Style of Management and Leadership by Manfred Davidmann • Contents SummaryStyle of ManagementSeeing things as they are Organisation Authoritarian organisation Participative organisation Degree of participation Style of Management in Different CountriesDifferent countries The changing pattern Effect on standard of living Impact of the Style of Management on OrganisationsStyle of management in organisations Overcoming problems of size Training AppendixAuthoritarian attitudes result in confrontatio n, leadership and co-operation result in economic success Notes <..> and References {..} Illustrations (Click any illustration to see the full-size chart) 1-5 Knocking One's Head Against a Brick Wall 6 Style of Management in Individual Countries 7 Style of Management in Different Countries: Changes over Ten Years 8 Effect of Style of Management on GNP/head in Different Countries 9 Effect of Style of Management on Rate of Increase ofGNP/head 10 Style of Management in Large, Medium and Small Enterprises11 Improving the Effectiveness of Management
Seeing things as they areOrganisationAuthoritarian organisation
Participative organisationDegree of participationStyle of Management in Different Countries
Different countriesThe changing patternEffect on standard of living
Impact of the Style of Management on Organisations Style of management in organisationsOvercoming problems of sizeTraining
Appendix Authoritarian attitudes result in confrontation,leadership and co-operation result in economic success
Notes <..> and References {..} Illustrations (Click any illustration to see the full-size chart)
1-5 Knocking One's Head Against a Brick Wall6 Style of Management in Individual Countries7 Style of Management in Different Countries: Changesover Ten Years8 Effect of Style of Management on GNP/head in
Different Countries9 Effect of Style of Management on Rate of Increase of GNP/head10 Style of Management in Large, Medium and Small
Enterprises 11 Improving the Effectiveness of Management
What Manfred Davidmann has done in his work on the generalmanagement of enterprises and communities is to lay thefoundation for, and develop, what truly can be called'management science'.
A management science which is objective, sees things as they
are. Manfred Davidmann vividly asks us 'to see things as theyare' and shows us how to do this. What he puts before us in hiswritings enables us to move into whatever direction we wish totake. But, as he used to say in his lectures, 'at least we will befully aware of the consequences of what we are doing'.
This report is a landmark in management and communityscience and their methods. It pulls the diverse world-wideevents in industrial relations and in government/peopleconfrontation into a meaningful, clear and highly significant
picture of interrelated events fitting into a consistent pattern.
Clearly defined and described is the whole scale of style of management and organising, from fully authoritarian to fullyparticipative. It applies to community organisations, commercialenterprises, political parties, whole countries. The socialassumptions underlying each of the styles are given, as areproblems they create, the symptoms by which they can be
recognised, and the ways people work together or againsteach other within them.
There are clear definitions of authority and of responsibility,and how they are applied in companies under different styles of
management. Also discussed are the extent to which authorityis balanced between top and bottom, participation in decision-making and the corresponding style of management.
Style of management is shown to depend on the size of theenterprise and related to company effectiveness and results.
The different problems faced by small and large companies areoutlined as well as how to overcome problems of size, how toimprove the effectiveness of management, and the need for teamwork.
Smaller companies are more effective than larger ones, andthe effectiveness of larger companies can be increased byabout 25 percent by training. An illustration shows how style of management was improved by appropriate managementtraining in a large organisation.
The right to strike is a basic component of any style of management and Manfred Davidmann defines it, giving its
source and authority. He looks at the extent to which peopleare allowed to strike, and at the extent to which they are able tostrike, and what this indicates.
Of interest is his description of Britain's labour relationsstruggle in the seventies. This brings in the right to strike,unofficial strikes, role of shop stewards, economic damageresulting from introducing such labour relations legislation andthe extent to which this was known in advance.
Manfred Davidmann defines and develops a scale of style of management, shows how to place organisations on this andhow to chart their progress in time. It is illustrated by changesoccurring in eleven countries over ten years. This report waswritten about fifteen years ago and the examples are drawn
from that period. However, they illustrate how to placeorganisation on the scale and how to evaluate changes in thestyle of management.
STYLE OF MANAGEMENT
Here we are looking at and discussing some of the basicrequirements for achieving good management andadministration, good leadership and government.
From the point of view of results, the effectiveness of theorganisation is determined by the way work is organised andby the way people work with or against each other. The way inwhich people co-operate with each other, with the leadershipand with the community, indeed the extent of their commitmentto their organisation, depend on the style of management.
So here we look at different styles of management, on their impact on people, on the way in which people work together and on results.
Just think of the many supplies and services required daily to
enable a large city like London to survive. Food has to beproduced, harvested, stored and transported. Waste productshave to be collected and treated or dispersed. Electricity has tobe generated and distributed, transport has to be provided.Houses have to be built. Streets have to be cleaned andmaintained, the district has to be policed. And all these andmuch more for millions of people, daily.
In our modern, industrialised, technological and highlycompetitive international environment it is essential that manyexperts from different areas of activity and different levels of society coming from different backgrounds work together tosuccessfully achieve the completion of large projects such asexploring space, or the building of large oil gathering andrefining installations.
Many experts have to work together to provide our daily needs,
to enable us to have good and satisfying lives. Discord in onearea can inconvenience many people and it is essential thatpeople co-operate with each other freely and effectively.
Experience shows that the larger the organisation the moredifficult it is to achieve the necessary degree of co-operationand that larger organisations are usually much less effectivethan smaller ones as people are working against each other instead of co-operating. We will see that improving the style of management can by itself increase the effectiveness of operating, improve results obtained and the way in whichresources are being used, by about 20-30%. The gains to bemade by improving the style of management are thus veryconsiderable not only from the point of view of a better return to
the shareholders and to the community but also from the pointof view of greater contentment and satisfaction felt byemployees.
Consider the following two stories. The first is about a civilservant:
When a very senior civil servant retired to his country cottage,he caused a stir in the village. Every morning one of the localboys would call and disappear for a minute or so into his
cottage. They persuaded the boy to reveal what was going on:"I am paid to knock on his bedroom door and shout a fewwords and then he shouts a few words". He finally told themwhat these words were. He said: "I shouts 'The Secretary of State wishes to see you', and he shouts back 'To hell with theSecretary of State'."
The second story is about a man who is working as a foremanin the garage of a Municipal Forestry Commission.
The garage wasn't efficient but since he started working for them things run much more smoothly. If a spare part is neededbut cannot be obtained, if anything goes wrong, he is the onewho sorts things out in his own quiet and effective way. For example, when the garage was told that it would take some sixmonths for a new radiator to be delivered to them, he simplytelephoned the factory to confirm this disturbing news. The
radiator was delivered beautifully wrapped the next day byspecial messenger.
You probably know the name of this foreman. It is Alexander Dubcek, the man who led his country in a bid for freedom in
l968. This is what he was doing a few years ago.
What he gets from those with whom he comes into contact isnot just esteem and respect but also co-operation and as aresult 'things run much more smoothly'. Compare this with theattitude to his work of the retired civil servant whose idea of blissful retirement is to be able to shout every morning 'To hellwith the boss'. This kind of frustration with management andworkplace indicates internal conflict and struggle, indicatesconsiderable lack of identification with the organisation and its
objectives.
People live and work together. Important is that the way inwhich they feel about their place of work, and the way in whichthey co-operate, depends on controllable factors, depends onthe style of management.
Those who live with you, work with you, or work for you willthink about living and working with you in either one way or theother. Certain is that the way in which they react depends on
the way in which you behave, depends on your style of management, depends on the factors which we will nowexplore.
All of us have at some time come up against a brick wall. Weare trying to achieve something which is difficult and keep onknocking our head against this brick wall which stops us. It may
be the system or the organisation or some other reason whichis stopping us.
So we find ourselves in the position of knocking our headagainst a brick wall and Figure 1 illustrates this.
In that kind of situation, what can one do? The wall is verysolid, very high, extends almost indefinitely on either side andits foundations are deep and strong. In other words we cannotget through it, we cannot climb over it, we cannot walk around
it and we cannot tunnel underneath it. So what are thealternatives, what can we do?
Of course we can keep on knocking our head against the brickwall. Continuing to do so could have drastic results (see Figure2). One lands up with a sore head and it may take some timeto recover from this. The expression 'sore head' here covers awide range from a general feeling of being fed up or of frustration to more severe symptoms.
Another way of dealing with the situation is to leave it, toemigrate, to find another job (Figure 3). People do not reallylike doing this and a lot of frustration can build up and beendured before people finally take the step. Their frustrationhas been building up for a considerable time before they takethe step. It may have taken a year or two years before anemployee makes up his mind to change his job and leaves.
There is yet a third way out of the situation (see Figure 4). Onecan sit down with one's back against the wall drinking tea, saki
or whatever the local drink may be, letting the wall support one,taking it easy and playing the game according to the localrules.
