Are leadership and democracy truly compatible?

Can true democracy really be practiced in a business? Would one employee – one vote make it possible not only to run a company but also make sure it’s profitable? Definitely, if you are a small jointly owned company. But how about a huge multinational with say, 250,000 employees?

leadership, democracy, company, government

Is democratic leadership that makes everybody happy just an illusion?

Imagine if all employees had to vote before a decision was made. Everybody would be looking after number one and the company would not only be ungovernable but lose money as well.

Fair decisions based on dialogue

Different stake holders should have their say and to aim for fair and emphatic decisions based on dialogue is definitely not only possible, but already practised in a multitude of companies.

Democracy – next fad in leadership theories?

With all the current emphasis on empathy in leadership I can’t help wondering if democratic leadership will soon become fashionable? The timing is right because many employees feel they have been badly treated by management during the current economic crisis.

Leaders are solely responsible

As a leader you are responsible to the board, share holders and all employees. There are no excuses for chosing the wrong path. You, and only you, are accountable and pay the price if your decisions fail. Or as President Truman put it, the buck stops with you.

Show me a truly democratic government

In all democratic countries politicians are elected because they promise the electorate they will do X,Y and Z. However,  once in power they frequently proceed with doing something else. Sometimes because they discover that what they would like to do isn’t possible for, usually, financial or legal reasons. Isn’t democracy more of a concept than reality? How much say does the electorate really have? The fact that a lot of politicians say what the electorate wants to hear and then do something else, doesn’t help. To get votes by pretending you stand for something you don’t is not what democracy should be about. But that is what happens in most countries.

In fact I don’t believe you can find any democratically elected government in the world that hasn’t failed to deliver on quite a few of their promises. As we all know, private companies operating that way would eventually cease to exist.

Staff can’t have more influence than board and shareholders

It’s impossible to allow employees to have more impact on decision making than the owners and board of directors do.

Sometimes taking decisions can be severely difficult and you will have to defend them not only to shareholders but colleagues as well. It’s particularly hard if you don’t agree with some of the decisions implemented. But you still have to be able to handle criticism for them and make sure as many as possible understand, accept and are motivated by your decisions.

Do you believe perfect democracy exists in any company or government in the world? How much more democratic can the corporate world get without jeopardizing the businesses? Is it possible to ever satisfy all and sundry and still be profitable and grow? A bit of a Catch 22, isn’t it?

(Photo: yeowatzup – flickr)

78 comments to Are leadership and democracy truly compatible?

  • GuyW  says:

    As you say, Catarina – democracies don't really exist anywhere as politicians invariably fail to meet election promises. Switzerland may well be the country with the greatest degree of participation by its citizens in the "business" of running the country due to its frequent referendums.

    In a company, the concept of having everybody with an equal say in all matters would result in chaos, and would so be unworkable.

    Perhaps countries should be run more along company lines with the shareholders(taxpayers) having a say proportionate to the shares they own (tax they pay)… Contentious, I know, but it would mean that those who avoid tax would have no real say.

    • catarinaalexon  says:

      Great comment Guy.

      You may very well be right about Switzerland.

      Interesting idea of taxpayers/shareholders having a say in proportion to their shares. Could make people more motivated to pay tax?

    • Mıchael Akerıb  says:

      Yes indeed, Swıtzerland's direct democracy should have been mentioned together wıth its rather uique government that is a coalition of all partıes and that makes decision making a very complex and slow process

      • catarinaalexon  says:

        MIchael, Guy who commented earlier today did mention Switzerland. Do you consider the Swiss system to be truly democratic. Not just the best in the world at the moment?

        To quote you it "makes decision making a very complex and slow process". So, do you believe the Swiss system can be applied to a multinational company? It would obviously make the corporation more democratic. But would it become un-governable and lose money by doing so? How would it impact leadership of the company?

  • Jaime Ferreira  says:

    Everything, when taken to a extreme is not good. When a leader does only what he thinks is right, without taking into account what his followers think, becomes a tyrant and when he only does what the majority says he may lose some good opportunities. I don't think a business could be run as a true democracy because the leader in a company is the leader not only becasuse he can integrate other's ideas into his decisions but because he knows enough of the business to make decisions on his own

  • Carlos RGT  says:

    For sure NO on a startup or a turn around, on an institutionalized and established company you can have some democratic decision making committees but the Board and the shareholders assembly has to be controlled by someone or a Group, that when needed makes things happen when the collective wisdom is wrong.

