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The Failure of Participatory Management

By Charles Heckscher
June 6, 1995

Across the Board 54 (Nov/Dec 1995): 16-21.

Introduction

Participatory management has been one of the longest-running management trends of the "post-50s" era. While fads have come and mostly gone ­ job enrichment, quality of worklife, quality circles, autonomous teams, and more recently TQM and re-engineering ­ one underlying theme has steadily picked up momentum: increasing the involvement of lower levels in decision-making.

The reason is clear: bureaucracy has reached its limits. The simplicity and power of top-down, rule-based administration created competitive advantage in the past, but it blocks the responsiveness and continuous innovation that are the keys today. That is why "teamwork" and "empowerment" are seen almost everywhere as the road to success.

But does it work? For the last five years I have been interviewing middle managers in companies that are downsizing and restructuring; I've talked to over 250 managers in fourteen large organizations, including divisions of General Motors, AT&T, Pitney-Bowes, Honeywell, and Dupont. One thing I can say is that from their point of view participatory management has generally not accomplished much. It is rarely successful in breaking the walls of bureaucracy. In fact, downsizing and restructuring as they are normally done have the opposite effect: as middle managers consistently told me, these changes increase bureaucracy and increase organizational "politics." Their experience is that the organizations they work in have become more rule-bound and more narrowly-focused rather than less, and less entrepreneurial rather than more. There is a huge gap between the views of the middle and the top. Top managers consistently believe they are breaking down old cultures and creating a new mood of collaboration and innovation. They talk of education, increased information-sharing, systems of teamwork, and communication. In most cases little of this has actually penetrated to the middle layers. The rhetoric and the programs talk of one thing, but the reality in the heart of the organization is another. This is why a growing series of studies has found that the enormous efforts at restructuring are yielding for the most part disappointing results. To be sure, they usually produce some short-term cost reductions; but those who are looking for fundamental increases in organizational effectiveness aren't finding them. This isn't an argument against restructuring, but it does say that many current approaches do it wrong and undermine the long-term strength of organizations. Instead of transforming bureaucracy, they are unwittingly reinforcing it. I have seen only a few cases that avoid the bureaucracy trap.

Two Forms of "Empowerment"

Part of the problem is that there are two sharply different meanings of "teamwork" or "empowerment": one of them creates something new, but the other just reinforces bureaucracy. By confusing the two many organizations set themselves on the wrong path.

The basic problem with bureaucracy is that it operates by dividing work up into small pieces and building walls between the pieces. That is the foundation for the control system: each person is supposed to focus on a particular set of programs, skills, and objectives. When individuals complete their piece they throw it "over the wall" to the next step in the process.

The most popular version of "empowerment," instead of tackling this problem, simply gives individuals bigger pieces: it gets rid of micro-managing superiors and unnecessary rules, and it allows people to do the job they are assigned without interference. "Delayering" is often seen as a way to get rid of micro-management and restore some real power to the front lines.

That sounds good, but it's not new: Alfred Sloan recommended that back in the 1920s when he was creating the classic bureaucratic structure of General Motors. Letting people do their jobs is nothing more than a principle of good bureaucratic management. It is true that organizations tend to build up unnecessary layers and rules, and it is wise to prune them periodically. But this approach increases the autonomy of different parts of the organization rather than helping them to work together. It therefore strengthens the walls which block systemic innovation and responsiveness.

Another version goes a step further, but only a step: I am referring to "autonomous team" systems that get rid of an immediate supervisory level and create a team from those who would normally be a bunch of subordinates. This has the advantage of reducing layers and somewhat increasing flexibility within the group: people can cover for each other and share information more directly. But this kind of team, being permanent, quickly builds its own walls around itself. The members start to share an identity that leads them to resist breaking up and recombining, and they don't generally deal well with "outsiders." I came across many cases of autonomous teams which were fighting to protect their turf and unity against change efforts. While this kind of teamwork increases immediate flexibility, it again raises the barriers to larger-scale responsiveness.

