Happy Hierarchies

16 May 2006 at 2:04 pm 5 comments

| Peter Klein |

Nicolai and I have tended to be skeptical about the new wave of happiness research, particularly as applied to intrinsic motivation, empowerment, and other trendy organizational issues. Economists Tyler Cowen and Arnold Kling agree. Corporate law professor Stephen Bainbridge, in his latest column, attacks the idea that participatory management increases worker happiness (and, presumably, productivity). On the contrary, says Bainbridge, workers often prefer hierarchy, for a variety of reasons (risk aversion, resistance to change, preference for standardized rules and procedures, and so on). “Whether the taste for participation or for hierarchy is more common is hard to say from the evidence to date, but at the very least the history of participatory management has taught us that not everyone wants more autonomy, challenge, and responsibility.”

Further details are provided in Bainbridge’s Williamsonian paper “Privately Ordered Participatory Management: An Organizational Failures Analysis.”

Entry filed under: - Klein -, Management Theory, Recommended Reading, Theory of the Firm.

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5 Comments Add your own

  • 1. orgtheory.net » Blog Archive » happy hierarchy?  |  16 May 2006 at 5:13 pm

    […] (via Organizations and Markets) […]

  • 2. Jack Hayhow  |  17 May 2006 at 2:59 pm

    But do you really WANT employees who don't want participation, autonomy and choice? Certainly, there may work environments in which slavish adherence to rules is the optimal approach. But if the work requires innovation, creativity or initiative does coloring in the lines best serve the enterprise? In this post I argue that employee passion is a propelling force.

  • 3. Peter Klein  |  18 May 2006 at 12:17 am

    Jack, I don’t think Bainbridge or other critics would disagree with you. The point is not that participatory management, empowerment, and the like have no benefits, but that they bring both benefits and costs, and these have to be weighed carefully, case by case. Much of the empowerment literature seems to assume that flatter hierarchies are always best, without performing the relevant comparative analysis. And, perhaps more important, systematic empirical evidence on the benefits of empowerment is scant.

  • 4. Alexander Kjerulf  |  21 May 2006 at 1:34 pm

    I think Bainbridge raises some important risks related to participatory decision making, but looking at the studies he cites, I certainly don’t see evidence that involving employees in corporate governance is a bad idea.

    And I would like to turn the tables on him: He says that the “the literature on happiness and participation simply isn’t very persuasive.”

    That may be true. But where is the literature that says that unhappiness and no participation (or at the very least indifference and traditional management) is particularly good or efficient?

    This is an ecellent example of how some people demand that a new paradigm proove it’s worth, while at the same time accepting without evidence the value of the current approach. When you do this, very little change ever happens, since the burden of proof is always on the new method.

  • 5. Roy  |  3 May 2009 at 12:55 am

    Andy Kay used participative management at Non-Linear Systems in Del Mar, Ca. years ago. It worked well according to a gentleman named Paul who is now 90 years old and worked for Mr. Kay at the time. However, the style ran into problems when in the late 60’s the aerospace industry saw a downturn and then economic issues became the driving force.

    A Mr. Gray wrote a book about Kay’s experience.

    There are articles all over the web as you can see by entering participative management.

    It worked for me as a manager for many years even in downturns.

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