Is organizational democracy worth the effort? Harrison and Freeman (2004) conclude that the answer is yes. Even if it does not produce economic gains, it produces other bene!ts such as reduced stress (Kalleberg, Nesheim, and Olsen, 2009). Still, many managers and union leaders oppose the idea because they fear losing prerogatives they see as essential to success. Union leaders and critical management theorists sometimes argue that democracy is a management ploy to get workers to accept gimmicks in place of gains in wages and bene!ts or as a wedge that might come between workers and their union.
Organizations that stop short of formal democracy can still become more egalitarian by reducing both real and symbolic status differences (Pfeffer, 1994, 1998). In most organiza- tions, it is easy to discern an individual’s place in the pecking order from such cues as of!ce size and access to perks like limousines and corporate jets. Organizations that invest in people, by contrast, often reinforce participation and job redesign by replacing symbols of hierarchy with symbols of cooperation and equality. Semco, for example, has no organiza- tion chart, secretaries, or personal assistants. Top executives type letters and make their own photocopies. Nucor has no executive dining rooms, and the chief executive “”ies commer- cial, manages without an executive parking space, and really does make the coffee in the of!ce when he takes the last cup” (Byrnes and Arndt, 2006, p. 60).
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Reducing symbolic differences is helpful, but reducing material disparities is important as well. A controversial issue is the pay differential between workers and management. In the 1980s, Peter Drucker suggested that no leader should earn more than 20 times the pay of the lowest-paid worker. He reasoned that outsized gaps undermine trust and devalue workers. Corporate America paid little heed. In 1980, big-company CEOs earned about 40 times as much as the average worker. By 2015, with an average annual compensation of $13.8 million, they were earning more than 200 times as much (Chamberlain, 2015). In the year it went bankrupt, Enron was a pioneer in the golden paycheck movement, handing out a total of $283 million to its !ve top executives (Ackman, 2002). The controversial drug company, Mylan, which came under !re in 2016 for stunning price increases on its most pro!table product, the EpiPen, paid its top !ve managers a total of $300 million over !ve- year period—signi!cantly more generous than much bigger and more pro!table competi- tors like Johnson & Johnson and P!zer (Maremont, 2016).
In contrast, a number of progressive companies, such as Costco, Whole Foods, and Southwest Airlines, have traditionally underpaid their CEOs by comparison with their competitors. Whole Foods Markets limits executives’ pay to 19 times the average employee salary, and CEO John Mackey asked the board in 2007 to set his salary at $1/year (Gaar, 2010). It was newsworthy that Southwest’s CEO received “less than $1 million in 2006 even as the carrier posted its 34th straight year of pro!ts” (Roberts, 2007). In the same year, United Airlines, fresh out of bankruptcy, unintentionally united all !ve of its unions in protest against the estimated take-home pay of $39 million for its CEO (Moyers, 2007).
Promote Diversity A good workplace is serious about treating everyone well—workers as well as executives; women as well as men; Asians, African Americans, and Hispanics as well as whites; gay as well as straight employees. Sometimes companies support diversity because they think it’s the right thing to do. Others do it more grudgingly because of bad publicity, a lawsuit, or government pressure.
In 1994, Denny’s Restaurants suffered a public relations disaster and paid $54 million to settle discrimination lawsuits. The bill was even higher for Shoney’s, at $134 million. Both restaurant chains got religion as a result (Colvin, 1999). So did Coca-Cola, which settled a class action suit by African American employees for $192 million in November 2000 (Kahn, 2001), and Texaco, after the company’s stock value dropped by half a billion dollars in the wake of a controversy over racism (Colvin, 1999).
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Denny’s transformation was so thorough that the company has frequently appeared on lists of best companies for minorities (Esposito et al., 2002; Daniels et al., 2004).
In the end, it makes good business sense for companies to promote diversity. If a company devalues certain groups, word tends to get out and customers become alienated. In the United States, more than half of consumers and workers are female, and about one fourth are Asian, African American, or Latino. California, New Mexico, and Texas are the !rst states in which non-Hispanic whites are no longer a majority—except for multiethnic Hawaii, in which whites have never been a majority. The same will eventually be true of the United States as a whole. When talent matters, it is tough to build a workforce if your business practices write off a sizable portion of potential employees. That’s one reason so many public agencies in the United States have long-standing commitments to diversity. One of the most successful is the U.S. Army, as exempli!ed in Colin Powell’s ability to rise through the ranks to head the Joint Chiefs of Staff and subsequently to become the nation’s secretary of state.
