Do Employee Participation, Tradition, Customs
and Sentiment Entail Rationality?



Peter Engholm

Monash University, 1999





This paper explores Weber’s notion about rationality in modern economic organisations, and whether issues such as employee participation and empowerment, tradition, customs and sentiment entail this notion. It is argued that the introduction of participation and/or empowerment schemes can be rational if the purpose by management is what defines rationality, and that the decision taken is considered the best one after taken all possible alternatives into account. Tradition, customs and sentiment seem not to entail rationality. It is, however, important not to generalise but to realise that organisations are individual units who differ from each other and need to consider several factors such as its internal culture, size, work force, and so on when making rational decisions.



Rationality, Weber, participation, HRM, empowerment, traditions, customs, sentiment



The old economic order asked: How can I give, on this peace of land, work and sustenance to the greatest possible number of men? Capitalism asks: From this given piece of land, how can I produce as many crops as possible for the market with as few men as possible? (Max Weber, in Gerth & Wright Mills, 1970:367)

Few writers have had more influence in the field of management than Max Weber, who made this statement while observing the changing economic climate and society in the beginning of this century. One century later and facing a new millennium, his work still inspires and challenges organisational and managerial theories in an ever-increasing capitalist society.

This paper explores Weber’s notion about rationality in modern economic organisations, and whether issues such as employee participation and empowerment, tradition, customs and sentiment entail this notion. Thus, the attempt is not to discuss whether Weber was right at the time he was writing, but whether his arguments are valid today. It shall be argued that above-mentioned issues do not entirely entail Weber’s definition of rationality, but that they actually can have a place in modern organisations. Note though, that a more theoretical and managerial, rather than fact-based and organisational approach is taken to the issue of economic rationality, which is explained in following sections. Arguments and findings by various writers, such as Vaughan, Blau and Meyer and Fernie & Metcalf, will be used to support the claims.

Weber and rationality

One definition of rationality according to the dictionary is to ‘reorganise (resources, components of the business, etc.) to promote efficiency, economy etc.’. This is what Weber saw as the main function of business management (particularly under capitalism), and as a consequence of increased efficiency and effectiveness, the organisation would also become more profitable (Vaughan, 1989). The definition leaves, however, unanswered questions about how this is to be done. What is rational behaviour within organisations and management?

Weber observed the society that developed around him, and concluded that it was the developing capitalist market economy that demanded businesses to be run precisely, unambiguously, continuously and with as much speed as possible - hence the need for organisations to behave rationally.  Rational behaviour, according to Weber, meant increased management control over and coordination of the workforce, detachment of personal feelings and sentiments from decision-making (impersonality of management), clear set rules and objectives, and the non-existence of traditional, charismatic leadership. Briefly speaking, the superior rational organisation would be the bureaucracy (Gerth & Wright Mills, 1970):

…in lieu of the master of older social structures, who was moved by personal sympathy and favor, by grace and gratitude, bureaucracy offers the attitudes demanded by the external apparatus of modern culture in the most favorable combination. (Max Weber, in Gerth & Wright Mills, 1970:216)

Implicit in Weber’s theories about the bureaucracy is thus more or less the non-existence of involvement by the work force in the decision-making process. Employee participation and empowerment, as emphasised by later theories such as the Contingency theory and Human Resources theory, does not entail Weber’s belief in strict management control and coordination of the workforce. It is important to notice, however, that Weber never claimed that rational calculation alone governs human conduct (Blau & Meyer, 1987). He merely observed what was demanded by a growing capitalist society for organisations to become as effective and efficient as possible. His claims also mainly refer to organisations with a larger workforce, hence the need to find the best way of guiding it to be productive and profitable for the organisation. Hence, he saw the bureaucracy as the ideal rational organisation, but allows for other organisational structures to be rational as well although that did not draw much of his attention in his essays.

 It will now be argued that a more flexible and allowing approach to work-force participation than was advocated by Weber, may well be compatible with economic rationalism.

Participation and empowerment

Much has been written about employee participation and empowerment in the work organisation during the last few decades. Articles and books are filled with arguments for or against it, and plenty of studies also try to convince us whether participation is good or bad.

It is not the purpose of this paper to discuss this much further. Rather, it is the more theoretical issue regarding whether participation and empowerment is compatible with economic rationalism that is of interest, because if it is, then there is an argument for Weber’s notion of rationality to be revised.

The claim goes like this: If it is considered rational by management to reorganise and restructure within the organisation to pursue its end goals and objectives (in terms of efficiency, effectiveness and profit maximisation), and management considers it more than less likely that the introduction of some particular form of employee participation and/or empowerment should ensure this - then it would be rational to do so.

