Co-operative Workplace Dispute Resolution

Organizational Structure, Ownership, and Ideology

Elizabeth A. Hoffmann

• Publisher: Routledge
• Year: 2016
• ISBN:
  9781317159667
• Edition: 1
• Topic: Derecho
• Subtopic: Procedimiento civil

Understanding the complex dynamics involved in workplace disputes helps improve the way organizations deal with unwelcome but inevitable occurrences. These issues have been researched from different perspectives, but previously such research has failed to ask how flattened organizational form might impact ways of resolving disputes, focusing instead on what occurs in conventional, hierarchical organizations only. In Co-operative Workplace Dispute Resolution, Elizabeth Hoffmann considers the question of how workplace disputes are raised in the absence of formal hierarchy. In contrast to conventionally organized businesses, co-operatives attempt to evenly distribute power and ownership and encourage worker control through egalitarian ideologies, flattened management structures and greater information sharing. Like conventional businesses, though, they still pursue goals relating to profit and efficiency. Dr Hoffmann argues that lessening hierarchy and sharing power, as occurs in co-operatives, provides insight into how greater worker involvement and ownership might operate in a less extreme and more modest form in conventional mainstream business. This book focuses on dispute resolution strategies at matched pairs of worker co-operatives and conventional businesses in three very different industries: coal mining, taxicab driving, and wholefood distribution. The author's central finding is that the worker co-operative members have access to more dispute resolution strategies than their conventionally employed counterparts. This leads to the conclusion that benefits might be achieved by conventional businesses that wish to embrace specific attributes usually associated with co-operatives, including management-employee cooperation, shared ownership, or greater workplace equality.

1 What Are Worker Co-operatives?

DOI: 10.4324/9781315574226-2

Worker co-operatives are organizations with equally shared worker ownership and egalitarian ideologies. As “[t]he oldest vision for an emancipatory alternative to capitalism,” according to Wright (2010: 165), worker cooperatives present an almost instinctive reaction to the alienation of workers that capitalism created because worker co-operatives reverse that separation of the worker from the means of production. Worker co-operative organizational structures are flattened, with minimal hierarchical levels of supervision, or no formal hierarchies at all: they exist in a wide variety of workplaces—bakeries, lumberyards, coal mines, theaters, grocery stores, and bicycle repair shops—but are less familiar to most people than consumer co-operatives, in which shoppers buy into an organization to receive discounts on future purchases.

The existence of worker co-operatives tests a number of beliefs strongly held by scholars and non-scholars for many years. Academics and the general public often assume that as the size of an organization increases, the need for more layers of management increases. Because of this widely held belief, much research on organizations focuses on the importance of hierarchy, and there has been little exploration into alternative organizations. Yet, knowledge of co-operatively run organizations can lead to a greater understanding of all organizations, which may be radically affected by the level of hierarchy present. It is also important to understand what alternatives exist to mainstream, conventional models of organization. To understand the challenge presented by worker co-operatives, we will examine what other researchers have written about how organizations work and what others can teach us about co-operatives.

The Assumption of Hierarchy

Conventional businesses are organized hierarchically, with top-down decision-making and with information generally flowing up to management: in this arrangement, workers lack control over their conditions at work and only highly filtered information reaches the rank-and-file. Managerial decisions are made in upper levels of the hierarchy, and those decisions are not necessarily based on local knowledge or diverse expertise (Bailyn 1997). Yet, despite these drawbacks, some scholars have argued that hierarchical bureaucracy is the natural order of things, and will come to dominate nearly all aspects of life. These scholars further argue that once it is established, bureaucracy becomes firmly entrenched and is the most difficult type of social structure to destroy. Max Weber, for example, stated that “[t]he ruled, for their part, cannot dispense with or replace the bureaucratic apparatus of authority once it exists” (Weber 1946: 26). Indeed, we encounter bureaucracy in almost every aspect of our lives.