These are really the only three ways out which are normallyopen to one. However, people who are involved in such asituation do not see it in such simple terms. People are often
deeply emotionally involved in their work and home situations.Success or failure at work is important as it determines not onlyone's standard of living and the standard of living of those whodepend on one but also determines the sense of well-being
and satisfaction of the individual concerned. Hence peoplereact strongly and emotionally to the kind of factors we aretalking about and will be discussing.
What I am asking you to do now is something quite differentand much more difficult. I am asking you to tear yourself out of this involvement with your situation at home or at work, with thekind of brick walls you are struggling with or which support you.I am asking you to see things as they are.
Figure 5 illustrates this. It shows the human eye looking at thetotal situation, seeing the situation as it is. We see the brickwall, the bricks from which it has been built, and their size. Wesee the thickness of the wall and the cement which holds ittogether. We see its height and its length and have a good lookat the foundations. We see the individual, see what he is doing,see the alternatives open to him and the consequences whichresult from choosing any one of the alternative ways of behaving. Seeing the total picture we can then act accordingly,knowing the consequences of our actions. We can decide tomove in any direction or take appropriate action about the wallitself but at least we will be fully aware of the consequences of what we are doing. We will then objectively see and assess thefactors which enable people to co-operate with each other andto work together effectively.
ORGANISATION
We have seen that we need to leave preconceived ideasbehind so as to see the situation as it is and that we need tosee the complete picture.
The whole pattern of different ways of organising may bedescribed as a sequence from one extreme to the other, as akind of scale. At one end of the scale is the completely
authoritarian organisation, at the other end the fullyparticipative organisation. Having looked at the two extremetypes of organisation, we will then be able to recognise andassess the style of management in organisations which
combine aspects of both. Most governments, companies andorganisations fall somewhere along the scale and these we willdiscuss later.
Hence so as to understand the scale and the characteristicsand symptoms by which different styles of management can berecognised, and so as to describe the advantages anddisadvantages of each, we consider firstly an organisationwhich is at one extreme end of the scale, namely a completelyauthoritarian organisation and then consider an organisation
which is at the other end of the scale, namely a completelyparticipative organisation.
A person's authority is the right to command and the power toexact obedience. Hence when considering authority {1, 2} onewants to know where the right comes from and how the power is used. It is this which points to the basic difference betweenauthoritarian and participative organisations.
When I give a person work to do, I hold him accountable for the
way in which he does it, that is he is responsible to me. This isthe meaning of 'responsibility'.
AUTHORITARIAN ORGANISATION
Kings ruled by 'divine' right and they enforced obediencethrough, in the end, the death penalty. Under privateownership, authority is derived from ownership of the means of
production and the penalty for disobedience is dismissal. Ineach case authority is centred at the top. It is the owners whodelegate authority to the chief executive, and it is immaterialwhether the owners are shareholders as in some countries, or the state in countries such as Russia.
In authoritarian organisations it is orders which are passed
down from above and the manager's role is to pass ordersdown the 'chain of command'. He is usually not expected tomake decisions and so carries little responsibility. He doesorder and may compel the worker to carry out the tasks
demanded from him, to produce.
Those who run society on such lines find that the workingpopulation does not willingly work for the benefit of only itsrulers and then they attempt to compel the working populationto work. The stick is unemployment and the compelling force isthe fear of the economic consequences of unemployment, isthe threat of need.
They will then do all they can to make the stick more effective.
The higher the level of unemployment and the greater the needof the working population, the greater is the fear of dismissaland the more effective is the stick. Hence it is those whobelieve in an authoritarian kind of organisation who advocatethat the level of unemployment should be kept above a certainminimum level or that it should be increased, and who want toreduce social security spending.
To them it appears as if people do not want to work, as if conditions have to be created which force the working
population to do as told, by depressing their standard of living<1> and the quality of their lives so that they become moredependent on the employer.
Examples of this attitude towards unemployment are thefollowing newspaper headlines:
(a) Big fall in unemployment and record spendingthreaten economic trouble.(b) Sharp fall in jobless a sign of overheating.
Authoritarian organisations are effective in an emergency andperhaps the best known authoritarian organisations are thearmed forces.
However, enterprises organised on authoritarian lines havemany problems. Orders are passed down and mistakes readilyresult in critical appraisal and dismissal. Hence people avoid
making decisions so that matters to be decided are either passed up for the decisions to be made at a higher level, or decisions are made by committees as it is more difficult todismiss all the members of a committee for jointly making a
wrong decision. There are likely to be many such committees.People survive by becoming expert at passing the buck.Empire building takes place, this being one way of increasing
job security. Blame is passed to someone else, empires arebuilt at someone else's expense; people work against eachother and we see conflict instead of co-operation. Senior management tends to be overworked, staff turnover tends tobe high and workers restrict effort.
The kind of difficulties which arise are perhaps best illustrated
by some examples:
1. On one of the scheduled flights from Moscow {3} to theSoviet Far East only half the seats had been taken up soAeroflot cancelled the flight and told the passengers towait.
They waited in the packed terminal all that night andindeed all the next day when they were told that their flight would now be leaving.
Trying to join their flight they found that they had to payan extra 25% of their fare as a fine for missing the firstflight.
2. Nigeria ordered 20 million tons of cement {4} worth £650million to be delivered during 1975. By the middle of October there were already 250 ships queuing todischarge their cement cargoes. A further 100 cement-laden ships were due the following week. Some of these
would have to wait for more than two years to dock.
Only 4 million tons of the 20 million tons ordered hadbeen delivered and in addition there were 150 generalcargo ships queuing to discharge their cargoes.
150 freighters had been "trapped" for more than sevenmonths while waiting for permission to dock and unload.All seamen who had been stuck for more than four months were being flown home for Christmas by their
employers.
The Nigerian government then announced a draft decreeenabling them to charge owners £7,000 for every day anunauthorised vessel spent in Nigerian waters.
Normally the docks could handle less than one and a half million tons of cement per year and a basic cause of thecongestion would appear to be lack of co-operation,contact and teamwork between different ministries and
departments.
3. Gerald Smith when leader of the American delegation {5}to the SALT negotiations in Vienna which aimed to limitnuclear weapons, submitted remarkable Russian tablesand drawings which compared the number and size of American and Russian inter-continental rockets andshelters for housing them. He was apparently submittinginformation prepared by Russian military intelligencethemselves.
In a counter-statement the leader of the Sovietdelegation, Vladimir Seminiov, made a new evaluationbut was openly corrected by his military deputy, ColonelGeneral Ogarkov.
After this meeting, Ogarkov took one of the Americandelegates to the side and whispered to him. He saidthere was no occasion whatsoever for the Americans todivulge their knowledge of Soviet military data in front of
civilians of the Soviet delegation as these matters areexclusively the concern of Soviet military officials.
A fine picture of conflict instead of co-operation betweenRussian military and civilian officials, that is departments.
4. Israel earns much foreign currency from tourist traffic, but
it was reported that the Ministry of Tourism continued toreceive complaints from Israelis and foreign touristsregarding the inadequacy of sanitary conditions andother facilities at Ben-Gurion airport.
The Ministry spokesman also pointed out {6} that theairport was under the exclusive jurisdiction of the Ministryof Transport, to which all complaints should be referred.
A clear case of passing the buck which appears todisregard the interests of those using the airport. Justwhat is the job of a Ministry of Tourism?
These are only a few examples of the kind of wasteful way in
which large units run on authoritarian lines muddle on throughcrisis after crisis. They cease to be able to learn from pastmistakes, the same mistakes are made again and again. Thereason some of them are still in existence is because their competitors are just as ineffective, are just as incapable of moving forward in any real sense.
Crisis succeeds crisis in badly managed as well as inauthoritarian organisations. This may be due to badmanagement but in an extremely authoritarian organisation
crises are often almost artificially created by managers so as toobtain co-operation. If I go to Jim and say "I want you to sweepthe floor of this office three times within the next half-hour, or else!" he is not going to like this one little bit. He will go throughthe motions but the office will be badly swept and the next half-hour will appear to him to be an eternity of drudgery, boredomand frustration. If on the other hand I can say "We are in realtrouble, some very nasty stuff has been spilled and it isimportant for all who work here that the floor be sweptthoroughly three times and quickly, say within thirty minutesanyway. I wonder if we've got someone who could do it?", thenhe is likely to volunteer for the job. It will be done extremelywell, it will get done within the half-hour and probably with fiveor ten minutes to spare. If afterwards I can go to him and say"Well done, we are all grateful" he will be left with the feeling of having spent half an hour most usefully serving the community,having done a very worthwhile job indeed. In other words,
people try to help each other and in an authoritarianorganisation crisis may succeed crisis as this is one way of getting work done. However, one can cry wolf once too oftenand in an authoritarian organisation 'This must be done today'
is succeeded by 'Do this now' which is succeeded by "We arein a mess, drop all else and do this now". In suchcircumstances people soon learn that crises are the routinerather than the exception and cease to care.
