager relationship has a far more significant impact. Among those who strongly agree that they work for a manager who cares about their well-being, CCL found that 94 percent intend to remain with their current employer – compared to only 43 percent of those who strongly disagree.”

The Gallup Studies

In 2009,Gallupconducted a meta-analysis on employee engagement. They found,  “Business/work units scoring in the top half on employee engagement essentially double their odds of success in comparison to those in the bottom half. Those at the 99th percentile have nearly five times the success rate as those at the 1st percentile. Median differences between top-quartile and bottom-quartile units were: 12% in customer ratings, 16% in profitability, 18% in productivity, 25% in turnover (high-turnover organizations), 49% in turnover (low-turnover organizations), 49% in safety incidents, 27% in shrinkage, 37% in absenteeism, 41% in patient safety incidents, and 60% in quality (defects).”

In 1999, the Gallup Organization, revealed the results of a twenty-five-year survey of more than a million employees. Gallup’s conclusions, published in the book First, Break All the Rules, as well as in the Journal of Applied Psychology, was this: While incentives like pay and benefits packages were important contributors to employee satisfaction, the one variable that made the most difference in retaining the best kinds of employees was management.

Gallup’s previous 1998 study of twenty-four companies and 2,500 “business units” (such as a store branch, restaurant or factory) developed a meta-analysis technique that allowed it to compare apples with oranges. The study discovered that employees who responded positively to twelve specific questions tended to work in business units that were more productive, “…with higher levels of productivity, profit, retention, and customer satisfaction.”

The Gallupstudy also demonstrated a measurable linkage between employee opinion and business performance across companies and industries. Marcus Buckingham and Curt Coffman, the Gallupexperts who presented the company’s results in First, Break All the Rules, concluded: “If you can create the kind of environment where employees answer positively to all twelve questions, then you will have built a great place to work.”

What is their prescription? Management, management, management. “We had discovered that the manager—not pay, benefits, perks, or a charismatic corporate leader—was the critical player in building a strong workplace,” wrote Buckingham and Coffman.

McKnight’s Morale Study

Gallup’s research continues to be backed up by other studies. A study published in the Journal of Managerial Issues in 2001 looked at the question of how a close employee-management relationship both affects morale directly and moderates the effects of management “controls” on morale. (Management controls are the tools that a manager uses to keep track of employees, such as overseeing them and holding them accountable.)

The researchers, led by D. Harrison McKnight ofMichiganStateUniversity, defined morale as “the degree to which an employee feels good about his or her work environment.” Morale measures were designed to encompass not only motivation, but also commitment to the organization.

Their hypothesis was that the closer a relationship an employee had with a manager, the more likely employee morale was to be positive. Furthermore, they believed that such a close relationship would make employees feel better about the kinds of controls that management exercised over them.

Relationship closeness with management was defined as “the extent to which an employee has a sharing, open, familiar relation with management.” By “moderating the effects” of management controls (for example, managers’ responsibilities to oversee and to track employee performance), the researchers suggest that having an open and trusting relationship with a manager makes such managerial functions less invasive or obtrusive.

At more than 100 manufacturing plants, researchers found that relationships with managers helped the formal controls, i.e., management tools, to work better.

Employee-management relationship closeness (in terms of interaction, sharing of management plans, and egalitarianism) appears to be a key to consistent success with feedback, autonomy, and incentive controls.

Kravetz’ People Management Practices Study

Over a 10-year period, Dennis Kravetz (1988) conducted a study to learn whether there was a link between the way people were treated at work and the company’s financial success.  His hypothesis was that companies with participative management styles would be more financially successful than those with autocratic management styles. 

Kravetz asked employees of 30 companies to describe on a pre-determined scale how participative the company’s management style was.  He called these “people management practices,” or PMPs.  He then correlated these results with the financial success of the companies through public sources.  Included in this data was growth in sales, equity, profits, and profit margins.  He found “a very powerful association between how a company manages people and financial success.”

Since then, Kravetz has surveyed over 330 companies, half of which are in the Fortune 500, and obtained similar results.