    • catarinaalexon  says:

      Yes Carlos, it's easier said than done to implement true democracy in a company, isn't it.

  • Julie Weishaar  says:

    Hi Catarina, I agree with you that true democracy in business or politics is more of an ideal that can't truly be carried out with positive results in either situation. Think about how hard it is to get three people to agree on one thing. Can you imagine trying to get an entire company to all agree on the same thing? No decisions would ever get made and nothing would get done. A leader should care about what the people think, try to do what is in the best interest of all and listen to what others say, but in the end, the decision making power needs to remain in the hands of a select few.
    My recent post “Work” Combined with Passion is not “Work”

    • catarinaalexon  says:

      Seems we agree Julie that it's unfortunately democracy is an ideal that can't be truly carried out, if we want governments and companies to function.

  • Susan Oakes  says:

    Hi Catarina,

    Another great thought provoking post. Reading it made me think back to a story of a company where the employees were shareholders and became involved in all decisions. There was a book written about it, although I can't remember the name. Apparently the company became very successful.

    In most multinational companies it just wouldn't work as far as I can see because to make the big decisions you have to have all the information as well as the skills and experience to make the decisions.
    My recent post 3 Marketing Lessons From Soap Operas

    • catarinaalexon  says:

      Thank you Susan. Good point that in a multinational it's simply impossible because in order to make the big decisions you have to have all the information as well as the skills and experience to make the decisions.

      • keepupweb  says:

        I'm in agreement with Susan. Empowering employees to contribute in decision making process is important to the well-being of the organization It's foolish to ignore what the employees in the "ranks" have to contribute. However, bottom-line, (as Susan points out"), the big decisions need to be made by those individuals who have the skills and experience.
        My recent post Low Cost Resources Small Business Owners and Entrepreneurs Can Access

        • catarinaalexon  says:

          Glad we all agree Sherryl. Examples of companies where they have succeeded are small and usually owned by the employees. Then it works. Would really love to know how it can be done in a huge multinational. We all agree it benefits a company but the drawbacks can be severe when 250,000 people look after number one, unfortunately.

  • Urs E. Gattiker  says:

    Hi Alexa

    Hi Alexa

    This is an interesting question…. with challenging remarks but I wanted to add my five cents:

    You ask: "Can true democracy really be practiced in a business?":

    Businesses do not necessarily have leaders but managers instead (hired guns) Second, business is not democratic because those that provide the capital needed decide while others such as workers can influence the process only.

    Even in a cooperative you do not have a true democracy since the members would on general things during the annual meeting while those chosen to manage make the operative decisions.

    Thanks so much for sharing. Urs

    • catarinaalexon  says:

      Hello Urs.

      Good points and it seems we agree.

  • wedding favors  says:

    In my previous company, workers could not really influence the decision of the managers. We can give suggestions but still, they will rather choose their own disposition because they believe that is right and that's good for the company. It's the reality.

    • catarinaalexon  says:

      Thank you Ann However, I'm not sure if you believe leadership and true democracy are compatible or not?

  • Chris McGrath  says:

    Pure democracy works well in small groups but there are definately "economies of scale" when it comes to larger ones. This is the primary reason why most western democracies like the US end up with a "representational" democracy, which does not serve the individual as well, and places too much power in the hands of the politician who ostensibly "serves" their constituency. In business organizations we can see a similar model where functional departments and divisions have managers that "represent" their operating areas and speak for them as necessary. How much democracy leadership and management chooses to derive from this input varies widely. From my own observations, I think business has more opportunity to leverage the principles of democracy than government does – but in the end – I think the results are pretty much the same. Politics most often wins out over the will of the constituents. While I don't see an inherent incompatibility between leadership and pure democracy, I just think it becomes too hard to integrate the two in large organizations.

    • catarinaalexon  says:

      In other words Chris, you agree with me. By the way, I would be interested in knowing if you really believe democracy as a concept is perfect? If so, where have you found it?

      Since you believe business has more opportunity to leverage the principles of democracy, I would sincerely be interested in hearing about a large company that you know have succeeded in doing so.