Centralised decision making is quick and decisions can beimplemented quickly but it generally fails to utilise the potentialof the employees.
Larger organisations also generally fail to perform as well as
they should because of internal conflict, because of confrontation, lack of co-operation and lack of teamwork.
Having now looked in some detail at the kind of organisationwe find at one end of the scale, namely the authoritarianorganisation, we can now look at the other end of the scale, ata completely participative organisation. Following this we willlook at the large number of organisations which aresomewhere in between.
PARTICIPATIVE ORGANISATION
The story is told that when a new manager was appointed {1}to a textile mill in America he walked into a weave room theday he arrived, walked directly over to the agent (for the TextileWorkers Union of America) and said "I am the new manager here. When I manage a mill, I run it. Do you understand?". Theagent nodded and then waved his hand. The workers, intently
watching this gesture, shut down every loom in the roomimmediately. The agent turned to the manager and said, "Allright, go ahead and run it."
This story with great clarity makes the point that there isanother authority besides the manager's. The workers'representative has authority and exercised it. The question
economically tied to the company, dependent on it for servicessuch as housing, medical or educational, this does not meanthat these companies use a participative style of management.In Japan and similar countries the compelling force is the fear
of 'losing face'. In Russia and in China the workers are notallowed to strike in any real sense and thus have no authorityand orders are passed down from the top. Protest is forbiddenand to demonstrate takes a highly developed sense of socialresponsibility and very considerable courage. It is seen that theRussian and Chinese systems of government and organisationare authoritarian systems in which their people work asdirected.
We have described here in outline two systems of organisation
which can be regarded as forming either end of a scale. Theposition of any organisation on this scale depends in each caseon the balance between the two kinds of authority, that isdepends on the degree of participation in decision makingwhich is practised. One can place on this scale any system of running a company or of governing a country, by consideringfor example whether and to what extent decisions are beingmade at the various levels or whether people merely followorders, or whether and to what extent people are free towithdraw their labour, are free to strike, to what extent authorityis centred at the top, or where the balance of power liesbetween management and worker. The position where anorganisation is placed thus depends on the balance of authoritybetween ruler and ruled, between owner and worker, betweenthe establishment and the population.
We can now develop this scale and place a number of organisations on it over the complete range from one end tothe other.
If we were to do this for individual companies then this wouldrequire a detailed knowledge in each case of the style of management and of company effectiveness. So what we willnow do in the next section is to look at the more generallyknown balance of authority in different countries and placethem on our scale.
COUNTRIESWe are now looking at the way different countries aremanaged, doing so country by country.
The style of management of government in different countriescan also be anywhere on the scale, from fully authoritarian(dictatorship) at one end of the scale to fully participative(policy decided by the people) at the other end.
This is a fundamental scale which cuts across artificial andineffective political divides - dictatorship of the left isdictatorship just like that of the right. Dictatorship is dictatorshipno matter whether the organisation or political party is on theleft or on the right of the political spectrum. Under participativegovernment and democracy the government and leadershipput into effect the wishes of the people, the policy decided bydelegates directly appointed by and directly responsible andaccountable to the people. Under authoritarian government or dictatorship the government and its 'experts' tell the people
what the government or rulers decide the people have tofollow.
Here 'directly' means selected by the people and voted for,each person having one vote. This is very different fromdelegates being selected by or being accountable through anestablishment such as a political party's or a Board of Directors.
Real struggle is not between political left and right but is a
struggle for democracy against dictatorship (authoritarian styleof management) in all community organisations and at alllevels.
Authoritarian attitudes result in confrontation, leadership andco-operation result in economic success.
The way in which countries are managed, that is their style of management, of course varies from country to country and
changes as time passes. Figure 6 illustrates the style of management.
The left hand side of the horizontal scale corresponds to thefully authoritarian, while the right hand end corresponds to thefully participative way of managing. The two ends are called 'A'and 'B' respectively, for convenience.
What we can now do is to place on the scale some linescorresponding to the style of management adopted in different
countries and then to discuss the pattern, following this by adiscussion of the effectiveness of different styles of management.
In doing so we need to remember that we are not in any wayconcerned with opinions and feelings and beliefs aboutwhether one country is better than another, whether onemethod of organisation is better than another, whether onepolitical system is an improvement on another. We areconcerned here only with the situation as it is, we are
concerned only with objective facts. Hence we assess the styleof management by two factors only, namely on the one handby the extent to which authority is centred at the top and on theother hand by the extent to which authority is centred at thebottom.
Our measure for the extent to which authority is centred on thebottom is the extent to which working people may withdrawtheir labour, that is the extent to which they are permitted to doso by the laws of the land and the extent to which they are
actually able to withdraw their labour.
We assess the style of management by these factors only andwhile at the authoritarian end of the scale there is generallylittle doubt about the extent to which authority is centred at thetop, this factor is more difficult to assess in democraticsocieties and here we find that the extent to which people are
loading and unloading of cargo had been seriously delayed bydockers. These were caused by {8} widespread discontentover food shortages.
It seems that fairly recently a group of thirty-eight Sovietworkers signed a petition against repression and oppression inthe field of work. They apparently brought the document to theattention of the Soviet authorities. However, Trade Unions inRussia appear to serve the employer (state) rather than theworkforce and the attempt to set up a free (unofficial) tradeunion for representation of the actual workforce has beencountered by repression.
Spain
Not so long ago the authority in Spain was clearly centred atthe top and strikes were illegal but the workers did strike andbitter confrontations and struggle developed between workersand employers. This placed Spain pretty close to thecompletely authoritarian end of the scale where authority iscentred at the top and strikes are illegal. The fact of protest andconfrontation means that it was then located just that little bit
further towards the participative end of the scale (see Figure6b).
Recently Spain moved much further from dictatorship towardsdemocracy and this change is shown on the scale by amovement towards greater participation, shown by a movefrom position 1 to position 2.
The considerable social upheaval and internal terroristactivities (by which I mean the use of vicious and brutal
treatment of civilian population for the sake of 'political' ends)may be related to the country's form of government or to thedesire for self-government in certain parts of the country butthey do not seem to be related to the right to strike.
When in l970 the Polish government increased food prices veryappreciably thus reducing the standard of living of the working
population there were spontaneous strikes in some areas.There was confrontation and rioting, and some workers losttheir lives. The Polish government was forced to cancel theprice increases and the disturbances resulted in a change of government, resulted in change towards greater co-operationwith the working population. Mr. Gomulka was replaced asparty leader by Mr. Edward Gierek.
So here we have a style of management which before l970was completely authoritarian, with authority centred at the top,
with strikes being illegal. Not only did they strike but theyforced a change of government, the new government beingmore concerned about the standard of living of the workingpopulation. This move is illustrated by Figure 6c, by the movefrom position l to position 2. Poland's position 2 is moreparticipative than Spain's position 1, since the Polish workers'action resulted in a fundamental change of policy on the part of the government.
In June l976 the Polish factory workers again forced the Polish
government to cancel drastic food price rises the day beforethey were due to come into force {9}. The Prime Minister wenton Warsaw television in the evening to announce hisgovernment's change of mind. He said that as some workerswere critical he had instructed the Polish parliament not toproceed with the bill providing for the price increases. This isthe second major victory for Polish workers in communistPoland. It being the second time that Polish workers forcedtheir authoritarian government to change its mind would seemto place Poland still further into the region of participativemanagement and this is shown on the scale by the move fromposition 2 to position 3.
The United States is a democratic country and it is moredifficult to determine to what extent authority is centred at thetop and to what extent it is balanced by the authority of theworking population exercising their power through the
withdrawal of their labour. The Taft-Hartly Act limits the right tostrike, seemingly shifting responsibility for declaring a strikefrom the factory floor to the union head office. A cooling-off period may be ordered which delays the beginning of a strikeby some months, in this way giving management and workersanother chance to negotiate an agreement before engaging inopen confrontation, giving both sides another chance to avoidlarge scale national economic damage which could otherwisearise.
The relative position of one country with respect to another onthe scale seems fairly clear. The right to strike exists and isopenly used but the right to strike is limited. Ownership is inprivate hands rather than in the hands of the state as in Russiaand so we place the USA a good bit further towards theparticipative style of management, roughly just over half of theway along the scale towards participative management, andthis is illustrated by Figure 6d.
Australia
On the whole, Australia is not far away from the United Statesas regards the right to strike. However, in Australia strikes areillegal since arbitration is compulsory. This places Australiaclose to the USA but also closer to the authoritarian style of management and this is shown by Figure 6d.