Related Research by Others

David Lewin (1988) conducted a study of 495 companies on the economic impact of participative work practices and found, among other things, that companies with broad employee involvement programs, and which share information widely, perform significantly better than companies that are run in an autocratic style.  He also found that training and development have a positive effect on business financial performance. Furthermore, Lewin found that companies combining participation (both intellectual and economic), training and development, and flexible job design increased their productivity even more—2/3 of the difference in the bottom line impact was due to the combined effect of these practices.

Mark Huselid and Brian Becker (1995) examined the performance and work practices of 222 firms and found that participative work practices are significantly associated with decreased turnover, increased productivity and better financial performance.  These practices also have a substantial impact on financial results:  Each standard deviation increase in their use increased a company’s market value by between $35,000 and $80,000 per employee.


Despite the difficulties facing leaders during these difficult economic times, the fundamental principles of what makes organizations work remain the same today as they were 60 years ago. Organizations that recognize the value of optimized management-employee communication, decision-making and strong morale often skip steps in well-intentioned efforts to improve the “culture.” While it may not be popular to point out that changing something as vast, entrenched, and usually unconscious as an organization’s climate takes a significant investment of time, commitment, and resources, it is honest.

Since the investment in creating stronger organizations does require significant investment, the rest of this paper draws upon decades of experience with Gordon Training International (GTI) clients in a multitude of industries, both public and private, to recommend specific steps decision-makers can take to increase return on investment.

Many companies, for example, offer far too many incentives and tangible benefits for improvements, while simultaneously overlooking the most crucial aspects of improvement (namely, skills training and follow-up).

Incentive programs should be on par with the rest of the industry, but should not be a primary focus. Buckingham and Coffman state,

It’s not that these employee-focused initiatives are unimportant. It’s just that your immediate manager is more important. She defines and pervades your work environment. If she sets clear expectations, knows you, trusts you, and invests in you, then you can forgive the company its lack of profit-sharing program. But if your relationship with your manager is fractured, then no amount of in-chair massaging or company-sponsored dog walking will persuade you to stay and perform.

The research reviewed in this White Paper reinforces a central assumption that underlies the work and programs developed and offered by GTI: Before undertaking company-specific technical or culture-change initiatives, ideally organizations should focus on improving basic communication and conflict-resolution skills, and supporting the development of empathic relationships between managers and workers.


It’s not easy to foster relationship skills in managers, who have often attained their positions by demonstrating superior technical competence or highly competitive personality traits. Ironically, training people who achieve leadership positions to be effective leaders can be challenging because the best approaches to communication and conflict resolution require that supervisors cede the “command and control” style that may have helped them reach a position of leadership in the first place.

In The Leadership Challenge, James Kouzes and Barry Z. Posner describe the qualities of the best leaders:

Leaders find the common thread that weaves the fabric of human needs into a colorful tapestry. They develop understanding of collective yearnings; they seek out the brewing consensus among those they would lead. They listen carefully for quiet whisperings and attend to subtle cues. They get a sense of what people want, what they value, what they dream about. Sensitivity to others is no trivial skill; rather, it is a truly precious human ability.

The Gallup Organization calls the process of building empathy creating “emotionally engaged” employees.

In Follow This Path, Curt W. Coffman and Gabriel Gonzalez-Molina write:

Emotionally committed employees form teams that deliver exceptional outcomes. Customers recognize the passion and commitment employees feel toward them and cannot help but respond in an emotional way. This emotionally driven reaction builds a bridge between employees and customers that creates engagement. This engagement becomes the key factor that drives sustainable growth.

Characteristics of Effective Training

With the focus on management, and specifically leadership training for managers in skills and tools that create a more committed, satisfied, and productive workforce, it is a given that a solid training program for managers is needed as a part of organization and leadership development.

GTI has developed a set of benchmark “best practices” criteria, based on decades of research in human learning, by which any training program (whether it be in-house or outsourced) should be evaluated. These best practices follow from current research and findings in adult learning theory.

1.  Lay The Foundation First

Before rolling out specific training or initiatives that attempt to improve operations at the microscopic level, organizations need to ensure that management and staff are equipped with fundamental communication and relationship management skills.

Numerous studies have verified that cooperation, communication, interpersonal skills, listening and summarizing are skills that are critical to higher-order team success, and in most cases, these skills must be taught in the workplace.