      • Mariola Besch  says:

        Hi Catarina, Hi Chris,
        the larger or more global the organization the more difficult to drive businesses upon the base of "democracy". I.e. all decisions made in headquater also affect people outside of the constituency, who do not have the possibility to vote. There is also another aspect we have to take into consideration: with regard to the same organization there are diffrent priority objectives depending on the party. The workers have focus more on the work conditions and wages while the shareholders or owners on turnover and profit. Hence it is important to have a leader who als generalist and global thinker would be able to find the optimat intersection and to balance the particular interests. I believe we still should have aspiration to deal on the base of democratic premises even if we would never be in position to reach that ideal.
        Best regards

        • catarinaalexon  says:

          Good comment Mariola. Seems we agree about the difficulties with implementing true democracy in a multinational global corporation. We also have to remember that Workers are not always able to understand big issues such as IPO:s, mergers and re-financing and hence not capable of voting on them.

  • slim  says:

    Democracy in business.

    As Yogi Berra said, "In theory there is not difference between theory and practice. In practice there is."

    In business, democracy is fine. But the marketplace will be the determining factor.

    Democracy demands that everyone participate in the process. Thus, we shall look at some of the participants of days gone by.

    If you sail that way, you'll fall off the edge.
    That'll never get off the ground. If God wanted me to fly, he'd have given me wings.
    The motor car? Noisy, smelly toy for the rich. It will never replace the horse.
    Talkin' pictures? Folks don't want to listen to all that chatter. They want to see real acting.

    Democracy in business?

    No motor car.
    No Aeroplanes.
    Silent Films
    No Television

    It takes ten people to say yes but only one person to say no.

    Laws are not made for the law-abiding.

    Congress made the President commander in chief of the military, not chairman of the committee in chief of the military.

    Statues are erected to leaders, not committees.

    Or, as Teddy Roosevelt said: Put the best person you can find in charge and get out of his way.


    My recent post Why I Read Newspapers

  • catarinaalexon  says:

    Seems we agree Marcus.

  • catarinaalexon  says:

    Yes, unfortunately that seems to be the case Jane. Mainly because of human nature.

  • Cherry  says:

    If democracy truly exists, let all the voices be heard even the lowest rank position. They do conduct General Assembly, but tell I tell you, still their ideas are used and applied. I think democracy in corporate is impossible to achieve.
    My recent post Does Big Butt Prolongs Life

    • catarinaalexon  says:

      Yes Cherry, unfortunately democracy in huge corporations doesn't seem to be possible.

    • catarinaalexon  says:

      Yes Cherry, democracy in corporations is impossible to achieve.

  • catarinaalexon  says:

    Agree with you Stacy. Chaos would be the result of true democracy in a huge corporation.

  • catarinaalexon  says:

    The fact that the majority decides doesn't matter when it comes to huge multinationals with an abundance of low skilled labourers Oliver. When they are in majority their choice would determine the future of the company. How many of them would understand big and complicated issues and hence be able to vote on them?

  • Sarah Russell  says:

    Certainly, on a larger scale (as in the case of countries and multinationals) true democracy isn't possible. The number of opinions and options being offered in any decision making process would prevent business from moving forward, and I think you're right that most people would look out for their own best interests.

    Although, even in smaller companies or organizations, I think you'll still run into similar problems. Not everyone is born to be a leader, so it makes sense to allocate power to those who show a predilection towards it (or, at the very least, invite it upon themselves). Obviously, there are going to be issues with this type of system (especially when you add complicating factors like profit margins, lobbyists and leaders who promise X and do Y), but I think overall, an organization will grow faster when power is centralized than in a true democracy.
    My recent post Recommended Readings – Memorial Day Edition

    • catarinaalexon  says:

      Good points Sarah. How can we get away from self interst at the expense of the company or country?

  • Catherine Lockey  says:

    I agree that companies are responsible to their stakeholders. At the same time, productive employees are valuable to every company and it's in the company's best interest to reward them and keep them. On the other hand, politicians are supposed to represent the majority of the people they serve – not themselves.
    My recent post Businesses Boldly Invest in Digital Marketing

    • catarinaalexon  says:

      Yes Catherine, it's a difficult balance in a company isn't it? But as far as politicians are concerned their main priority unfortunately is, has always been and presumably always will be, to get re-elected. How can the voters win?