United Kingdom (UK)
The Industrial Relations Act came into effect in 1971. Thismade 'unofficial' strikes illegal and in this way transferred theresponsibility for deciding whether to strike or not from the menon the spot, that is from their elected shop steward, to the
union head office official. Agreements between managementand unions became enforceable at law which meant damagescould be claimed, it being possible to prosecute unofficial strikeleaders.
Before the Act there was no legal limitation to the right to strikebut ownership was private so that the UK occupied roughlyposition 1 on the scale (see Figure 6e).
I am told that the Industrial Relations Act was somewhattougher than the corresponding Taft-Hartley Act but not assevere as Australia's compulsory arbitration. Hence with thepassing of the Industrial Relations Act, the United Kingdommoved from position 1 to position 2.
What happened then was predictable and devastating.
A good deal of pressure had been used to have the Actpassed. Unemployment seemingly had been allowed to risefrom about 300,000 to about the 1 million mark and there hadbeen much reporting of strikes which stressed that there weremany strikes and that many of them were 'unofficial' or 'wildcat'strikes. The name 'wildcat' is but another name for an unofficialstrike. Clearly there were many strikes and we seemed to have
relatively more strikes than countries such as Australia andAmerica.
But when the Act came into force there began a bitter strugglebetween the working population and those who run thecountry, a hard and tough struggle which year by year increased in severity and in extent. It was in some ways a mostremarkable conflict, its major confrontations taking place inwinter after winter in increasing order of severity. Winter is thesensitive time for Britain, heating is necessary for comfort and
there was countrywide confrontation with each winter more andmore industries and services becoming involved on a nation-wide scale. The Post Office was affected, followed by thesupply of gas, electricity, the docks and coal.
The government, deeply involved in this confrontation, wasfinding loopholes to prevent strike leaders from either winning
their cases in the courts or else from becoming popular heroes.It still continued to battle with the miners three months after oilprices had been vastly increased and threatened the economicindependence of the country.
Such a fierce, fundamental and protracted confrontationinvolving directly and indirectly the well-being and comfort of probably the whole population of the country would not havetaken place about a matter such as whether an agreement wasbinding on the parties, was legally enforceable. What then wasthe point at issue between them?
Management and worker representatives in the UnitedKingdom are trained to negotiate, form agreements and stick to
them. Bargaining may be hard and prolonged but in the endyou can only work with people you can trust and that meanswith people whose word means something. Agreementsreached at the end of the bargaining process were on thewhole being implemented and maintained unless there wasgood reason to do otherwise.
There are a few, some small percentage, who believe inconflict and confrontation for its own sake. They see it as anend in itself. It is they who may break their word and who could
fail to maintain the bargains they have struck. Restraining themby law would not have caused this kind of battle andconfrontation.
Clearly a very fundamental and most important basic right andfreedom was at stake.
In addition, the effect the Industrial Relations Act would havewas known in advance. The introduction of similar legislation inthe United States and Australia had, of course, drastically
reduced the number of strikes. Unofficial strikes were out,strikes recognised and set by union headquarters were in. Alarge number of relatively small strikes, in individual factoriesall across the country, had been replaced by nation-wideconfrontation, by whole industries being shut down at the sametime. In the United States it isn't just one little or even one largedock or harbour which is immobilised due to strike, it is just
about the whole seaboard which is shut down. Replacing thelarge number of small strikes by the few countrywide onesincreased the economic damage done enormously, multiplyingit by about four.
This is what happened in the United Kingdom. The number of strikes were reduced drastically but the economic damagecaused by the fewer but countrywide strikes was multiplied bya factor of four or even more. In the end much of Britain'sindustry was working a three-day week.
Those who managed the country were prepared to face thiskind of heavy loss, this kind of damage to the economy of thecountry and to its well-being. From their point of view also,
what was at stake was a basic shift in the balance between theauthority and power of those who work as compared with theauthority and power of those who run the country.
The slave has to work whether he likes it or not, the free manmay withdraw his labour. What was at stake was a mostessential right and freedom, the right of every ordinary worker to withdraw his labour, to go on strike.
The enterprise may be located anywhere in the country, away
from the capital. Union head office or the local officials are toobusy doing whatever they are doing to sort out the localgrievances. In the end the men put pressure on their shopsteward and strike. This is an 'unofficial' strike, which meansthat it has not been recognised by the head office of the union.It is a relatively small strike affecting only a few people in thelocality. The strike may then receive publicity in the nationalnewspapers and a union negotiator or official dashes to thescene, sorts out the grievances, negotiates an agreedsettlement or at least gets negotiations going. The strike isover. The men have succeeded in bringing their grievances tothe notice of both union and management and negotiations areproceeding.
An unofficial strike is not just a way of getting management tothe negotiating table, of impressing management with thestrength of feeling about a particular grievance. It is also a way
of getting the union establishment to act for the membership.The union establishment, far removed from the membership, isfar too often too busy pronouncing about politics, economics,the state of the country and the world, wining and dining with
members of the establishment on the other side and so 'sortingout' abstract vague general matters which could not be further removed from the problems of the workplace.
The shop steward is elected by the workforce, he representsthe working people in their place of work, he talks for them tothe management, he negotiates for them, it is he who isbacked by the union in the work that he is doing. Andgenerally, although there are a few exceptions, he exercises arestraining influence and it is pressure from the working people
which pushes him into open confrontation, into leading them instrike.
This then is the central, relevant and utterly important issue atthe root of the confrontation. The Industrial Relations Act andany similar legislation takes away the right to strike from theworking population and gives it to the union establishment,takes away from them the ability to decide their own course of action, to agree voluntarily to work for the employer or todecide when to withdraw their labour, takes away from theworking population the ability to make their voice heard, thepower to express their opinion, the power to influence events,to negotiate in their own interest.
The Industrial Relations Act took away power from the ordinaryworking people and gave it to a few people at the top of theunion establishment. It replaced upward flowing authority (fromthe people) by downward flowing authority (from the top). Itremoved and destroyed a basic freedom by taking the power towithdraw their labour away from the workforce. It did not justlimit the right to strike, it took it away from the workforce andtogether with the corresponding authority and power gave it tothe few people at the top, to the establishment.
The result of the ensuing confrontation and struggle was thatthe Industrial Relations Act was repealed and other legislationtook its place. This brought back the right to strike but the
'closed-shop' provisions compelled the worker to belong to theunion if he wished to work. It gave the union and thus itsestablishment the power to decide who should work and whoshould not. The changes would thus seem to have been aimed
at increasing the power of the establishment rather than that of the workforce and its elected representatives.
Hence it would seem in this case that movement along thescale, towards greater freedom to withdraw one's labour, wascountered by giving greater power to the union's establishment.One is left with the impression that the style of managementmoved further towards a more authoritarian style of management, under a supposedly pro-Labour government.
Figure 6Style of Management in Individual
Countries
The left wing opposes co-operation and opposes theappointment of worker directors. Increasing nationalisationmeans increased state ownership and generally results ingreater centralisation and more authoritarian management. Butthe Post Office unions have shared out among themselvesworker-directorships on the Post Office board, both on themain board and on the eleven regional boards, this being atwo-year experiment in union participation.
The material point is not whether it is a left wing or right wingdictatorship but whether and to what extent it is a dictatorship.What matters is whether management is authoritarian or participative. That is, what matters is whether the people arefree or whether they are oppressed, whether they have theright to strike and whether they can exercise this right.
Yugoslavia operates a system of 'self-management'. To a veryconsiderable extent those who work in a workplace also own it,and this means actually control it. They elect from amongthemselves the policy-making body. One is elected to this bodyfor two years and it is this body which then appoints themanagement.
The state of course exercises considerable influence by theamount of money it may withdraw from the enterprise's incomebut the enterprise has full control over what is left. The money
left may be used to increase wages or to extend the factory.
There was no right to strike and this placed Yugoslavia on thescale somewhere between the United States of America andwhere the United Kingdom used to be, shown by the firstYugoslav position on the scale.
Some years ago strikes were made legal and Yugoslaviamoved even further towards participative management, shownby a move from position 1 to position 2 on the scale (see
Figure 6f). Not only are people able to withdraw their labour,but in addition they exercise a great deal of control over their own working conditions and over the future of the enterprise.
If they strike, then presumably they strike against their ownmanagement, backing the policy-making board they haveelected or perhaps even striking against the policy set by thispolicy-making board. The right to strike is there, the workershave that power at least in principle. It is possible that they mayin fact be unable to freely withdraw their labour, that the right to
strike is restricted in some way.
Israel
In Israel the same Labour government and establishment had
until 1977 been in control for just under thirty years. Thegovernment is a very large employer, there is a veryconsiderable private sector but there is also a very large tradeunion owned sector which contains some of the largest
companies in the country.
