Question 5 CPAA Flashcards
What is Michels’ “iron law of oligarchy”?
Michels’ “iron law of oligarchy” posits that democracy is incompatible with large-scale organizations due to the need for efficient decision-making. Over time, power becomes concentrated in a small group of elite leaders, forming an oligarchy.
What are the key characteristics of oligarchy according to Michels?
Centralized decision-making, formalized rules and structures, disconnect between leaders and members, leader entitlement and unresponsiveness, cartel formation, and member apathy.
How does the “iron law” explain the governance of PABs?
As PABs grow and become complex, centralized decision-making by a professional leadership class can marginalize members and reinforce oligarchic practices.
What governance reforms in CPAA led to the formation of a leadership cartel?
In 2006, governance reforms centralized authority, reducing divisional council influence and consolidating power within the board. This paved the way for Alex Malley’s appointment as CEO in 2009.
What role did Alex Malley play in CPAA’s leadership cartel?
Malley became the face of CPAA, leading high-profile initiatives like The Naked CEO and The Bottom Line. His appointment was criticized as self-serving, and his leadership further centralized power.
How did CPAA’s leadership limit member influence?
Leadership restricted access to board meeting minutes, suppressed criticism by removing posts, and disabled the “Find a CPA” function to limit member mobilization.
How did member Brett Stevenson challenge CPAA’s leadership?
Stevenson criticized leadership’s marketing expenditures, Malley’s self-promotion, and CPAA Advice. He mobilized members using emails and forced disclosures through legal mechanisms.
How did CPAA’s leadership respond to criticism?
The leadership reacted aggressively, relocating the AGM to Singapore, issuing a 16-page rebuttal dismissing critics, and controlling information flows to suppress dissent.
What led to the leadership collapse in CPAA?
The disclosure of Malley’s AUD 1.7 million salary and AUD 4.7 million severance, combined with media attention and member outrage, led to the resignation of CPAA’s chair and Malley’s termination.
How did oligarchy persist under new leadership?
The new board implemented only minor reforms, rejected member resolutions, suppressed communication, and leveraged proxy votes to secure control, mirroring the actions of previous leadership.
What criticisms did the new board face during governance reform?
Critics like “The Spillers” accused the board of resisting meaningful reforms and perpetuating oligarchic practices by focusing on stability over accountability.
How did the new leadership handle member consultations and resolutions?
Member concerns were largely ignored, and proposed resolutions for greater change were dismissed, leading to minimal governance improvements.
What are the impacts of oligarchy on PAB governance?
Oligarchy marginalizes members, fosters apathy, suppresses dissent, and prioritizes leadership’s strategic goals over member and public interests.
Why do new leadership teams often fail to dismantle oligarchies?
New leadership tends to adopt conservative approaches to avoid reputational damage and maintain stability, which often perpetuates existing power structures.
How does Michels’ framework help explain CPAA’s governance crisis?
Michels’ theory explains how organizational complexity and the need for efficiency drive centralization of power, leading to democratic deficits and oligarchic persistence, as seen in CPAA.
