One thing we see throughout the finance industry is the success of the authoritarian leader. Why, since authoritarianism is frowned upon, does it pervade as a model for management? To understand this, we need to, I think, take the judgement out of the question and simply ask:
Why does the authoritarian manager succeed in the finance industry?
The secret to the success of the authoritarian manager lies in the type of task their team does and how optimal the conditions of work are. When you have optimal conditions and simple tasks, authoritarian leadership works well. Consider this from Johnson and Hackman in Leadership, A Communication Perspective:
The findings related to leadership communication style suggest the leader adopting authoritarian communication can expect: high productivity (particularly under optimal conditions: a simple task completed over a short period of time with direct supervision by the leader); increased hostility, aggression, and discontent; and decreased independence, and creativity among followers.
This is in line with my observations: in times of stability, the authoritarian leader flourishes. In times of change, for example when regulations change or when teams merge, you see that the authoritarian manager flounders. Actually, I have a theory that goes like this:
- In times of stability, the authoritarian leader flourishes.
- A system of authority grows up and around the leader.
- Things change – think about the financial crisis.
- The authoritarian system tries to manage but can’t.
- What we are left with, then, is the mess we have now, with 1996 systems of management trying to deal with 2013 problems.
If I am right, then the system needs to change. It needs to become more democratic. Hackman and Johnson say this:
Democratic leadership communication contributes to relatively high productivity (whether or not the leader directly supervises followers) and to increased satisfaction, commitment and cohesiveness.
What we lose is productivity, in the democratic system, what we gain is the ability to cope with non-optimal conditions. I.e. conditions that are changing. As an aside, people are happier in a democratic system, mainly because their needs to contribute are met. The result is passion. In the authoritarian system people exchange creativity for certainty. The result is obedience.
In conclusion, I don’t think either system is bad*, I just think that you need the right one for the job at hand. In times of change, democracy, maybe counter to intuition, works best.
* I am speaking from a sytem's perspetive, here. From a humanist perspective, the authoritarian system is utterly repugnant; it encourages bullying, strips away human dignity and leaves in its wake a disempowered work force.