By 1973 it had become apparent that power was beingconcentrated in relatively few people and that even the tradeunion organisation had become more authoritarian. There wasa strong feeling that the central trade union federation(Histadrut) does not represent the workforce as it should.
'Unofficial strikes result {10} from such neglect, drawingattention to local unresolved grievances. If there are too many
unofficial strikes then trade union officials have to be maderesponsible for properly taking up their members' grievanceswith management and need to be replaced if they do not do so.
Instead, the government passed a law restricting the right tostrike. Unofficial strikes are out but the Histadrut can callstrikes. Local grievances are bottled up, resentment increases,the conflict becomes more severe.'
'Introducing such legislation generally results in fewer but
bigger strikes which do far more damage to the economy thanbefore. So what such a law does is to silence effective protestagainst the trade union establishment and to increase thepower of the trade union leaders to direct and control their members. The free man can withdraw his labour as he pleasesso that a basic freedom has been restricted.'
The Israeli labour law applies to essential or governmentcontrolled enterprises. It was introduced at about the sametime as the British Industrial Relations Act and amounts to a
move towards a more authoritarian style of management, asshown by position 1 in Figure 6g.
El Al is Israel's national airline which in 1974 carried bothpassengers and freight, then having the monopoly for suchtraffic. Let us look in some detail at two strikes which occurredone after the other, the first in August 1974 and the second
which followed the first in December 1974. These strikes arerelevant because this was the first occasion in which theHistadrut openly sided with the management against its ownmembership.
The first strike started apparently on 26th August 1974. TheCompany's maintenance workers suddenly called a 24-hour warning strike. The difference between management and the500 or 600 workers centred on an overdue collective wageagreement.
The Tel Aviv Labour Court ordered the maintenance men toreturn to work immediately and on 1st September it wasreported {11} that the State Attorney had initiated proceedings
against the men's committee - but relating only to their earlier refusal or slow acceptance to obey the back-to-work ordersissued during the previous week by the Labour Court. As themen were back at work but working to rule, there wasapparently no way in which the law could be brought to bear against them, according to what one of the country's ministersis reported to have said.
It was also reported that the El Al management was apparentlysuing each of the 500 or 600 maintenance men (out of about
3,800 workers then employed by El Al in Israel) for payment of IL25,000 (about £2,275) towards the Company's losses causedby their unauthorised action.
This is open and direct confrontation between themanagement, that is the socialist 'Labour' party, and theworkers. Management is attempting to compel the men to workwhether they like it or not by using as a weapon against themen the labour legislation I have already mentioned.Management is here encouraging and promoting strife andconflict instead of co-operation and teamwork. The men wereat that time apparently 'working to rule' and apparently thereare no labour laws which can be used against them.
The way in which this dispute was handled must haveintensified the confrontation.
Now we can look at what took place only a few monthsafterwards, in December 1974. It was again a dispute betweenthe El Al management and its maintenance workers but thistime El Al for the first time in its history grounded its entire fleet
of thirteen aircraft on 27th December apparently with theendorsement of the Transport Ministry. The maintenancemen's committee denied that they were indulging in any form of 'working to rule' or strike. It seems that the Company had gotfed up with the maintenance men working to rule.
The Histadrut sent a letter to Ben-Gurion airport suggestingthat the Histadrut initiate a meeting between the maintenancemen and management. However, they wanted anunderstanding from the maintenance men that they would
abide by the Histadrut's ultimate ruling. The maintenance mensaid that they wished nothing better than a meeting with themanagement, but the clause about accepting the final authorityof the Histadrut was ignored.
The Histadrut then decided on Sunday, 29th December towithdraw 'union protection' from the El Al maintenance men.This was to take effect on the following day unless the workersindicated before then that they would obey the Histadrut'sdecisions about their grievances.
Withdrawal of Histadrut 'protection' meant that the Histadrutwould not intervene if the Government issued job mobilisationorders, dismissed strikers or recruited others to replace them.
Even if the Histadrut had been afraid of legal consequences,they need not have actively opposed the men by withdrawingtrade union protection.
The Histadrut's decision had far-reaching consequences, being
a first step towards withdrawing union protection from workersin essential services who strike without the permission of theHistadrut.
The Histadrut executive's decision would seem to indicate thatat least in this instance it has ceased to represent the workerswho are its members. Instead of representing them it is
attempting to impose its authority on them. The managementand the Histadrut executive are supporting each other againstthe workmen.
The situation in Israel was complicated because the particular law concerned applies to government employees and relates toessential services but on the other hand one could consider ElAl to have been a commercial company controlled by thegovernment, with the Histadrut assisting the management (thatis the government) to break the 'work to rule'.
I would not like in any way to comment on the validity of themen's case which could possibly have been mostunreasonable. However, the Histadrut is here not concerning
itself with mediating between workmen and management,seems to be more concerned with forcing the menunconditionally to accept the decisions of the Histadrut'sexecutive.
A meeting on Sunday, 29th December betweenrepresentatives of the El Al worker committees (which did notinclude the locked-out maintenance men) and the Histadrut(Labour Federation) leaders produced no results. They seemto have merely restated {12} their own positions. The workers
urged the Histadrut executive to cancel their decision andapparently asked: "What have you done between strikes?What did you do to prevent the situation from deteriorating?".They claimed that El Al's management had misled the pressinto believing the maintenance workers were striking. "For years we asked them to set norms. But they claimed it couldnot be done. How come they suddenly know how long it takesto do this or that?"
The secretary-general of the Histadrut is reported to have saidthat their decision to withdraw trade union protection wasmainly influenced by two inter-related considerations:
To deter workers in essential services from setting their working conditions themselves.
As far as the Histadrut is concerned, the real issue is whether the Histadrut negotiates to satisfy its own criteria (whatever
these may be) and then imposes its solution on the workmenor whether it negotiates till the workmen are satisfied that thebest possible deal has been obtained.
The maintenance workers continued to report for work as usualat Ben Gurion airport. What they did was to remain in theshops for their normal working hours but without attempting todo any work. The Histadrut continued to demand {13} that themaintenance men would have to sign an undertaking to abideby Histadrut decisions.
There was not a 'labour dispute'. The men seem to haveworked to rule which apparently and probably was not a 'strike'in the legal sense of the labour law referred to earlier on.
By 2nd January {14} the confrontation reached its end.
The management, that is the El Al executive, called for aguarantee from the maintenance workers that they wouldreturn to work and perform it properly 'within a reasonable
time!'.
The Histadrut had sent a cable to the maintenance workerssaying that the 'protection' would be restored if the workersagreed to fulfil faithfully their labour contract and to accept theauthority of the Histadrut.
This being the national airline, the government {14} cabled themaintenance workers that they "must resume their work,according to the standards laid down by the labour contract",
also saying that "the maintenance workers must accept theauthority of the Histadrut and the decisions of its recognisedinstitutions".
The men's committee now had it from both the Histadrut andfrom the government. The Histadrut told them also to faithfullyfollow their labour contract while the government
(management) told them that also they must obey theHistadrut. In other words they had been locked out by their employer and had been opposed by their trade union.
What took place was that management and owners (thegovernment) and the central trade union federation co-operated with each other to squash an 'unofficial' dispute. Theydid so in an attempt to enforce the decisions of the centralunion establishment over those of the locally electedrepresentatives and the representative works committees, toenforce the decisions of the central establishment over that of the locally elected representatives.
The way in which owners (government), management and
Histadrut (central trade union federation) co-operated witheach other in my opinion clearly proves this point.
One fails to see how this confrontation in which thegovernment, the management and the central trade unionfederation opposed and crushed a small section of the workingforce could contribute to anything but future dissatisfaction,frustration and industrial unrest throughout the country. Sincethen Israel has had a continuous sequence of conflict,confrontation and strikes which can be compared to the intense
internal struggle which took place in the United Kingdom after the passing of the Industrial Relations Act, in both cases thedirect result of moving from position 1 to position 2 (Figure 6g),of moving towards a more authoritarian style of management.
China
Every fourth person is Chinese and to this already large
number of Chinese should probably be added the manyChinese who live outside China.
What the Chinese are taught to think, the way in which they aretaught to behave and what they do is thus of importance to therest of humanity. Just as it is of concern that the Japanese whomake up about 3% of the world population have become the
third most powerful economic power in the world, so thethought and action of the Chinese rulers, establishment andpeople is important to the rest of us.
In January l975 the 4th National People's Congress was held insecret and produced a new constitution to replace that of l954.The National People's Congress remains the highest organ of state power, "under the leadership of the communist party of China". The chairman of the Central Committee of thecommunist party assumes "command of the country's armedforces," thus ensuring that the party controls the armed forces.
