Structures, management and 'degeneration'

The presence and operation of technical persuasion, ideological (normative) persuasion, mutual scrutiny and concertive control, pay incentives and expulsion as co-ordination mechanisms were all broadly corroborated by both the review and the fieldwork. So was the relational, consensual

character of decision-making in small organisations, partnerships and NHOs alike. Evidence-based practice was an important homogeniser of working practices in the healthcare partnerships and cooperatives. Interpersonal skills and team working proved more important coordination mechanisms than we initially assumed, and expulsion less. The fieldwork and the

systematic review both strongly indicated the centrality of mutual scrutiny and concertive control as a coordinating strategy in both kinds of

organisation. Weak or slow consensus decision making was reported in one consumer and one producer NHO but not the other case study sites.

Secondary sources rarely if ever reported it as a problem. Generational attrition of cooperative or egalitarian values was found in two of our case study consumer NHOs and non-health partnerships but not in the producer NHOs and health partnerships. Many studies in the systematic review reported generational attrition of cooperative or egalitarian values, especially in the countries central and eastern Europe. The phenomenon was not reported in partnerships.

An important empirical qualification to our initial account of workplace democracy is to notice the apparent necessity, for operating many kinds of core process, of structures in which staff do not elect or recall their own immediate supervisor. Our findings suggest that two polar models of NHO structure are compatible with it long-term survival and effectiveness (in

terms of meeting its own objectives). One is the direct, relational democracy of the self-contained workshop (or clinic, hospital ward, department, office, team) with its reliance on everyday peer scrutiny, concertive control, and consensus or voluntary allocation of tasks and positions of responsibility. The other model is analogous to an elective presidency. The members elect the CEO executive and perhaps the board, who until the next election exercise a temporary hierarchical control over their electors, typically through a chain of middle managers who are salaried employees and cannot be voted out by their subordinates alone.

Either model can be effective over long periods, raising the question of what conditions each is best adapted to. Our combined findings suggest it

depends on:

1. The extent to which external discipline is necessary to get the members to operate the organisation's core productive process.

This depends on the character of the core process (whether it is disagreeable work, occurs at inconvenient times or places, requires reliable attendance at the same time as other workers, is hazardous etc.), hence whether the worker is intrinsically or extrinsically motivated to do it.

2. The homogeneity of the workforce in terms of skills, motivation and social status. Direct democracy and concertive control apparently function more effectively within occupational groups than between them.

3. Speed of decision-making required. Under relational (direct) democracy decision-making is fast in small groups (e.g.

partnerships) and can to a certain extent be streamlined in larger entities (e.g. decision by vote rather than consensus).

However in large organisations especially, decision-making by a single person is almost bound to be faster. Whether faster is necessarily better decision-making is another matter.

The more external discipline is required, the more heterogeneous the workforce, and the more often fast decision-making is necessary in a large organisation, the more effective the elected-CEO or board structure rather than direct democracy is likely to be. In consumer cooperatives there was so to speak a 'ladder' of member participation but the case studies and the reviewed studies gave conflicting evidence about whether this situation reflected a degeneration of member control. In our case study sites degeneration of member of control was more apparent in consumer than producer cooperatives but that difference was not so marked in the systematically reviewed research. The subjoined hierarchy tended to be proportionately larger and of greater practical importance in consumer cooperatives, mutuals and partnerships than in producer cooperatives in our case studies. The reviewed studies indicated however that a

non-hierarchical producer organisation could under certain conditions survive having as much as 40% of its workforce as employees.

Other assumptions about organisational structure were more substantially qualified or even refuted by our case study and review findings. The

allocation of rewards, especially outside the health sector, was often more complex and subtle than the simplistic assumptions of neo-classical micro-economic models. Instances of equal distribution were found, especially in NHOs and healthcare partnerships. However more complex arrangements were described which partly reflected 'contribution' (mainly, income

generation) but diluted or compounded these incentives with others based on seniority, technical skill, family income 'needs' or simply colleagues' good opinion. Decision-making was slow in some of our non-hierarchical case study organisations, though without the organisationally fatal consequences which some theories predict. In other study sites it was not slow at all.