The kind of empowerment that really breaks the bureaucratic mold is something different: instead of increasing autonomy, it increases the ability to work together effectively across walls. These walls exist between levels, blocking open communication; and they exist between functions, blocking effective cooperation on complex problems. The organizations that are starting to leap beyond bureaucracy are the ones who have built a capacity to pull people together quickly, from different parts of the system, with different skills and knowledge, into effective temporary teams working on a task. This capacity quickly to bring together diverse expertise into an effective unit is the characteristic that marks a quantum leap beyond bureaucracy, and which will create competitive advantage for the next economic phase.

Very few companies in my experience can do this well. Though many have been trying cross-functional task-focused teams, the middle managers I have spoken to widely regard them as ineffective and distracting. Empowerment programs which expand autonomy make the situation worse, not better.

The Negative Effects of Restructuring

Restructuring not only fails to create the new kind of participation just described; it has also undermined the old forms of participation which kept good bureaucracies working reasonably effectively in the past.

In traditionally effective organizations, a key form of participation was through the direct supervisor. That was the position responsible for listening, for supporting, and for representing people to the organization. Studies have always shown that most people are pleased with their supervisors, and that this is their most important relationship in the corporation. Again, new programs to create "participatory" relations between managers and their subordinates may be helpful in systematizing past practice, but they do not bring anything fundamentally new.

But at the same time that these programs try to build those "coaching" relations, the larger restructuring process is undermining them. Delayering widely increases the span of control and reduces direct supervision. That may mean that people are more in control of their own jobs, but they are less able to bring up concerns and issues to someone they trust. Focus groups and skip-level meetings do not substitute for the personal relations which used to give people a sense that they had someone to go to in a pinch.

The old organization also had another crucial form of "teamwork." Middle managers were never the narrowly job-focused rule-following automatons that they were made out to be. Fortunately for the companies they worked for, they have always gone beyond the job limits by building communications networks throughout the system, cutting across official lines.

These management networks were informal, based on personal trust and on hit-or-miss contacts. You might go through your first orientation session with Joe from engineering. A few years later, when you're handed a project that needs more engineering talent than you can muster from your own people, you call Joe up and ask for help. He might give you some tips; he might even lend you one of his people for a few weeks. And, of course, you'd do the same for him.

Now, any bureaucratic organization that didn't have these informal networks was doomed to failure. If middle managers really had to go through channels and follow the rules all the time to get what they needed, the whole system would quickly come to a grinding halt. It was because people found ways to cross the walls that bureaucracies functioned at all.

What happens in a downsizing or restructuring? One manager summed it up nicely:

"The changes did two things: they destroyed networks and they destroyed career paths, Now more and more people don't trust each other."

The first thing is that the networks are disrupted: Joe is gone. The second thing is that the wider basis for trust is destroyed. The main reason Joe was willing to help you was that he knew you were both in this for the long haul, and that when he came back to you for a favor you'd still be around. If he was lucky, you might even have gotten promoted and be able to help him more. Now his replacement, if there is one, doesn't know any of that. He's got enough problems of his own; he can't spare time or people. Why should he help you out?

Things are even worse if, as in many companies, there is increasing short-term pressure to meet objectives. What that means is that the formal requirements of the organization are being rewarded more than ever, but the informal teamwork that gave it life is pushed further under the surface. It becomes still harder to go out of your way to help someone in the expectation that it will all work out for the best in the end.

In the absence of trust people feel more isolated, more lonely, more vulnerable; they rely more on formal rules than before; and they are quicker to protect their turf. All of that is the opposite of what is intended, of course. But in the absence of trust, no amount of participatory programs, of training, or of communication makes much of a difference.

The Loyalty Trap

There is more: Restructuring not only disrupts middle managers' traditional forms of involvement and collaboration; it pushes them into a defensive mentality which blocks new forms.

Almost every company I have been involved with has been trying to get managers more involved in the business. They have elaborate programs to distribute strategic information on a far wider scale than ever before, and they have set up all kinds of systems to encourage critical feedback and discussion. The logic is that it is not enough any more for people to work together on particular tasks: they need to feel an ownership in the whole, and to understand its relevance to their work. It is a noble objective, but it is not often realized ­ because managers flee from this level of participation.