  • catarinaalexon  says:

    Seems you agree with me Keyuri. Trouble is when we vote for a politician he/she then proceeds to do the opposite of what was promised when elected:-) Catch 22, isn't it?

  • catarinaalexon  says:

    Yes Tisha, it's a pity isn't it? Catch is what's the alternative?

  • catarinaalexon  says:

    Lou, why is in your opinion the father the final decision maker in a family?

    • catarinaalexon  says:

      Reminds me of when I lived and worked in Saudi Arabia. One colleague wanted to have quotes from the Koran on the web site I was creating.

      The sheikh who owned the conglomerate then said "Let's not bring religion into this". I second his opinion when it comes to this discussion. My blog is read in 89 countries by people of different faith.

  • Steven Spenser  says:

    I think you’ve failed to make a critically important distinction: In a true democracy, the citizenry collectively make its own decisions, and every citizen has an equal say. With the possible exception of Switzerland, I don’t think any government on Earth is a truly direct democracy. Certainly, the USA isn’t–it’s a republic, not a democracy. In a republic, although citizens theoretically retain control of their government, they elect representatives to run it for them.

    The American founding fathers were very suspicious of democracy, and intentionally designed a republican system of government so that the “mob” could not take over the new nation. In a democracy, a majority of citizens can vote to abolish individual rights, but in a republican system, citizens have unalienable rights that cannot be voted away by the tyranny of the majority.

    Any corporation in which a board of directors is elected by, and responsible to, the corporation’s shareholders is displaying a republican system of self-governance—not a democracy.

    Direct democracies do not need leaders, since decisions are made through the collective will of the citizens. But even in representative democracies, the people retain ultimate control of their government: All they have to do is vote to get rid of any government, or government official, they don’t like.

    The fact that the majority of eligible U.S. voters–to take one example–rarely vote does not mean that the electorate has little, or no, control over its government. It simply means that most of the electorate has chosen not to exercise that control. The electorate has not relinquished its authority, because voters can sweep a government or an individual out of office at any time.

    And, of course, many U.S. states have constitutions enshrining the right of citizens to overturn legislation through the referendum, to propose legislation through initiatives, and to shorten an official’ s term with a recall election.

    The problem you seem to be ascribing to “democracy” has much more to do with voter apathy than with the inherent flaws of any representative system of government.

    • catarinaalexon  says:

      Steven, thank you for your comment.

      You actually have voter apathy all over the West because politicians promise one thing and then once elected forget about their promises and do the opposite. In other words democracy is a more of a concept than reality.

      Glad we agree that it's difficult for a corporation to be a democracy. Unless of course it's a small jointly owned company.

  • Adrienne  says:

    I found this to the case with a company I worked for a long time ago. They changed the management structure and wanted me to get approval from a committee of individuals who didn't want that responsibility and all had different opinions. It was a nightmare and eventually that all fell apart.

    I can definitely tell that you have plenty of people voicing their opinions on this topic. As they should because there is so much wrong with our government today. But what's the answer? Darn good question. Will it ever be fixed? Probably not! There are too many very opinionated people in those positions with a lot of money and frankly, that seems to be all that matters to them. To heck with the rest of us.

    Thanks Catarina.. I do enjoy hearing other people's opinions on this topic and you definitely have received a lot of comments. Keep up the great work.

    My recent post Confession Time- My May Stats Are In

  • catarinaalexon  says:

    Jeanine, that's a good description of democracy in the US at the moment.

  • Leora  says:

    You raise important points, as do your commentators. Democracy sounds like a great idea, but you can't run a business if every vote is counted alike. It's hard enough to do so in a government (and those with money always seem to have a bit more influence in any case).

