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Are Democratic Leaders Effective in Large Companies?

written by: Donna Cosmato • edited by: Michele McDonough • updated: 7/30/2011

The democratic style of leadership is one in which every employee has a voice and decisions are made through consultation and cooperation. Democratic leadership in large companies has many benefits as well as some serious drawbacks, and here we'll discuss both sides of this managerial style.

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    Hearing Thoughts of Everyone

    Democratic Leadership style meeting 

    Democratic leadership is a style of leadership that is based on sharing responsibilities and decision-making throughout the company. This style of leadership is differentiated from an autocratic type of leadership by four primary factors:

    1. In a democratic leadership environment, consultation is sought from members throughout the company before decisions are reached.
    2. Managers delegate responsibilities and, in so doing, give full control to those responsible for task completion.
    3. Feedback is welcomed and encouraged.
    4. Employees are continuously encouraged to develop into leadership roles.
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    Leadership that is democratic in style offers four primary benefits. First, it contributes to a positive work environment. By allowing employees to take full responsibility for delegated tasks, the employee is able to take “ownership" and, in so doing, becomes invigorated and motivated by the project or task at hand. Motivated, fulfilled employees are happier, eager to work, and have a better perspective about their work environment and managerial team.

    Second, the process of consultation and feedback tends to result in better decision making. The reason for this is all persons involved are able to participate and provide feedback in a decision. In this way, a decision proposed by management can be tweaked or changed to provide a benefit to all departments as opposed to one or two.

    For example, if management proposes changing shipping companies, customer service can weigh in on the decision as can the shipping department and the distribution department. Because employees feel empowered by their involvement in the decision making process, they are more likely to support the final decision.

    Third, this leadership styles allows for a free flow of ideas and room for efficient improvements. When various departments and employee classes interact together, barriers to efficiency can be discussed, monitored and amended.

    Fourth, it reduces employee turnover. Employees tend to feel more empowered, more valued, and more respected when their ideas and opinions can be voiced, and they are encouraged to do so. Employees feel vital and important to the overall success of the company, and managers find it makes their roles easier and less time consuming because there are fewer problems with dissatisfied employees.

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    However, for as many benefits as a democratic style of leadership carries with it, there are also several drawbacks:

    1. First, decision making can take a long time, at times long enough to erode some of the benefits of making a particular decision. In worst case scenarios, decision making may be permanently delayed or stalled and projects could fail or incur cost overruns because of the delays.
    2. Second, and sometimes subsequently, managers may end up creating a pseudo-participation environment, by where employees are encouraged to voice their opinions but their suggestions are never implemented. When this type of environment exists, employees feel deceived or betrayed and may rebel against all decisions made by management because of their built-up resentments.
    3. Lastly, employees may have the right ideas but implementation can be costly, particularly if the company is very large and employees numerous. If this is not properly communicated to the affected employees, it can cause miscommunication and ill-feelings.
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    Effectiveness of the Democratic Style

    This leads to the question of whether or not the democratic style of leadership is effective. Well, the reality is that the democratic style of leadership is one of the important elements employed by the Big Four to facilitate effective leadership so it seems to work very well in that industry segment.

    For the large manufacturing company, this type of leadership is very effective. By listening to each employee, each step in the product cycle has a voice. As such, employees can explain where inefficiencies exist in their realm of the manufacturing process and provide suggestions for remedying the situation. Those suggestions can be discussed by the company as a whole and the process tweaked.

    A democratic style of leadership is also very effective in creative industries and nonprofit organizations. The former benefits through the flow of ideas, strategies, and concepts afforded by the democratic leadership style, while the latter enjoys the benefits of creative solutions to cost-cutting, fundraising, and budget stretching.

    Traditional corporations can also enjoy the benefits of a democratic style but only if the focus of the company is on effective leadership and employee development.

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    Sharpe, Dave, "Choosing Leadership Style," Montana State University,

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    Image Credits

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