Thursday, February 23, 2006

More on Democracy

Hi,I am curious, how do you see democracy working in the context of business? I agree that it at the very least bringing elements of democracy into a business structure makes good business sense, but an organization can also easily get bogged down in consensus and also eventually suffer from an inability to make decisions effectively when it is too consensus driven. What do you think?

---It all depends on the type and size of the firm. With large firms the presence of a union (within which there are always votes taken on major issues) provides a welcome checks and balances element. Then there is the issue of ownership: Countries are, theoretically at least, owned by all of its citizens, so a good constitution like that of the U.S. can lay the groundwork for democracy. Large firms, on the other hand, belonging to the shareholders, have some measure of democracy when the shareholders vote in regards to who will manage the company. Of course, in the case of shareholders they are by no means equal: money determines voting power.
The management of a large company has the option of either setting up democratic structures within the framework of the company, e.g. the various departments will each have a voice, or the management can simply dictate policies. It makes better sense to allow as many voices to be heard as possible, as this will enrich the options available to top management. As to how much democracy there can be in a given business will need to be determined by a number of factors, not the least of which is the nature of the business. A law firm, for instance, or an enterprise with equally gifted scientists will have it easier to have a democratic decision-making structure than a complex factory.
A rule of thumb might be: the more democratic elements a business can maintain in its operation without stiffling quick decision making when it is needed, the better it is

1 comment:

brigitte said...

You mention that companies that belong to the shareholders have some measure of democracy. This of course is democracy among the owners and not among the employees. I guess when I think of democracy in terms of business, I think about it in the workplace, among the employees and not among the owners. The owners will of course have a lot of power over the employees -- whether the owners are shareholders or one or a small handful of individuals. The owners of a business having a say is not such a big deal to me. It's more of a given. But when the employees have a say -- now that's democracy in the world of business that is of interest to me.