    Ideally, an employer should at least make employees feel that they have a voice.
    My recent post Guide for Restaurant Owners: Restaurant Website Essentials

  • Jeannette Paladino  says:

    Catarina — Unfortunately, most politicians will make any promise to get elected without the commitment to following through once they're in office. As you know, there is a battle raging in the U.S. about gun control laws. The National Rifle Association has such a huge influence on lawmakers that almost no meaningful legislation has been passed to limit the use of hand guns and semi-automatic rifles here. However, after the massacre of 20 children in Newton, CT, families of shooting victims from around the country have descended on Washington to make their voices heard. It's hard to ignore a mother whose 6-year-old child was murdered. So ordinary citizens, when speaking in one voice, can have a powerful impact and it looks like we will have gun control legislation passed at last. Democracy is very sloppy. In a dictatorship, one tyrant rules. In a democracy individuals can have a voice but they need to come together around an issue if they want to have a real impact.
    My recent post Now You Can Connect With Other Members Using LinkedIn Mentions

    • catarinaalexon  says:

      Glad you agree with me Jeannette. Got the video of parents of the White House sent to me by The White House. You can sign up if you are pro gun control. The power of the NRA is scary, and people die as a result. Even children.

  • Heather Stone  says:

    Hi Catarina,
    This is an interesting question. Here in the U.S., there is some research suggesting subcontracting and outsourcing are increasing in frequency which will likely lead to a decrease in full time employment. Also, social media sites like Facebook operate largely on the content creation of millions of individual businesses and individuals. Arguably, these users are a hybrid. They certainly are customers, but in a way, some also take on the role of quasi-employees. They create content which social networks use as both the service and product of their operations and receive compensation in the form of traffic and community. But both contractors and users are more autonomous than employees. Is this democracy? It's certainly an evolution in work.
    My recent post No Money? No Problem! Essential Advice When Launching Your Startup on the Cheap

    • catarinaalexon  says:

      That's a way of looking at the issue in a wider aspect, Heather. You are right about such developments taking place, not only in the US but all over the world. It's an improvment but doesn't, in my opinion, make leadership and democracy truly compatible. Do you believe leadership and democracy are truly compatible?

  • findingourwaynow  says:

    A true democracy is rare. Even the US isn't a true democracy. It is as you said, an ideal. When you're a business and have to get things done, to take all thoughts, opinions and considerations into a decision it would stop the process of doing business, not a good thing. It really is a balance between being thoughtful and honest in what your intentions are. Many will accept that not all opinions are worthy or can be heard. They need just want to know what is and isn't part of the process.
    My recent post R.L. Buller and Son Fine Muscat: Wine

    • catarinaalexon  says:

      Yes democracy is flawed, isn't it Susan. Switzerland is probably doing better than other democracies with their constant referendums on important issues.

  • JeriWB  says:

    Pure democracy is impossible. Utopia is a nice idea in theory. The best to be hoped for is a representative democracy.
    My recent post Best Books: The Thorn Birds as Children’s Literature (Guest Post)

    • catarinaalexon  says:

      Yes democracy isn't perfect, Jeri. But it's the better than the alternatives:-)

  • becc03  says:

    I dont believe pure democracy is possible either. I can only imagine that it would bring things to a grinding halt. It is a nice ideal but not really practical.

    My recent post What is in store at 4?

    • catarinaalexon  says:

      True, above all, when it comes to businesses Rebecca. However, Switzerland has a better form of democracy with constant referendums on issues of importance. That enables the voters to have their say instead of politicians deciding.

  • DDL  says:

    Democracy is a system to choose leaders who are accountable. They are accountable to the ones who chose them as leaders. What they do once chosen as a leader is often not what they thought they would do nor what they said they would do. However, in a democracy, they are still accountable for their decisions and actions. Even company directors are accountable to the shareholders. They must be re-elected on a regular basis. Democracy is not about voting on every decision. It is about choosing leaders and then holding them accountable for their decisions and actions.

    • catarinaalexon  says:

      The problem is that accountability isn't always being applied. Too big to fail, to big to jail is a good example of that.

  • catarinaalexon  says:

    Glad we are of the same opinion Lawrence.

  • Slim  says:

    As you said, Catarina, another fad. If anything, I've been inveighing against the fads and fashions of organisational analysis, group dynamics, consensus building, and every other idea to come down the pike as a sorry substitution for management.

    This idea seems like another of the many inflicted on business for half a century.


    My recent post The Side Street Journal Weekly 3-10 April 2013

  • Suzanne Fluhr  says:

    Having run a small business, I don't think a true democracy would work although I think businesses run best if the employees feel that their work and opinions are valued. Further, although employers don't necessarily legally owe employees an explanation for their actions, my experience is that this goes a long way towards getting people on board.