In their book The Leadership Challenge, James Kouzes and Barry Z. Posner write, “Every leader ought to know how to paraphrase, summarize, express feelings, disclose personal information, admit mistakes, respond non-defensively, ask for clarification, solicit different views, and so on.”

These skills are at the heart of emotional intelligence. Cultivating them in employees and managers is the key to all of the benefits of training and development.

An organization that is already able to communicate across levels productively and functionally, and to manage conflicts creatively and beneficially, is prepared appropriately for higher-order training and learning that will require those skills for successful implementation.

2. Encourage Practice and Repetition of New Skills

Emotional patterns are thought today to be lodged deep in the “limbic brain,” the primitive system where such strong drives as self-preservation and pleasure are seated. Essentially, this means emotional patterns are not easy to change, especially in adulthood.

Practice and repetition are important to lasting change. Daniel Goleman, Richard Boyatzis and Annie McKee in their book, Primal Leadership, argue that the limbic brain is capable of changing its patterns, even later in life, provided the right ingredients are present:

The limbic brain…is a much slower learner—particularly when the

challenge is to relearn deeply ingrained habits. This difference matters

immensely when trying to improve leadership skills: At their most basic

level, those skills come down to habits learned early in life. If those habits are no longer sufficient, or hold a person back, learning takes longer. Reeducating the brain for leadership learning, therefore, requires a different model from what works for the thinking brain: It needs lots of practice and repetition….
The brain’s ability to sprout fresh connections continues throughout life. It just takes more effort and energy to learn in adulthood lessons that would have come more readily in our early years, because these new lessons fight an uphill battle against the ingrained patterns the brain already has in place. The task is doubled–we have to undo habits that do not work for us, and replace them with new ones that do.

Understanding the critical need for continuing practice and repetition and creating a plan of action to encourage these behaviors is an essential part of any successful training.

3. Create and Use Safe Feedback Mechanisms

No organization or leadership training program can be adequately tracked without a fail-safe, anonymous feedback mechanism.

Employees must feel completely safe before they will tell you what they really think. Many managers are unaware of how they are really perceived. As Goleman, et al, point out in Primal Leadership:

The higher up a ladder a leader climbs, the less accurate his self-

assessment is likely to be. The problem is an acute lack of feedback.…[T]he higher a leader’s position in an organization, the more critically the leader needs that very kind of feedback….[W]hy don’t leaders solicit and encourage accurate feedback?…[I]t’s often because they truly believe they can’t change….The parallel often appears with the people around the leader: If they believe the leader cannot truly change, then why offer distasteful and awkward negative feedback?

Before beginning any change initiative, it is advisable for organizations to either obtain or create the structures needed for truly anonymous feedback.

4. Establish Clear and Regular Follow-Up Procedures

It is difficult for education or training to effect real and lasting change without structured follow-up activities. As adults, people require continued exposure to new concepts, and practice for new skills to take root and grow.

Typically, managers and staff in a large organization with the mandate to change may be sent to a short-term training. On the basis of exposure to new concepts, they may even begin to change the way they work. Unfortunately, anecdotally and statistically, they are almost inevitably doomed to slip back into old patterns.

Goleman, et. al., discuss this honeymoon effect, in Primal Leadership.

A person leaves the program enthusiastic and committed to improving. But, back in the office, dozens of emails, letters and calls await him. The boss and a subordinate have each called with an emergency, and he is sucked into the swamp of demands. All of the new learning slips away as old, knee-jerk responses take over. Soon he is acting the way he always has—not the new way committed to at the end of the training.

The “Training Honeymoon” effect can be mitigated by a carefully planned and structured follow-up mechanism that continues to track trained employees for a full year or more, and continues to re-expose them to the concepts that were introduced through leadership training. Without such reinforcement, any learning will be significantly diminished through lack of practice.

The People Productivity Process™

Grounded and guided by the type of research summarized in this paper, as well as the research and scholarship of our founder, Dr. Thomas Gordon, Gordon Training International provides proven, tested resources for empowering people and their organizations. 

The design of our proprietary leadership training system, skill-based immersion workshops, and graduate follow-up program—all rooted in this research—utilizes a six-step methodology, the People Productivity Process. It is a unique and powerful model that equips managers and employees with the fundamental skills they need to negotiate conflicting demands, goals and conflicts in the workplace. For more information about our methodology, please visit our web site (


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