It is almost universally accepted that labor unions, but not companies, must be democratic. Why is there this dichotomy? What does this dichotomy imply about the organizational structures and...

It is almost universally accepted that labor unions, but not companies, must be democratic. Why is there this dichotomy? What does this dichotomy imply about the organizational structures and sources of power for labor unions and for corporations?

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pohnpei397 | College Teacher | (Level 3) Distinguished Educator

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This dichotomy exists because of the different purposes of these two different types of organization.  Companies are organized in order to make money.  That is their only purpose.  This makes them the equivalent, for example, of a sports team that exists only to win or a class in school whose purpose is to help the students learn.  These are all goals that are best achieved by having centralized power.  The people who know best should be put in power and allowed to guide the others to achieve their goals.  By contrast, a labor union is more like a country.  It exists to work for the benefit of its members.  Therefore, its members deserve to have a say in what it does and how it works.  There should not be a central leader because no central leader knows what is good for the people better than they themselves do.

This dichotomy implies that the source of power for a corporation is expertise.  The goal of a company is to make money so the source of power for a company is the knowledge of how to make money.  There is no other reason for a company to exist so there is no reason for there to be any other source of power.  By contrast, the dichotomy implies that the source of power for a union is the consent of its membership.  The goal of a union is to represent its members and do what is best for them.  Therefore, the source of power (as it is for a country) should be the people.

This dichotomy tells us that the organizational structures of these different types of organizations will be different.  Because a company is meritocratic and aimed towards a clear goal, it will have a hierarchical organization.  There will be a clear leader and orders will flow from that leader down to his or her subordinates.  By contrast, the organizational structure of a union will have to be less hierarchical and more open.  There will need to be more ways for the membership to have their voices heard.  There will be leaders, but they will not have as much ability to simply impose their will on the membership.

Because unions and corporations are organized for very different reasons, they have different organizational structures and different sources of power.

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