Why is this so? The answer is simply because rationality, as Blau and Meyer (1987) notes, is an ideal that is beyond the capacity of human decisions. For completely rational decision-making, managers would need to know all about the consequences and end-results of their choices. This, as we know, may not always be possible. Firms are different, people are different, and what would be a rational decision in one case might not be so in another. Two firms that may seem very much alike and apply the same types of employee participation or empowerment schemes may get totally different end-results in terms of effectiveness and efficiency. The economic rationality of participation is therefore depending on whether the purpose of implementing it is profit-maximisation, and whether it is legitimate to believe that that will be the result. It does not matter whether studies show that quality circles, semi-autonomous work groups, and so on, are proven to generally be beneficial (or not). If the management chooses to implement them in its re-organisation strategy because it finds it reasonable to believe that it will be profitable or help the organisation to achieve its goals and objectives, then it would be rational to do so.

This theory of economic rationality may seem somewhat simplified, but shines through in many of the critiques to Weber’s close integration of rationality and the bureaucracy. Arthur Stinch, for example, meant that one has to distinguish between the rational and specifically bureaucratic elements of the work organisation (Blau and Meyer, 1987). This would allow for other organisations than bureaucracies to be rational, but again, it is important that the purpose of this is to achieve organisational goals. For example, consider these findings by Fernie and Metcalf (1995:409), shown in Table A1 below.

Their study shows that the introduction of employee participation schemes generally made the financial performance of the firm worse (although the working climate generally improved). Studies like this might not alone legitimate decisions by management to introduce participation schemes. However, considering other factors such as the external and internal environment, size of the organisation, and so on, may in the end legitimate a participation-positive decision when all possible sources of information have been taken into account. Only then can the decision taken be judged rational or not.

The key pitfall for management would be to introduce participation schemes when it is not reasonable to believe that it will improve the organisation’s performance. Decisions like these are often due to sentiment, personal relationships, pressures or other irrational behaviour, and do not belong in the modern work organisation as they go against the very definition of rationality, stated in the previous section. Weber also argued this and meant that the elimination of these elements would lead to the impersonality of management. However, Vaughan (1989:34) notes that “managers should deal with people in a conscientious, honourable and just manner, though without sacrificing the economic rationality that should be their primary concern”, which would indicate that impersonality and rationality does not necessarily entail, as Weber believed.

Hence, participation and empowerment may or may not involve rational decisions by management. An organisation can not know beforehand whether introduction of these types of schemes will be beneficial, but as long as its purpose is to reach its economic objectives and goals, and if as many alternatives as possible have been evaluated and the best and most legitimate one is chosen, the decision it takes will be a rational one.

This paper now looks at whether tradition and old customs belong in the ‘modern rational organisation’.

Tradition and customs

Tradition and customs in organisations refer to the notion that ‘what has always happened is sacred’. In these organisations, managerial positions are often handed down with selection based not so much (or at all) on expertise, but on kinship. This had no place in Weber’s rational modern organisation. According to Weber, the increasing technology, specialisation, education and general modernisation of society necessitates the need to eliminate all such elements if the organisation is to achieve its certain specific goals (Pugh, Hickson & Hinings, 1989). Managers would have to be appointed solely on account of their specialised knowledge or expertise, and conduct their office in a formalistic and impersonal way, excluding all personal, irrational and emotional elements in their decision-making (Vaughan, 1989).

As noted in the previous section, Weber was concerned particularly with larger organisations and how these could be as efficient and effective as possible. He certainly did not rule out that some organisations would be different from his ‘ideal organisation’ (i.e. the bureaucracy) but retain their rationality. For example, the success of many local businesses and factories may actually depend on their ability to keep tradition and old customs intact and unchanged. Firms that produces hand-made products that would not be demanded if they were mass-produced is one example of this, and it would not be rational for these firms to modernise if that meant the loss of customers and hence profit.

It is difficult, however, to disagree with Weber’s views when looking at bigger companies and corporations. The issue of tradition and customs is very closely linked to the concept of ‘organisational change’. It is not the aim of this paper to discuss this issue much further, but it needs to be mentioned that although we do consider it rational for organisations to adapt to changes in the external environment, rationalisation does not end there. If tradition and old customs are to be scrapped, the organisation then often faces a very different task to legitimate and introduce these changes in a sometimes hostile, tradition- and ritual-bounded workforce. For example, although organisations in many industries such as banking and electronics have faced increasingly complex and changing environments and attempted to adapt to the new conditions, the attempts failed because the particular organisation’s culture (norms, values and customs within the workforce) was not suited for the change (Cumm1ings and Worley, 1996:481).