In industries where talent is a vital competitive edge, private employers have moved aggressively to accommodate gay employees:
As a high-pro!le supporter of gay rights, Raytheon of course provides health- care bene!ts to the domestic partners of its gay employees. It does a lot more, too. The company supports a wide array of gay-rights groups, including the Human Rights Campaign, the nation’s largest gay-advocacy group. Its employees march under the Raytheon banner at gay-pride celebrations and AIDS walks. And it belongs to gay chambers of commerce in communi- ties where it has big plants. Why? Because the competition to hire and retain engineers and other skilled workers is so brutal that Raytheon doesn’t want to overlook anyone. To attract openly gay workers, who worry about discrimi- nation, a company like Raytheon needs to hang out a big welcome sign. “Over the next ten years we’re going to need anywhere from 30,000 to 40,000 new employees,” explains Heyward Bell, Raytheon’s chief diversity of!cer. “We can’t afford to turn our back on anyone in the talent pool” (Gunther, 2006, p. 94).
Promoting diversity comes down to focus and persistence. Forward-looking organiza- tions take it seriously and build it into day-to-day management. They tailor recruiting practices to diversify the candidate pool. They develop a variety of internal diversity
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initiatives, such as mentoring programs to help people learn the ropes and get ahead. They tie executive bonuses to success in diversifying the workforce. They work hard at eliminating the glass ceiling. They diversify their board of directors. They buy from minority vendors. It takes more than lip service, and it doesn’t happen overnight. Many organizations still don’t get the picture, but others have made impressive strides.
GETTING THERE: TRAINING AND ORGANIZATION DEVELOPMENT Noble human resource practices are more often espoused than implemented. Why? One problem is managerial ambivalence. Progressive practices cost money and alter the relationship between superiors and subordinates. Managers are skeptical about a getting a positive return on the investment and fearful of losing control. Moreover, execution requires levels of skill and understanding that are often in short supply. Beginning as far back as the 1950s, chronic dif!culties in improving life at work spurred the rise of the !eld of organization development (OD), an array of ideas and techniques designed to help managers convert intention to reality.
Group Interventions Working in the 1930s and 1940s, social psychologist Kurt Lewin pioneered the idea that change efforts should emphasize the group rather than the individual (Burnes, 2006). His work was instrumental in the development of a provocative and historically in”uential group intervention: sensitivity training in “T-groups.” The T-group (T for training) was a serendipitous discovery. At a conference on race relations in the late 1940s, participants met in groups, and researchers in each group observed and took notes. In the evening, researchers reported their observations to program staff. Participants got wind of it, and asked to be included in these evening sessions. They were fascinated to hear new and surprising things about themselves and their behavior. Researchers recognized that they had discovered something important and developed a program of “human relations laborato- ries.” Trainers and participants joined in small groups, working together and learning from their work at the same time.
As word spread, T-groups began to supplant lectures as a way to develop human relations skills. But research indicated that T-groups were better at changing individuals than organizations (Gibb, 1975; Campbell and Dunnette, 1968), and practitioners experimented with a variety of new methods, including “con”ict laboratories” for situations involving friction among organizational units and “team-building” programs to help groups work more effectively. “Future search” (Weisbord and Janoff, 1995), “open
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space” (Owen, 1993, 1995), and other large-group designs (Bunker and Alban, 1996, 2006) brought sizable numbers of people to work on key challenges together. Mirvis (2006, 2014) observes that even though the T-group itself may have become passé, it gave birth to an enormous range of workshops and training activities that are now a standard part of organizational life.
One famous example of a large-group intervention is the “Work-Out” conferences initiated by JackWelch when he was CEO of General Electric. Frustrated by the slow pace of change in his organization, Welch convened a series of town hall meetings, typically with 100 to 200 employees, to identify and resolve issues “that participants thought were dumb, a waste of time, or needed to be changed” (Bunker and Alban, 1996, p. 170). Decisions had to be reached on the spot. The conferences were generally viewed as highly successful and spread throughout the company.
Survey Feedback In the late 1940s, researchers at the University of Michigan began to develop surveys to measure patterns in organizational behavior. They focused on motivation, communication, leadership, and organizational climate (Burke, 2006). Rensis Likert helped found the Survey Research Center at the University of Michigan and produced a 1961 book, New Patterns of Management, that became a classic in the human resource tradition. Likert’s survey data con!rmed earlier research showing that “employee-centered” supervisors, who focused more on people and relationships, typically managed higher-producing units than “job- centered” supervisors, who ignored human issues, made decisions themselves, and dictated to subordinates.