According to a number of scholars, the operation of an organization without a hierarchy would be “utopian” and impossible to achieve in modern society (Weber 1946: 27). Moreover, scholars like Weber reason that the absence of hierarchy is impracticable because of hierarchy's strong link to bureaucracy; a link that he holds is inevitable in modern society. Hierarchy provides both the apparatus that bureaucracy needs and the foundation of beliefs on which bureaucracy bases its claims. Weber (1946) argues that the legitimization of bureaucracy requires the belief hierarchy perpetuates: that bureaucracy should be followed for the sake of efficiency. Without efficiency as a highly prioritized goal, bureaucracy appears less essential, since a key advantage of bureaucracies is their more efficient operation of administrative functions (Ouchi 1980).

Like Weber, Robert Michels shares reservations about large-scale, non-hierarchical organizations (Michels 1962: 38, 43). His classic statement, “Who says organization, says oligarchy,” vehemently expresses this disbelief in the possibility of successful collective management (Michels 1962: 49). Arguing more strongly than Weber for a natural inclination toward hierarchy, he states, “organization implies the tendency to oligarchy … As a result of organization, every party or professional union becomes divided into a minority of directors and a majority of directed” (Michels 1962: 42).

Michels holds that an organization must have strong leaders. According to his line of reasoning, the masses choose leaders, who in time become the rulers of the people who selected them. In this regard, a system of domination is inevitably created, whether or not a democratic base or an ideological commitment to equality exist. Importantly, once the power is transferred, it remains in the hands of those few individuals (Michels 1962: 49).

This transfer of power from workers to a hierarchy of managers is not only inevitable but also universal, according to Michels. “The formation of oligarchies within the various forms of democracy is the outcome of organic necessity, and consequently affects every organization, be it socialist or even anarchist,” he writes (Michels 1962: 50). Thus, despite commitment by members to ideologies that seek to redistribute power throughout the masses, power will be transferred, accumulating in only a small subgroup. Hierarchy, then, emerges as the outcome of technical conditions (Michels 1962: 44). Michels argues that an unequal distribution of power is inevitable and that this mandates a hierarchical arrangement to utilize this power. In addition, as the division of labor becomes greater, hierarchy becomes more complicated. The larger and more complicated an organization becomes, the more hierarchy becomes unavoidable. This point illustrates a theoretical difference between Weber and Michels. Michels believes that, as an organization grows, technical conditions necessitate hierarchy, while Weber argues that technical conditions only make hierarchy more desirable, not necessarily inevitable, because hierarchy allows an organization to deal most effectively with increased technical complications.

Because most organizational theorists assume Michels’ “Iron Law of Oligarchy” as a given, few researchers have sought to explore the functioning of organizations that challenge the notion of the inevitability of hierarchy and oligarchy. Several studies that examine hierarchy conclude that hierarchy is unavoidable. In their 1956 study of a democratic labor union, the International Typographers Union, Lipset, Trow, and Coleman, argue that hierarchy is necessary and inevitable in larger organizations: they conclude that the structure of large-scale organizations “inherently requires the development of bureaucratic patterns” (Lipset, Trow, and Coleman 1956: 361). They find that the conditions necessary for the institutionalization of bureaucracy and democracy are incompatible (Lipset, Trow, and Coleman 1956).

Even writers in the popular press have raised the question of the inevitability of hierarchical businesses, and found an answer similar to Michels’ Iron Law. For example, in a much noted Forbes article, Peter Drucker writes, “[O]ne hears a great deal today about ‘the end of hierarchy.’ This is blatant nonsense. In any institution, there has to be a final authority, that is, a ‘boss’—someone who can make the final decision and who can then expect to be obeyed” (Drucker October 5, 1998: 158).

In other research, scholars assert that hierarchy is not just inevitable, but beneficial. Hannan and Freeman suggest that the likelihood of success is diminished if an organization operates without a hierarchical structure, although they, too, do not identify hierarchy specifically. First, they argue that the possibility of structural innovations may cause a loss of technical efficiency (Meyer and Rowan 1977) because implementing a new or alternative way to operate may harm the actual functioning of the organization, making survival less likely (Hannan and Freeman 1989). They further argue that such structural innovations may create costs in legitimacy for the organization with regard to its institutional environment. Organizations are more likely to fail when they deviate from the prescriptions of institutionalizing myths (Hannan and Freeman 1989).