Despite all the programs, in my research I was struck by two widespread problems. First, middle managers did not understand the business: they had little or no conception of the competitive environment and the strategic positioning of the firm. They understood their own piece extremely well, but not more. The whole set of changes that was threatening them made very little sense.

Most of the top level managers I reported this to have found this hard to believe. "We tell them all the time, we tell them everything," they say ­ and they're largely right. The problem is not usually that middle managers haven't been told about the business; it's just that they haven't heard it.

Second, though they had deep private doubts about the competence of their leaders, they refused to express these doubts in public. They almost refused to admit them to themselves: the same person would commonly in one breath criticize top management, and in the next say that he had complete faith in them. Though many companies were going all out to provide opportunities for dialogue and voice, middle managers were very reluctant to use them fully.

This is an irrational pattern, but a typical one. It's partly due to fear of retaliation, but only partly. A more basic source is, surprisingly, the loyalty that managers continue to feel towards their companies. Despite the downsizings, despite the violations of long-term expectations, most of the people I talked to cared deeply about their organizations and wanted to hold on. But they were trapped by their own loyalty.

Let me try to interpret what they are feeling. The deal in loyalty is that if you do your job well the organization will take care of you ­ you do your part, the higher-ups will do theirs. Now a bunch of your superiors are coming down and saying to you, "We want you to know what's happening. We want you to know the information we have. We want you to know how difficult and confusing the environment is. And we want you to tell us honestly what we're doing wrong and what we can do better." What middle managers hear is: They don't know what they're doing.

That's not a message the middle managers want to hear; they actively resist hearing it. When their superiors come out with another batch of business information, it basically means that more layoffs and disruption are on the way. They can't do anything with the knowledge, and it just makes them anxious.

"I think what we all struggle with is how much we can influence the business ­ because we know the business can influence us."

So most don't want to hear to much or criticize too much; they don't want to come face to face with the fact that the situation is no longer in control, and no one quite knows what is going on. Even the private water-cooler conversations are contradictory: one the one hand they say the top is making all sorts of stupid decisions that doesn't make any sense; on the other they say (or hope) that the top probably does know what it's doing.

The situation is, in short, one of loyalty without trust. People hang onto their attachment to the company as a kind of security blanket in a world gone mad; but they no longer have the network of trusting relationships that were so crucial in the past. They cope by withdrawing into a narrow world, putting their heads down, getting by, waiting it out:

"I have no doubt that it's going to get worse, but I have no doubt that we will recognize it and turn it around. The only thing we can do is just wait. We have a good organization here, when we get directed to do it, we do it. I can't help but think that the pendulum will swing back. We will just have to wait it out, because there is really nobody to talk to."

Overcoming the Barriers

All of this adds up to a pattern where no matter how hard you try, you stay stuck within bureaucracy. Downsizing and restructuring produce quick benefits because they cut costs and temporarily improve the alignment between structure and strategy. But they don't increase the basic flexibility of the system; in fact, they reduce it by increasing the barriers between people. So most organizations end up putting people back on (though they may hide it by changing the categories), or by restructuring over and over to try to keep up with change.

As I've said, there were few in my study that escaped the trap. The ones that did were the ones that had changed the most. They had created a kind of teamwork that was not just a modification of bureaucracy, but which truly brought down the walls. Most managers served on multiple teams ­ some lasting for a few hours, some for a few years, many of them spontaneously created from the middle, all focused on solving problems.

I have never found this kind of management through an entire corporation: it has appeared so far only at the level of plants and divisions. In my own study one of the successes was a General Motors plant, another a Honeywell division; and recently I have been impressed by the Network Services Division of AT&T. I have also heard convincing case studies of similar units at General Electric, IBM, and a few others. But it clearly remains rare.

In these organizations the managers I interviewed were not putting their heads down and avoiding reality; they were working together to master it. They were not looking for more autonomy, but were enjoying a sense of interactivity.

"The middle managers really make this place run. There's a strong desire among all of us to work the problem. We work together, we're friends, we have a lot of kinship in getting a job done."

How did they do it? There are many elements, large and small. One is simply to be clear about what you're doing ­ about the difference between "empowerment" within bureaucracy and breaking bureaucracy. Increasing autonomy ­ leaving people alone ­ leads the wrong way; increasing interdependence and interaction across wall leads the right way.