    In a true democracy, there is a tyranny of the majority. This is why our Founders (here in the US) set up a government with checks and balances. The Supreme Court is the least democratic of our institutions, but is often the body that looks out for the rights of minorities in our society.
    My recent post Ireland Road Trip — Part Three (The Ring of Kerry)

    • catarinaalexon  says:

      Thank you for conveying your thoughts Suzanne. Perfect democracy is impossible. In a small business what you suggest is applicable.

      When it comes to politics, democracy is better than the alternatives. But it's still a flawed concept.

  • catarinaalexon  says:

    Glad you agree with me Candace.

  • akandrewwriter  says:

    Good post as always Catarina. Leadership is essential for any democracy to survive, and within the confines of a business even a coop needs to have a board of governors. Not everyone knows , or wants to know the big picture, nor are they qualified to make a decision because of that. In theory electing leaders to represent the people's interest is a good system, but as we all know politics often comes down to money like everything else in this world.
    My recent post 1969: Does Music Capture the Heart of an Era?

    • catarinaalexon  says:

      Good points AK. Glad you agree with me.

  • yearwoodcom  says:

    It's an interesting question. There are certainly times when it feels like the drive to engage employees is leading management down this path, but just as governments can't be run like businesses, business can't be run like government. The objective of a business is not to serve the majority of employees. Their input is valuable and can bring terrific insight, but insight isn't vision. The more employees, the broader the spectrum of priorities and then a process that forces agreement based on general knowledge not expertise. No business runs effectively without a vision, a concise list of priorities, a focus on the customer and clearly defined strategic goals.
    My recent post Rather Have a Conversation or a Meeting?

    • catarinaalexon  says:

      In other words, you agree with me Debra.

      • yearwoodcom  says:

        LOL…Yes! but that would have been too easy to write. :)

  • Wayne Reagan  says:

    A corporation is a kind of repressive socialist state where every worker is equal but each must respond precisely to collective authority. The corporate genome – the sequenced and mapped skills of work and workers — is leadership's archive, containing the plans for each type of worker, the master program for generating a 10-thousand-worker company from a single thought, and the life cycle instructions that guide it from birth to adolescence and maturity.

    • catarinaalexon  says:

      Yeap, but not socialist, just authoritarian. Good analogy:-)

  • Lawrence Grodecki  says:

    Businesses do not exist to promote equality . . . even non-profits are very competitive. It's not just a matter of some sort of "harmony" within an organization, but also between them – if there is disharmony between, then eventually there will be within an organization.

  • Geek Girl  says:

    I think there is value in getting input, but someone needs to take the responsibility for the final decisions.
    My recent post Best Business Tech Upgrades for Your Office In 2013

    • catarinaalexon  says:

      Yes Cheryl. The final decision rest with the leader.

  • MK Slagel  says:

    You pose a good question. I have never believed (since I was old enough to understand the government and form my own opinion) that we were purely democratic. Sure, we have the right to vote. But how many elections would have been different if it was based on amount of votes alone? It is reasons like that that politics become difficult to understand.
    My recent post Is Being Debt Free Always Good?

    • catarinaalexon  says:

      That's a problem with the American system. In Europe we don't have the electoral system. Your founding fathers had to add the electoral system to please representatives of small states. Agree with you completely that the amount of votes should determine who will govern.

  • Kelly Wade  says:

    I think that people want to believe that a true democracy can be put into place and work, but I don't see that happening in a government or in a business. There needs to be voices heard, but ultimately not everyone can have a say in decisions because everyone will not come to the same conclusions. Interesting idea though!
    My recent post Can You Workout Your Face?

  • patweber  says:

    Right now you can see in the USA that leadership and democracy don't necessarily go together. Our politicians, right on up to the top, are doing what THEY want. Not necessarily what the public outcry calls. It's about winning the next election, to stay in office, to retain power, to whiddle away a little more at – democracy.

    As always, an thought provoking post.
    My recent post LinkedIn, Oh LinkedIn, What Happened to the “Reply” (don’t accept yet) Option to an Invitation?

    • catarinaalexon  says:

      Yes Pat, and the same is happening all over the world. Is that democracy?:-)

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