Tournament career practices were described in the reviewed literature but not found in our study sites. In any event, such systems are not restricted to partnerships (they exist for instance in medical and academic

bureaucracies), are absent in a substantial minority of partnerships and (e.g. as apprenticeships) exist a minority of producer NHOs, corporations and public bureaucracies. So they are an incidental not a defining structure of partnerships. The symbolic importance of an inspirational founder who personified organisational culture and ideology to following generations was an unforeseen finding.

Of our case study sites, Michels' 'iron law of oligarchy' (57) appeared to have some application to one large non-hierarchical consumer organisation and to the partnerships, but less to the other NHOs. Stratification of the relevant occupations even within partnerships was corroborated in both case studies and reviewed literature, especially studies of NHO workforces in the countries of central and eastern Europe. Insofar as managerial capture of NHOs occurred, it was through:

1. Activists being compliant and relatively few, although the nominal membership was many times larger; in our building society study site, tens of thousands of times larger.

2. A large subjoined bureaucracy with specialised staff whose

functions were not necessarily intelligible or transparent, or even legitimate, to the members.

3. Managers becoming conscious of having a distinct interest and role apart from the members.

4. Managers having weaker normative attachment to the NHO's mutualist or democratic organisational structures, management practices and goals than to corporate ones.

Degeneration appeared harder to prevent in consumer NHOs with their dispersed memberships in whose lives the organisation played a small part, than in producer organisations with the opposite characteristics. It appears that consumer NHOs must often rely on a minority of 'true believer'

members to exercise control and prevent the NHO degenerating.

But was it of any practical consequence if managers captured control? Our findings suggest that it depended upon how far managers' motivations, normative beliefs and interests aligned with the members'. Alignment appeared to become less likely, the greater the difference in occupation, biography and beliefs between members and managers. Our own financial services case study and recent historical experience in that sector show the importance of managers' commitment to the principles of cooperation and mutuality. One can contrast:

1. HouseLend, where the consequences of manager control ensured survival of the organisation in its mutual form. Managers

thwarted attempts to convert HouseLend into a commercial bank.

2. Northern Rock BS, whose managers converted a mutual building society into a corporate bank and began operating accordingly, indeed going further than older corporate banks did in relying on wholesale credit markets for their financing, raising loan-to-value limits for mortgages and making risky ('sub-prime') loans.

Other converted mutuals did likewise (328).

These polar scenarios contrast with the gradual erosion of mutualist beliefs in OverThere in favour of managerial beliefs, norms, practices and language copied from corporations. The difference between these scenarios appears to stem partly from such contingencies as the outcome of members' votes, hence the voting members' perception of their own interests,and partly from the ideological standpoint of the managers themselves.

Mutation of partnerships in corporations was not observed in our study sites although the reviewed literature discusses it. Nevertheless our findings evidence the following trends:

1. Stratification and role specialisation within partnerships (emergence of managing-partners, partners with special interests, multi-professional partnerships, employed non-partners).

2. Growth of partnership size

3. Growth of subjoined hierarchies, both absolutely and in

proportion to the number of partners. Then a growing proportion of partnership income derives from the work of employees

rather than of the partners, and a hierarchical the culture prevails more widely in the organisation as a whole. Many studies reported a tendency for partnerships to become more bureaucratic, the more wage-workers they employed.

4. Formalisation and normalisation of work (e.g. EBM, QOF) with increasing external scrutiny of it.

5. Shift from personal towards external, often corporate,

capitalisation, including creation of parallel corporate structures.

Yet the partners remain in control and their original goals for the partnership remain more or less stable. That far,

Introducing outside experts such as a human resources manager might make the firm more

“business-like” in its selection or promotion policies but unless they break the control of partners over decision-making they do not alter the firm fundamentally away from the P² archetype.

(115); p.97

Yet the question remains of how far these changes can go until the partners (concentrate on managing their employees' work instead of doing their own, increasingly marginalised, productive work. Then, in terms of goals and structure the partnership converges upon another archetype, not the corporation but the hierarchical, non-profit social enterprise. Indeed the NurseLed partners were deliberately following that trajectory.

None of our case studies allowed us to observe whether increased

(employment of wage-labour led to the organisation's 'degeneration'. Many studies report NHOs employing wage-labour, but of these only a minority of studies report degeneration, the rest no degeneration.

12.2.3 Professions in non-hierarchical organisations and