However, the constitution states that the masses have the rightof free speech. They may hold debates and "write big-
character posters" as they did during the cultural revolution.Chinese workers again "enjoy the freedom to strike" which theyhave not in theory been able to do since l954.
About seven months later there were newspaper reports inMoscow about purges and deportations which took place inChina following worker and peasant uprisings in severalprovinces because of economic problems.
About three months later there were reports from Bonn that
dockers and railway workers in Shanghai, the world's mostdensely populated city, had gone on strike in the last fewmonths for higher wages and better working conditions. Itseems that four strikes closed the main dockyards and railwaystations. It seems that radicals opposed the eight-grade wagescale endorsed by the constitution and demanded immediatemoves toward an egalitarian wage. Many older workers,however, were demanding "more co-operation" from thehigher-paid cadres - which is a roundabout Chinese way of demanding higher wages and better working conditions {15}.
Any Chinese institution down to a primary school or smallfactory had been run by a revolutionary committee consistingof veteran administrators, representatives of the younger staff and often military men as well. But during the previous fewyears they had been used to challenge the parallel partycommittees. It seems that the present leadership is
emphasising control by communist party committees at alllevels and it seems that the lower-level revolutionarycommittees, such as those in schools and factories, are to beabolished.
The lives of all citizens are in the hands of the state and itseems that the Chinese worker lives all his life inside hiscommune and that the quality of life - how well he is treated -depends largely on the leadership of the commune.
The Chinese worker has apparently {l6} to live where he is toldto live, has to work where he is told to work, has to do what heis told to do. One has to ask for permission to leave one's workand for permission to travel.
Families are normally given food coupons which are valid onlyin their own province. But if one wants to travel one must alsoget national food coupons to buy food elsewhere.
Since then more protesting voices have been heard and therehave been some demonstrations. But there have also beensubsequent trials and heavy punishment for some outspokendissidents who disagreed with the 'official' point of view.
But there has been no news of people in fact being able tostrike freely as and when they want to or of successfuldemonstrations or strikes.
On the whole there is little if any indication that the standard of living is increasing or that any protests or strikes have hadimpact or caused change.
And now we have to place China on the scale of style of management. Before the l975 constitution there was no
problem. Authority clearly centred at the top, strikes illegal,China placed right on the vertical line of completelyauthoritarian management (see Figure 6h, position 1).Following the l975 constitution there were strikes, and peoplewere able to express their feelings through posters. There wasdiscussion and an attempt was made to create a system of self-management which apparently rested on the people and
paralleled the party control structure. It would seem to havebeen a move towards self-management and freedom, shownby the move from position 1 to position 2.
It seems to me that the movement was then reversed and thatthe Chinese people allowed themselves to be pushed backfrom position 2 to say position 3.
Overall it would seem after this backsliding towards moreauthoritarian government that China moved again a littletowards a more participative form of government since therehave been protests, since there have been demonstrations andstrikes although so far they have been few in number and havenot as yet produced noticeable change. This movement is
indicated by the move from position 3 to position 4.
Japan
Japan is a democratic country. Life is in many ways restrained,stylised and formal. Strikes are legal and the workforce doesstrike.
In Western democratic countries pressure is exerted on theworking population, persuading and compelling them to workand to serve, by the fear of dismissal, by the fear of beingunemployed and by fear of the resulting hardship anddeprivation. In Japan pressure is exerted in a different way. For centuries the Japanese were governed by means of a strictcode of adherence to the collective will of the group. At home,in school, at work or at play, individualism is frowned upon. It isthe need to conform, the fear of 'losing face', which motivates.If one does not conform then one is ostracised, if one
disagrees then one of the two parties may lose 'face' (which is'standing') and it is this which is to be avoided.
There is pointed and almost direct co-operation and team workby those at the top who put Japan's economic progress aboveall else. Japan, now the third most powerful country in theworld, is very much looking after 'Japan Incorporated' with
government, owners, and other institutions co-operating closelytogether. Profit was of secondary consideration to Japanesecompanies and shareholders accepted minute profit margins,the general aim being 'seiko', which is 'growth'.
The Japanese do not start a project until some kind of agreement has been reached. For example a larger capitalinvestment programme would be discussed by the company,by the union, by the ministry, with the banks and of coursewithin the enterprise. It would be discussed extensively until ittakes a firm form.
The discussions within the enterprise are called 'Ringi'. Thestyle of management would appear to be strongly authoritarian
but paternal. The Ringi process is time-consuming andformalised but aims to involve younger and junior employees inthe decisions and in the fate of the company.
Sharp changes are taking place in the life of the country and inthe economy and there is a felt need for speeding up thedecision-making process. All decision cannot be made at thetop, delegation of authority is increasing and the scope for independent decision-making is being widened. Groupdecision-making is being modified in the light of increasing size
and complexity of modern organisations so that instead of alarge group making decisions concerning a broad area of policy or operations, small groups make decisions concerningareas of particular concern to them and these are thenapproved by their superiors. Participation in policy setting isbeing downgraded into implementing policy, and this is adowngrading of participation, of the level of decision making,by employees.
It seems that large and important companies are on the wholenot allowed to go bankrupt. Creditors, shareholders and other financially interested parties all participate in the reorganisationof the company <2>.
To be laid off does not mean being made redundant. Workersin large companies are likely to be turned to other work or aresent home while receiving full pay and benefits <3>. This is on
the whole soon heartily disliked by Japanese workers who donot feel comfortable if they do not work.
There is much life-time employment in one company. Workers'
homes are likely to be owned by the company, all will go onholiday together as a group. The company's influence is felt inmany areas of the workers' lives, loyalty to the company isfostered (for example all company workers are likely to wear the same lapel badges) and conformity is expected.
About one-third of the employed labour force are members of trade unions, distributed through something like 60,000 unions,based mostly on enterprises. Such enterprise unions negotiateprimarily at the factory, site or enterprise level, although there
are some negotiations between national trade unionfederations on the one hand and employers' associations onthe other.
Roughly three-quarters of the trade union membership are inthe private sector and exercise the right to free collectivebargaining.
Loyalty to the company is strong and many workers normallystrike during their lunch break, in this way making their opinion
felt. They would not do so if it were not effective and thisimplies that management takes note.
Then there is the 'Shunto' (spring offensive) which is used todeal with the annual wage claim by establishing an acceptablegeneral increase. A certain selected group of employees or union goes on strike. The results of that strike are graduallyused for the bulk of the settlements throughout the country.
The general picture would appear to be one of democratic
government and authoritarian but paternal management,combined with a system of management consultation and co-operation which is sound in principle.
The cost to the Japanese of authoritarian management isalready considerable. For example, waste products weredumped over a considerable number of years by a commercial
concern into the Bay of Minamata with tragic results to many of the local population who suffered organic mercury poisoning insevere degree through eating polluted fish caught by the localfishermen. Fish is a staple diet. The Japanese eat fish rather
than meat and fishing is a source of livelihood for manyJapanese. Much of the fish around the shores of Japan isaffected by pollution and the Japanese government hasapparently already issued guidelines advising people to limitthe amount of fish they eat.
But there are also bitter confrontations between employeesand employers as a result of the impact of foreign ideology.There are also demonstrations, at times violent, concerningpopular protest issues.
Leaders of left-orientated Japanese unions are said to regardco-operation with capitalists as impossible and confront for thesake of confronting, in line with other marxist movements.
To them it appears as if enemies cannot co-operate becausethey would be traitors to their individual ideologies and theyapparently eliminate dissenters from among their own leadingpersonalities {17}.
Seeing everything according to pre-conceived ideas, accordingto what one is told to do by those above, in terms of black andwhite or right and wrong, is typical of the authoritarian mind.Democracy rests firmly on voluntary co-operation betweeninformed and knowledgeable citizens and groups able toevaluate differing points of view according to the situationexisting at the time.
Hence Japan is fairly authoritarian in its style of management.There is little or no power sharing. People have the right to
strike but striking is limited by the Japanese equivalent of theWestern fear of the sack, by pressure to conform. Hence I putJapan close to the UK but consider it to be somewhat moreauthoritarian (see Figure 6i).
Legislation about striking would appear to be similar to theAmerican Taft-Hartley Act and to the British Industrial Relations
Act which caused such intense confrontation in the UnitedKingdom when in the end much of British industry was reducedto working a three-day week.
But outstanding is the 'Bestimmungsrecht', the legalrequirement for the policy-making body to contain worker representatives.
West Germany has had worker participation in the coal andsteel industries since 1951. The extent of representation was
50:50 but apparently in larger companies the shareholders hadtwo-thirds and workers one-third of the votes on these policy-making (that is supervisory) boards. The system has workedwell and helped to maintain good industrial relations in this keyarea.
A new law passed in l976 extended the system to cover another six hundred large enterprises, each employing morethan 2,000 workers, outside the coal and steel industries. Itgives workers equal representation with shareholders on
supervisory boards.
