Does digitalisation make companies more democratic – or less?

Home Technologist Online Does digitalisation make companies more democratic – or less?

Digital networking has not only changed everyday life; it’s also testing the way companies organise their work. More than ever, companies depend on employees actively sharing their knowledge and interacting across department boundaries. Can decisions in such companies still be made by lone leaders from their lofty heights?

Photo of a work team gathered around a table with reports, laptop computers... and coffee mugs

This week, entrepreneurs, trade union officials, politicians and scientists met in Munich to discuss models for democratic companies and their impact at an international conference: “The Democratic Company – Dawn of a New Humanisation in the Working World?” organised by Technische Universität München (TUM), ISF München – an independent institute for social science research, and the Human Resources Alliance.

According to Thomas Sattelberger, CEO of Human Resources Alliance and former board member of German Telekom, democratic companies are a new option for corporate development, creating more competition.

“Especially companies that live from innovation or are in need of disruptive change are now challenged to empower talent. Social innovation in the work culture goes hand in hand with technological innovation,” Sattelberger said.

Company democracy: difficult in practice

Research presented at the conference shows that the features of a democratic organisation structure are important factors in companies’ competition for both personnel and funding, shaping employer attractiveness and decisions to invest in the company.

But research also shows that new forms of organisation, company strategies and employee expectations are often incompatible. For example, a TUM survey of 1,000 Germans found that two-thirds of them would like to see companies managed more democratically, giving them opportunities to choose their own bosses and have a say in the corporate strategy. Even so, they view the possibility of their wishes coming true as fairly unrealistic.

This belief is reflected in the opinions of 45 managers surveyed in another study: senior executives believe company democracy is difficult in practice, although smaller companies typically claim to go about things in a more democratic way than larger ones.

“Wherever people’s perspectives differ, and where it’s important to bring knowledge together that is shared by numerous individuals — that’s where the democratic approach works well,” said TUM professor Isabell Welpe. “Technical change alone, unsupported by social and organisational change, cannot work.”

‘Managing by figures’ instead of empowering employees

The fact that technical possibilities do not necessarily foster democracy is reflected in research by ISF München. Scientists found that many companies with the technical resources to analyse data stick rigidly to the principal of ‘managing by figures’ – resulting in more decision-making powers at the top, even within flat hierarchies.

Work areas that lend themselves to a collaborative and independent style, such as ‘knowledge work’, are also not exempt from more control. For instance, the values of transparency, cooperation and shared knowledge are typically praised in companies working with crowd and open innovation models. But for employees in such companies, this doesn’t always mean more scope for development. Instead, they often need to hold their ground against demands from outside and experience this as a feeling of being dispensable.

“We are moving towards a divide regarding democratisation of work,” said ISF München board member Andreas Boes. “New possibilities for employee participation and empowerment could be instrumental in helping democratic companies toward a breakthrough. A feasible counter trend might, however, emerge in the form of power wielded by those who own the data.”

Adapted from article by Klaus Becker, TUM Research News

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