The benefits of participatory organizations have been analyzed for some time (as the company with purposeteamwork, suggestion boxes, continuous improvement processes…), in which the work environment and relations between its members are improved, and everyone’s participation and collaboration in decision-making are encouraged, making work a matter of a team in which everyone wins.
However, it is not clear that traditional organizations, more hierarchical and in which authority and power are highly concentrated, lose market share by taking little care of their employees. What is verified is that the participation systems disappear due to disuse and the only form of participation that prevails is the one legally imposed: the union system. Probably because some companies have implemented different participatory techniques with the sole objective of improve your image in front of the public.
opposing forces
These strategies should not harbor any hope of success if managers are the ones who must develop work systems that imply a loss of power. Just as workers shouldn’t be expected to think and get involved just for the satisfaction of feeling appreciated, or for some pyrrhic rewards. Thinking is difficult and requires time and effort, making it almost impossible to encourage this type of investment in flexible companies that do not guarantee permanence over time.
This complicated problem has hardly been dealt with in the economic literature, which has put a lot of effort into understanding how the market works, mainly the price distortions that occur when supply or demand have greater bargaining power, leaving discussions in the background. on the level of hierarchy and participation in organizations.
Technology and economy of scale
It seemed that the information technology (IT) revolution could boost the market against organizations, thanks to cost and time reductions in the transmission of information. Instead, the result has been the emergence of large multinationals (Google, Apple, Meta, Microsoft, Amazon) with sufficient power. to rival the states.
This is so because IT has generated the greatest economies of scale seen to date: the marginal cost of serving a new customer is practically zero and that has turned them into natural monopolies. These large companies have the ability to prevent the emergence of competition due to the accumulation of resources and power.
In addition, IT has enabled organizations appropriate much of the knowledge of the labor factor, discouraging investment in human capital, distorting compensation balances and deteriorating long-term productivity growth.
The havoc generated
The lack of regulation (necessary to improve the efficiency of the markets) increases as technology development acceleratesassets become more intangible, corporations affect broader segments of society, and economies of scale grow to global proportions.
Three empirical pieces of evidence point to the problems of the authoritarian model of organization:
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The accelerated concentration of income in a few peoplewhich questions whether the current governance system provides sufficient and necessary well-being so as not to generate conflict between individuals.
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The decreasing trend of productivitythat calls into question the hitherto strong point of the concentration of authority.
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The lack of trust of individuals towards organizations, which can frustrate investment in specific human capital. This, together with the lack of capitalization, can cause phenomena such as the continuous failure in the implementation of technological projects by companies and the leaving the job for no apparent reason.
Regulate the business model
Voluntary initiatives such as purpose-driven business development are not enough. There must be a regulatory system that goes beyond the model of confronted management-worker participation, making use of new technologies.
In 2020, the French economist Thomas Piketty proposed to establish the legal obligation of recruit members of the organization in the boards of directors in order to increase the participation of workers in business decision-making.
The new regulatory systems They must pay attention to the reduction of decision times, to the independence of individuals and to the establishment of more transparent information systems to maintain the competitiveness of the participatory company.
These initiatives are close to self-management, where the risk caused by the uncertainty about the final production is distributed among the owners of the resources.
Ultimately, regulation should reward consciously (taxes and incentives) to the participative company, knowing that it weakens the authority and distributes the responsibility and remuneration, which is not an easy problem to solve.
Carlos Saenz RoyoOrganization and management of companies, Zaragoza’s University
This article was originally published on The Conversation. read the original.