However, as Mathews (1994:98) mentions in his discussion about changes in the modern Australian society, industrial relations agreements may provide for all parties the ‘rules of change’ in the process of organisational transformation. This is one example of how our modern rational society (which Weber saw was coming) now offers organisations easier ways of modernisation and rationalisation than probably was the case in Weber’s society.

Hence, Weber was partly correct when arguing that tradition and old customs can not exist in modern rational organisations, but he neglected the power of its existence within the internal organisational culture. A rational organisation needs to be able to adapt to new technologies and customs if it wishes to improve its performance (which is the core essence of rationality), but it also needs to carefully transform and lead its workforce on the right track to change.

Examples of how tradition is overruled by more profit-oriented resolutions can be seen everywhere in our society today and not just in industrial organisations. Within the sports industry, the last decades have shown a transformation more from it just being a small-scale entertainment industry towards the creation of massive business-like profit-oriented organisations. One example in Australia is the football club ‘North Melbourne’, who this year changed its name to “Kangaroos” as a first step of a planned move of the team from Melbourne to Sydney. A key player in the team, Glenn Archer, explains the economic rationality behind this decision: “If we continue to grow [our gross revenue by] $700,000, we are always going to be $8 million a year behind the Eagles and Essendon and Collingwood. We've got to find new markets.” (Hinds, 1999).

Weber’s notion of rationality is also seen in macro-economic issues such as, for example, the transformation of national economies to a common economy in Europe. The European Monetary Union (EMU) will end centuries of existence of national currencies by introducing the Euro as a means of payment in the participating countries. Numismatics (collectors of notes and coins) may angrily rise from their chairs and argue that the traditions and cultures that make each of these countries so specific, and which has been very much signified in its currency, now will be lost forever. However, this only proves that in the capitalist society there is no room for tradition, old customs or sentiment. In all aspects of our lives we now face the economic rationality that was forecasted by Weber one century ago.

To conclude, it is obvious that Weber could not possibly see a hundred years ahead and describe our society. That was not his intention either, but we should not see his work as holy words that perfectly explains today’s society and organisations, which both are very complex bodies. Employee participation and empowerment was probably not as huge issue in Weber’s time, but it is now - hence the need to look for other definitions of ‘rational modern organisation’ to complement Weber’s theories. Still, many of the ingredients in Weber’s bureaucracy are very much common practice and legitimated for rational management. The need to coordinate the workforce is a result of increased specialisation and improved technology and education, which makes a case for Weber’s theories to last for yet a while. Although this paper has not looked specifically on the implications on national cultures, it is clear that tradition and customs in general more and more will have to step aside for economic rationality. Yet there is not one best way of describing a rational organisation - each individual organisation must do what it considers to be best, or as Mintzberg (1981:115) summarises:

An organisation cannot be all things to all people (…). Be an efficient machine bureaucracy where that is appropriate and do not pretend to be highly adaptive. Or be an adaptive adhocracy and do not pretend to be highly efficient. Or create some new configuration to suit your own needs. The point is not really which configuration you have; it is that you achieve configuration.



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Books and journals:

Blau, P.M., and Meyer, M.W., (1987). Bureaucracy in Modern Society, 3rd ed., New York, McGraw-Hill.

Cummings, T.G., and Worley, C.G., (1996). Organization Development & Change, 6th ed., South-Western College Publishing, Cincinnati, Ohio USA.

Fernie, S., & Metcalf, D., (1995). “Participation, Contingent Pay, Representation and Workplace Performance: Evidence from Great Britain”, British Journal of Industrial Relations, Vol.33, No.3 Sept., pp.379-415.

Gerth, H. H. and Wright Mills, C., (1970). From Max Weber: Essays in sociology, Routledge & Kegan Paul Ltd., London.

Mathews, J., (1994). Catching the wave: Workplace reform in Australia, Allen & Unwin, Sydney.

Mintzberg, H., (1981). “Organisation Design: Fashion or Fit?”, Harvard Business Review, Jan-Feb, pp. 106-115.

Pugh, D.S., Hickson, D.J. and Hinings, C.R., (1989). Writers on Organisations. 4th ed., Penguin, Harmondsworth, Middlesex, pp.4-6.

Vaughan, E., (1989). “The leadership obsession: an addendum to Mangham’s ‘In search of Competence’”, Journal of General Management, Vol.14, No.3 Spring, pp. 26-34.


Newspaper articles:

Hinds, R., “Roos’ rue over Archer” in Sydney Morning Herald Sun, 15 April 1999.