Supervisory boards meet only four times a year, take allstrategic decisions and appoint the management board whichhandles day to day operations.
The chairman of each supervisory board must be elected bytwo-thirds of the board's members and can cast two votes inthe event of a voting deadlock. This gives the chairman thepower to decide, and since the procedure for electing him
seems to be weighted in favour of the shareholders, theworkers are still at some disadvantage.
This system cautiously acknowledges that both employees andemployers are vitally interested and concerned about the well-being of the enterprise and constitutes a considerable transfer
which is a special case by reason of its applied 'self-management'. The UK and Israel we considered to be adoptinga rather more participative management style than the other democratic countries.
Interesting is that the later picture is significantly different. Thelast ten years saw a distinct movement towards greater participation and power sharing.
The countries are now spread out more evenly along the scalebecause four of the most authoritarian countries have movedsignificantly towards greater participation and power sharing.Two countries, namely Britain and Israel, have allowedthemselves to slide back. They have been overtaken by two
countries which moved just that much further towards power sharing and towards participation in policy setting.
EFFECT ON STANDARD OF LIVING
A quick inspection shows that democracies have a higher standard of living than more authoritarian forms of government.A move towards greater centralisation and more authoritarian
management corresponds to a more restricted life and lower standard of living. Freedom and good life go hand in hand.
The question arises to what extent these statements arebacked by the facts. In other words, one would like to know theextent to which such changes have taken place in thesecountries.
One measure of a country's income and productive capacity iswhat the country produces by way of material goods and
services per person. It is the best overall measure we have atpresent but even so it gives no indication about how thecountry's income is shared out or used, about whether it issquandered or used wisely, about whether what is produced isneeded, useful or necessary, about who benefits.
Figure 8 shows how the gross national product per person
depends on the style of management adopted. Democraticcountries have a much higher standard of living, which is aboutthree times that of the authoritarian countries.
On this basis Spain would seem to be pulling itself up and onewould expect both Israel and Britain to be losing out. ButYugoslavia, which we considered to be one of the mostpowersharing countries, has a lower standard than much moreauthoritarian countries. It could be that we have ratedYugoslavia too highly, that freedom is much more restrictedthan we thought, that people in Yugoslavia may have the rightto strike but are unable to do so. Further, Yugoslavia started ata much lower level but is catching up and has still someconsiderable way to go. These considerations would seem to
Changes take time to show. The smaller company can bemuch more effective and profitable than its larger, wealthier competitor. But the smaller company is growing, the larger onemay be stagnating or falling back.
Figure 9 illustrates this point and explains the discrepancies.Both Britain and Israel are lagging behind. Between l972 andl978 their output and standard increased by a factor of about
1.7. Yugoslavia, Spain and Germany, having madeconsiderable strides towards more participative management,have together with Japan increased their output and standardby a factor of about 3.
Figure 8 - 9
However, America has not done as well as might have beenexpected. It could be that this is a problem of size and sheer
volume and concentration of output <4>. After all, 215 millionpeople in America produced about 2,100 billion US dollars'worth of goods and services in l978 while in the USSR about260 million people produced about 800 billion US dollars'
worth, that is a product of about 9,800 US dollars per person inAmerica compared with about 3,100 US dollars per person inthe USSR.
A participative style of management and consequent goodleadership and effective co-operation can do better under adverse as well as under good conditions. Hence it is notsurprising that the top 30 countries with the highest grossnational product {21} are almost all democracies. 10% areauthoritarian oil producing and exporting countries (ranked
2nd, 10th and 18th from the top), another 10% areauthoritarian communist countries (ranked 22nd, 24th and 30thfrom the top), but the other 80% are all democracies.
IMPACT OF THE STYLE OF MANAGEMENTON ORGANISATIONS (for example,ENTERPRISES)
STYLE OF MANAGEMENT IN ORGANISATIONS
We have seen that the style of management in individualcountries can be assessed and ranked on a scale and we haveseen how this assessment relates to their effectiveness fromthe point of view of the standard of living, freedom of theindividual and indeed the very quality of life.
Now we can look at measurements of the style of managementin individual organisations and enterprises and relate these totheir effectiveness. Here we can also see what happens to theeffectiveness of organisations as their style of managementchanges. The style of management has been measured bymyself over some years in a number of organisations, on the
scale from fully authoritarian to fully participative. The resultsare extremely interesting and useful.
Figure 10Style of Management in Large,Medium and Small Enterprises
Back to Contents list
Figure 10 illustrates the results of such measurements indifferent organisations. Look at level 'B'.
These are actual measurements on one international company.Bearing in mind that its far flung operations, offices andemployees range from the Persian Gulf to the Caribbean, fromHong Kong to the UK, and that the measurements were madeat regular intervals over a period of five years, it is seen thatthe results are remarkably consistent. The exception could be
due to events taking place within the organisation at the time or could be due to chance alone, particularly as later determinations were again scattered between the earlier ones.
The measurements ranged from fairly authoritarian to markedlyauthoritarian and showed that this organisation was managedconsistently and more or less continuously in a pronouncedauthoritarian way.
Style of management depends to a considerable extent on the
people at the top and in a smaller or medium size company it ispossible for the owner or chief executive to impress his ownpersonal style of management on the rest of the organisation.This explains the exception at level D.
The measurements clearly show that the style of managementrelates to the size of the organisation. The larger the
organisation the more likely is it that it is run on authoritarianlines.
The reasons for this, its effects and implications provide insight
into the requirements for effective organisation and can help usto run our own organisations more effectively.
OVERCOMING PROBLEMS OF SIZE
To find out why it is the larger organisations which tend to berun on authoritarian lines, let us look at the different kinds of problems experienced by larger compared with smaller
organisations and how these affect their effectiveness, their profitability, their way of working.
The problems facing those who direct organisations havealready been clearly described and determined {22} inconsiderable detail in 'Work, Remuneration and Motivation of Directors' from which the following paragraphs were taken:
Pressures are increasing. Business problems are seen to bemore complex, competition is getting more intense. Underlying
this is that we live in a time of change, indeed in a time of accelerating change. To survive in the jungle one must adaptto it, to survive in a changing environment one must adapt tochange. A company has to do more than just survive: it needsto be successful and advance.
New technology is making its impact felt, economic growth isaccelerating, human processes are being replaced byequipment. Modern equipment costs a great deal, purchasingpower of money is reducing, replacement costs are increasing.
Selling is being replaced by marketing...'
While large companies can employ experts, with smallcompanies it is largely the board of directors which plans thecourse ahead.
Teamwork is generally not a problem in the smaller company
except where personalities clash. Its problems are more likelyto be concerned with forward planning rather than withorganisation, with profitable use of techniques rather than withcommunication.
The smaller company has to use its resources effectively. Itneeds to move with the times, but often neither needs nor canafford expertise on a full-time basis. Often it does not realise towhat extent part-time expert knowledge can assist itsoperation, making all the difference between stagnation or success.
Smaller companies have to be more effective and are moreeffective. Their problems are more related to moving with the
times, to getting and using specialist advice and applying it in away suited to their operations.
The large organisation's problems are quite different.
The large organisation has many experts but its main problemis how to get these experts and all the other people to worktogether. The completion of larger projects brings in manydifferent experts working in different areas all of whom need tocontribute their own specific know-how and work together
smoothly as a team. The larger the organisation the moredifficult it is to achieve this {18}. We saw earlier on <5> that itappears easier to give people an order than to co-ordinate their efforts and the untrained manager presses for greater authority, presses for a more authoritarian organisation. Wealso saw that this mainly results in making the organisationless effective. Hence the inability of managers to manage, toco-ordinate the work of other experts and managers, results inmore authoritarian management which in fact makes mattersworse. 'One of the main problems facing management today isthat of obtaining effective teamwork' {24}.
The smaller company is more effective when compared withthe larger company both as regards employee utilisation(turnover per employee) and capital utilisation (turnover per unit of issued share capital). The difference {23} is about 24 to33%. Suppose it is only 25%. This means that the
effectiveness of larger organisations can be increased by 25%,that productivity and profitability can increase by such a largefactor through organising in a way which promotes teamwork,through adopting and propagating a more participative style of
management, through appropriate training of managers inparticipative management.
If the turnover of a large company can be increased by 25%without increasing the number of employees or the capital,then the corresponding gains to the shareholders areenormous. At the same time there are other gains resultingfrom the increased commitment and dedication of theemployees towards their work which result from a moreparticipative style of management.
Figure 11Improving the Effectiveness of
Management
Back to Contents list
Figure 11 is an example of what has been done. Here aredeterminations showing the change in the style of managementof a large organisation at level 'A' over a period of about fiveyears. The measurements were taken at regular intervals andmade at two different levels of management. It took about twoyears for the results of the particular approach adopted to showbut the gains to the organisation are seen to be enormous.During the later stages the work was continued at the moresenior levels and further improvement is seen to have resulted.