Institutionalist theorists argue that hierarchy is an important rational myth. According to this line of reasoning, if an organization operates without the structure of hierarchy, it may lose the legitimacy it needs to succeed. The institutional legitimacy of hierarchy makes social action more easily reproduced (Zucker 1977). However, institutional theorists do not agree with Weber and others on the technical benefits of hierarchy.

In contrast, other scholars do not perceive a degree of hierarchy as beneficial. Some classical theorists have perceived hierarchy negatively, the most famous of these being Marx. Understanding organizations as power systems that are designed to maximize profit and control, Marx argued that hierarchy is utilized to “deskill” workers, rather than to improve efficiency. Thus, hierarchy is not a rational system of co-ordination, as Weber believed, but “an instrument of control and a means of accumulating capital through the appropriation of surplus value” (Scott 1992: 115).

Although Marxists assert that hierarchy is used in the workplace to control and oppress, they do not necessarily support systems of collective management. Marxists argue that co-operative management is misguided because it fails to challenge the fundamental exploitative nature of organizations. Marx himself felt that co-operatively held property would precede socialism. However, the type of social property arrangement he proposed would be formally developed on a national scale and sponsored by government (Marx and Engels 1986). Wright explains that Marx initially rejected worker co-operatives, although later in his life Marx concluded that worker co-operatives were “a legitimate element of socialist strategy” (Wright 2010: 165). Rothschild and Whitt (1986) argue that though many members of worker co-operatives would label themselves as Marxists and subscribe to Marxist ideals and critiques of capitalism, their community-level agendas and their beliefs in the importance of grassroots movements are not supported by Marx.

Organizations Without Hierarchy

Despite these assertions by a range of scholars, collectively run organizations attempt to escape from the inevitabilities of hierarchical administration. Many members of worker co-operatives strive to create entities that exist without one person or a small, select group holding the ultimate authority (Rothschild and Whitt 1986: 52). Some contemporary theorists suggest that hierarchy, which would inevitably be produced in most situations, is not inevitable in less conventional, alternative groups. These researchers argue that, because these subgroups interpret conditions differently from mainstream society, “hierarchy-related” conditions may not necessarily lead to hierarchy for them.

Collins and other scholars have argued that certain subgroups within society differ in their orientations toward assumed, “taken-for-granted” norms and in how they invest cultural resources (Collins 1981). People who hold less conventional beliefs, therefore, may not assume that hierarchy is inevitable. In addition, Scott (1992) has argued that cultural frames establish which means are appropriate and which ends are desirable. Ethnic subpopulations, such as the Basque in Spain, present the classic example of a homogenous subgroup which created a large, successful co-operative (Wright 2010). In this way, people with cultural frames that differ from those of mainstream society may view means and ends that are commonly deemed utopian—such as non-hierarchical workplaces—as highly possible and worthwhile. In their work on various forms of co-operatives, Rothschild and Whitt (1986) found that interviewees often held non-conventional beliefs, especially with regard to hierarchy and efficiency, the capitalist economic system, and government actions. Many people in their study identified themselves as Marxists or anarchists, or aligned themselves with such ideologies. These ideologies encourage values that contrast and oppose those of mainstream society.

Powell and DiMaggio (1991: 29) argue that institutional models will not be imported in their entirety into systems that are very different from the ones in which they originate. They note that despite these subgroups’ alternative ideologies and commitment to eliminating certain aspects of conventional organizations, they will nevertheless continue to operate using some elements of the system they oppose. Thus, these subgroups may retain some aspects of mainstream organizational culture, such as paychecks, regular operating or business hours, and income-tax deductions, while not necessarily including all aspects, namely hierarchy.

Scott argues that, under some conditions, institutional environments may reduce rather than increase the quantity or elaborateness of organizational structure. He explains that cultural controls can substitute for structural controls in some circumstances: “When beliefs are widely shared and categories and procedures are taken for granted, it is less essential that...