There were at least two other things that seemed crucial:

1. A focus on purpose

The new environment does increase the mobility and independence of managers. They can no longer rely on personal contacts and informal networks as a basis for trust, and they need to pay attention to their own needs rather than counting on the company to take care of them. The problem is how to get these more individualistic employees to work together. A major answer seems to be to a focus on the organization's purpose. The most successful organizations in my sample had created a rich and thoroughly shared picture of what they were trying to accomplish together in the next few years.

The purpose, in this sense, is different from most definitions of "vision," "goals," or "mission."

  • On one side, "visions" tend to be simple, eternal statements of the organization's identity that can be put on a wall: Mazda's, to take one classic example, is "Everlasting effort for everlasting cooperation." That supports traditional loyalty, but it doesn't create a sense of working on a problem together.

  • On the other side, many organizations put heavy emphasis on this year's goals, or numbers. That gives a visible target, but is too short-term to sustain a sense of shared commitment and enthusiasm; it quickly degenerates into "just hitting the numbers."

A purpose is something in the middle: a complex statement of the organization's challenges and objectives over a three to five year time frame. It usually can't hang on a wall, because it is far too complicated. The limited time frame keeps the purpose concrete, away from airy abstractions. But it is a long enough period to provide a challenge worth caring about.

People who understand the purpose can talk knowledgeably about competitive positioning, comparative advantages, and strategic objectives. This was the clearest difference in my sample: in the troubled companies middle managers could not talk about those issues; in the dynamic ones they could, and that sense of purpose pulled them together.

2. Telling the truth

All corporate leaders say they want to communicate the reality of change, but most are held back by their end of the loyalty bargain. They are supposed to protect "their people"; they are almost unconsciously reluctant to admit that they can't do that, and they worry that their people won't be able to deal with the full reality of what's happening. So they pull their punches. They try to reassure people: they communicate, "We may not be able to guarantee you a job, but we'll do everything we can to take care of you." They also tend to hold back the full picture, doling out reality a bit at a time, allowing people to believe that things may return to "normal."

The dynamic companies don't do that. They tell the full picture of competitive problems, and they make clear that promises of security are no longer possible. For most managers, including lifelong loyalists, this has the effect of a bracing dose of truth: the world makes sense, even if it isn't entirely pleasant.

I don't mean that the solution is to be cruel: hauling people out of buildings under armed guard, or refusing to do anything to help those laid off, may be ways of getting the truth across ­ but they don't contribute a sense of shared purpose. The problem is to replace the paternalistic ethic of caring for people with a professional ethic of mutual commitment.

Companies with a sense of honesty and purpose have high levels of participation. They don't do it with participative programs, but they create an environment in which understanding and criticizing the business direction are important to people's daily jobs. In that situation people work together rather than fragmenting into isolated pieces.

Conclusion

"Participation" is one of those words that can mean almost anything. In this case it can mean at least two opposite things: reinforcing bureaucracy or overcoming it. Managers and others have no difficulty in "participating" within the traditional framework: that is, they want to be left alone to do their jobs, to get out from under unnecessary rules; and they are delighted to discuss with superiors how their jobs can be done better. These kinds of "participation" date back at least to the 1920s.

Flexible organizations, however, require that people participate beyond their jobs: everyone needs to understand and contribute creatively to the overall purpose of the organization. That kind of participation profoundly threatens traditional relationships.

Surprisingly, this is the crux of the change in expectations. Layoffs and downsizings do not shatter the contract of loyalty. Managers are able to rationalize these for a long time as responses to crisis, and to settle into a waiting posture. They don't fundamentally give up the expectation that if they can just get through this period things will return to normal.

Being asked to get involved in strategic purpose is a far more serious threat, because it establishes new relationships. If middle managers (and others) have real involvement in issues beyond their jobs, it means that the whole system of bureaucratic coordination needs to be reconstructed; it means that the uncertainty and threats of the "outside" world have to become a daily reality for everyone, not just the top; it means that middle managers have to be treated far more as independent agents than before. These are difficult shifts that are widely resisted, and most existing programs do not penetrate the resistance.

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