It is of interest to note that this large organisation has not onlyreached a level of effectiveness and participative managementwhich corresponds to that of the smaller companies and in thisway was reaping the benefits of its large size but that it
appears to be proceeding on the way towards becoming evenmore effective than the smaller companies.
This example shows what has been achieved as a result of our
appropriate management training.
TRAINING
We know today the causes of internal stress and weaknesswithin societies and organisations. More particularly we sawthat it is possible for large organisations to become moreeffective by adopting a participative style of management. It is
up to us to move forward towards greater participation, towardsa higher standard of living and a better quality of life.
In enterprises, one possible solution to the problems of sizesometimes appears to be to split up into subsidiaries but far toooften this does not improve matters. The problem of how onecan get people to work together so as to reap the benefits of size remains to be solved.
Increasing the effectiveness of organisation by changing the
style of management can be achieved but requires expertguidance not just in the field of organisation and organisationalbehaviour but in adopting a way of managing which moves withthe times, spreads throughout the organisation and has thebacking of those who work in it.
Such expertise is not readily available and incompetence oftenhides behind the pleasant bedside manner of the consultant.
Training can be given to the point where managers and
consultants not only become more effective themselves butbecome able to help others make organisation and teamworkmore effective. This applies to community leaders as well as tomanagers, applies equally well to government, community andcommercial enterprises and organisations.
This training, to be successful and effective, needs to be based
results in increasing discontent and in increasing antisocialbehaviour {25}.
In addition, religious behaviour is belittled and portrayed as
irrelevant to daily life. This not only reduces resistance topromiscuity but increases antisocial behaviour such as lyingand stealing and results in disregarding the value of peopleand the value of life itself, results in increasingly brutalbehaviour of man to man.
It is accompanied by attempts to reduce the social security of the working population in areas such as unemployment benefit,health insurance payments, social security benefits such assupplementary payments, and pension rights. For example, it
has been reported that in the British national health service thenumber of hospital beds has steadily declined over aconsiderable number of years while the number of admissionshas increased, while apparently the number of court cases bypatients against the medical profession and the health servicehas also increased.
In such circumstances people become less and less able totrust each other, in the home, in the market place or at work.They are increasingly turned against each other, become less
able to co-operate with each other, are weakened byincreasing personal problems and difficulties, are much moreat the mercy of their rulers.
But outstanding is that society nowadays depends absolutelyon many people freely, willingly and effectively co-operatingwith each other.
In addition we may soon find automation proceeding to thepoint where the work of a few produces what very many
produced before. Mass unemployment, life-long unemploymentand deprivation are very real and close threats today.
The fact that much of mankind is underfed and starvingindicates that one cannot leave to chance such matters as thesharing out of the available cake.
What is required is leadership and management which acts for the people and is rewarded appropriately according to results{26}.
NOTES AND REFERENCES
NOTES
<1> See also Appendix 1.
<2>
Under the Corporate Reorganisation Act. If they decide that the debts cannot be paidthen the debts are shelved while thecompany remains in being.
<3>
The government may underwrite part of theunemployment pay. One company wasbankrupted by having to make manycompensation payments to citizens as aresult of environmental pollution. In this casethe government took the company over soas to ensure that the payments would bemade.
<4>
The problems associated with size and theimportance of the style of management inovercoming them, as well as some readilyapplied remedies, are discussed in moredetail in the following chapter and in the
volume on organising {18}. <5> See chapter 'Role of Manager' in {18}.
A list of other relevant current and associatedreports by Manfred Davidmann on leadership andmanagement.
Title Description
Role of ManagersUnder Different
Styles of
Management
Short summary of the role of managersunder authoritarian and participativestyles of management. Also coversdecision making and the basiccharacteristics of each style.
Directing and
Managing Change
How to plan ahead, find best strategies,decide and implement, agree targets andobjectives, monitor and control progress,evaluate performance, carry outappraisal and target-setting interviews.Describes proved, practical and effectivetechniques. See 'Press Notices'.
Motivation
Summary
Reviews and summarises past work inMotivation. Provides a clear definition of 'motivation', of the factors which motivateand of what people are striving toachieve. See 'Press Notices'.
The Will to Work:
What People
Struggle to Achieve
Major review, analysis and report aboutmotivation and motivating. Coversremuneration and job satisfaction as wellas the factors which motivate. Developsa clear definition of 'motivation'. Lists
what people are striving and strugglingto achieve, and progress made, incorporations, communities, countries.
Organising
Comprehensive review. Outstanding isthe section on functional relationships.Shows how to improve co-ordination,teamwork and co-operation. Discussesthe role and responsibilities of managersin different circumstances.
Major review and analysis of work andpay in relation to employer, employeeand community. Provides the underlyingknowledge and understanding for scientific determination and prediction of
rates of pay, remuneration anddifferentials, of National RemunerationScales and of the NationalRemuneration Pattern of pay anddifferentials.
Work and Pay:
Summary
Concise summary review of wholesubject of work and pay, in clear language. Covers pay, incomes anddifferentials and the interests andrequirements of owners and employers,of the individual and his family, and of the community.
Exporting and
Importing of
Employment and
Unemployment
Discusses exporting and importing of employment and unemployment,underlying principles, effect of trade, howto reduce unemployment, social costs of unemployment, community objectives,support for enterprises, sociallyirresponsible enterprise behaviour. See'Press Notices'.
Transfer Pricing
and Taxation
One of the most controversial operationsof multinationals, transfer pricing, isclearly described and defined. An easily-followed illustration shows how transfer pricing can be used by multinationals tomaximise their profits by tax avoidanceand by obtaining tax rebates. Alsodiscussed is the effect of transfer pricingon the tax burden carried by other taxpayers.
Inflation, Balance
of Payments and
Currency Exchange
Rates
Reviews the relationships, how inflationaffects currency exchange rates andtrade, the effect of changing interestrates on share prices and pensions.Discusses multinational operations suchas transfer pricing, inflation's burdensand worldwide inequality. See 'Press
Notices'.
Social
Responsibility,
Profits and Social
Incidents, disasters and catastrophesare here put together as individual casestudies and reviewed as a whole. Weare facing a sequence of events whichare increasing in frequency, severity and
Accountability extent. There are sections about whatcan be done about this, on communityaims and community leadership, on theworld-wide struggle for socialaccountability.
SocialResponsibility and
Accountability:
Summary
Outlines basic causes of sociallyirresponsible behaviour and ways of solving the problem. Statement of aims.Public demonstrations and protests asessential survival mechanisms. Whistle-blowing. Worldwide struggle to achievesocial accountability.
Co-operatives and
Co-operation:
Causes of Failure,
Guidelines for
Success
Based on eight studies of co-operativesand mutual societies, the report'sconclusions and recommendations cover fundamental and practical problems of co-ops and mutual societies, of
members, of direction, of managementand control. There are extensivesections on Style of Management,decision-taking, management motivationand performance, on GeneralManagement principles and their application in practice.
Using Words to
Communicate
Effectively
Shows how to communicate moreeffectively, covering aspects of thinking,writing, speaking and listening as well asformal and informal communications.Consists of guidelines found useful by
university students and practising middleand senior managers.
Community and
Public Ownership
This report objectively evaluatescommunity ownership and reviews thereasons both for nationalising and for privatising. Performance, control andaccountability of community-ownedenterprises and industries are discussed.Points made are illustrated by a number of striking case-studies.
Ownership andLimited Liability
Discusses different types of enterprisesand the extent to which owners areresponsible for repaying the debts of their enterprise. Also discussed aredisadvantages, difficulties and abusesassociated with the system of LimitedLiability, and their implications for customers, suppliers and employees.
A short statement which describes thesystem by which a company's majorityshareholders decide policy and controlthe company.
Creating, Patenting
and Marketing of
New Forms of Life
Evaluates problems in geneticmanipulation, and consequences of private ownership of new life-forms bymultinationals. Lists conclusions andrecommendations about man-madeforms of life, their ownership andpatenting, about improving the trend of events.
The Right to Strike
Discusses and defines the right to strike,
the extent to which people can strike andwhat this implies. Also discussed areaspects of current problems such aspart-time work and home working, WorksCouncils, uses and misuses of linkingpay to a cost-of-living index, participationin decision-taking, upward redistributionof income and wealth.
Reorganising the
National Health
Service:
An Evaluation of the Griffiths Report
1984 report which has become a classicstudy of the application and effect of General Management principles and of ignoring them.
The Site Overview page has links to all individual Subject IndexPages which between them list the works by ManfredDavidmann which are available on the Internet, with shortdescriptions and links for downloading.
