Workplace democracy is the application of democracy in all its forms (including voting systems, debates, democratic structuring, due process, adversarial process, systems of appeal, and so on) to the workplace.
It usually involves or requires more use of lateral methods like arbitration when workplace disputes arise.

History
These methods are often seen as associated with trade unions or syndicalism (or more lately eco-syndicalism), or in extreme forms anarcho-syndicalism.
Most unions have democratic structures at least for selecting the leader, and sometimes these are seen as providing the only democratic aspects of work. However, unions are not everywhere, and not every workplace that lacks a union lacks democracy, and not every workplace that has a union necessarily has a democratic way to resolve disputes.
However, some unions have historically been more committed to it than others. The Industrial Workers of the World pioneered the archetypal workplace democracy model, the Wobbly Shop, in which recallable delegates were elected by workers, and other norms of grassroots democracy were applied. This is still used in some organizations, notably Semco and in the software industry.

Associated with ideologies
Industrial and organizational psychology and even more formal management science has studied the methods of workplace democracy. They are just that - methods - and do not imply any particular political movement, agenda, theory, or ideology: There are many management science papers on the application of democratic structuring, in particular, to the workplace, and the benefits of it. Such benefits are usually compared to simple command hierarchy arrangements in which "the boss" can hire anyone and fire anyone, and takes absolute and total responsibility for his own well-being and also all that occurs "under" him. The command hierarchy is a preferred management style followed in many companies for its simplicity, speed and low process overheads.

Studied by management science
20th century pioneers of workplace democracy include the early Belgian advocates of syndicalism who argued that workers had more knowledge but less control of the workplace than they had of major political decisions (where they at least had a vote and the right to be heard even if they knew nothing about the situation). Of these theorists the most influential, de Paepe, is often considered as a peer or competitor to Karl Marx's concept of the workplace as merely a cauldron and test for the proletariat.

Early theory
However, workplace democracy theory closely follows political, especially where businesses are large or politics is small:
Spanish anarchists, Mohandas Gandhi, farm and retail co-operative movements, all made contributions to the theory and practice of workplace democracy and often carried that into the political arena as a "more participatory democracy." The Green Parties worldwide adopted this as one of their Four Pillars and also often mimic workplace democracy norms such as gender equity, co-leadership, deliberative democracy applied to any major decision, and leaders who don't do policy.
Politically, Salvador Allende inspired a large number of such experiments in Chile before his death on September 11, 1973. The book Brain of the Firm by Stafford Beer details experiments in workplace feedback that exploited systems theory extensively.

Relation to political theory

Current approaches
Many organizations began by the 1960s to realize that tight control by too few people was creating groupthink, turnover in staff and a loss of morale among qualified people helpless to appeal what they saw as stupid decisions. Usually employees who criticise such stupid decisions of their higher management are fired from their jobs on some false pretext or other. The comic strip Dilbert has become popular satirizing this type of oblivious management, the icon for which is the Pointy Haired Boss, a nameless and clueless social climber. The Dilbert Principle has been accepted as fact by some.
Much management philosophy has focused on trying to limit manager power, differentiate leadership versus management, and so on. Henry Mintzberg, Peter Drucker and Donella Meadows were three very notable theorists addressing these concerns in the 1980s. Mintzberg and Drucker studied how executives spent their time, Meadows how change and leverage to resist it existed at all levels in all kinds of organizations.
Adhocracy, functional leadership models, and reengineering were all attempts to detect and remove administrative incompetence. Business process and quality management methods in general remove managerial flexibility that is often perceived as masking managerial mistakes, but also preventing transparency and facilitating fraud, as in the case of Enron. Had managers been more accountable to employees, it is argued, owners and employees would not have been defrauded.

Limits of management
Managerial grid models and matrix management, compromises between true workplace democracy and conventional top-down hierarchy, became common in the 1990s. These models cross responsibilities so that no one manager had total control of any one employee, or so that technical and marketing management were not subordinated to each other but had to argue out their concerns more mutually. A consequence of this was the rise of learning organization theory, in which the ontology of definitions in common among all factions or professions becomes the main management problem.
London Business School chief Nigel Nicholson in his 1998 Harvard Business Review paper How Hardwired is Human Behavior? suggested that human nature was just as likely to cause problems in the workplace as in larger social and political settings, and that similar methods were required to deal with stressful situations and difficult problems. He held up the workplace democracy model advanced by Ricardo Semler as the "only" one that actually took cognizance of human foibles.

Semler and Semco
Venezuela has instituted worker-run "co-management" initiatives in which workers' councils are the cornerstone of the management of a plant or factory. In experimental co-managed enterprises, such as the state-owned Alcasa factory, workers develop budgets and elect both managers and departmental delegates who work together with strategists on technical issues related to production[1].

Venezuela
A more political approach to workplace reforms was advocated in Closing The Iron Cage: The Scientific Management of Work and Leisure by Canadian sociologist Ed Andrew based on Max Weber's notion "that the spirit of capitalism envelopes our activities like an iron cage, that the ubiquitous structure of technical rationality appears as an iron cage to those who live in it."
Andrew critiques Frederick Winslow Taylor and so-called Taylorism that has grown up - beyond limits that Taylor himself would not have advocated - to become a "scientific management of leisure."
Andrew asks provocative questions such as:
Andrew argues that both the political left and the right accept the thesis of "leisure-as-compensation" and that most issues between unions and "management" are too narrowly framed. Andrew in particular believes that scientifically managed leisure is "the closing of an iron cage of technological rationality" on all human life. In other words, a technological escalation not just in the workplace but also imposed by the need to use communications, transport, and other technologies to get to work, learn, do the work itself, and justify the work afterwards. New technologies take time to learn and to use, and that time is taken away from either real work, or leisure.
The growth of scientific management in the industrial work force, and the consequences of that growth for how workers spend their leisure time, according to Andrew, combine to create a false idea of workplace efficiency. His critique is similar to that used to justify throughput accounting: overfocus on human labour is counter-productive since more and more minute divisions of labour deny workers' intelligence and creativity at work, destroys their ability to enjoy their time away from work, and puts them always at risk of losing opportunities simply for experimenting, thinking or dreaming on the job. An undemocratic workplace cannot be substituted by "more, and more enjoyable, leisure" if "boring and denigrating work" that alienates the individual - a key concern of Marx's sociology - remains the daily norm.
He counters pseudo-"conservative claims by efficiency experts that productivity is greatest when individual initiative is minimized" which is exactly the opposite of the ideal preached for entrepreneurship.
He presents his own model, worker self-management, which he claims "would give all workers the same ability to create their jobs and to mingle leisure and work", as a radical alternative to both scientific management and technocratic socialism. His economic and organizational framework he intends to provide a unity of meaningful work and leisure.
His model parallels that of Amartya Sen who argued in his 1999 Development as Freedom that the goal of all sustainable development must be the freeing of human time. But while Sen addresses the interface between the workplace and leisure-place, Andrew addresses freedom within the workplace.
Many of Andrew's ideas were echoed by companies during the dotcom boom during which many experiments in combining work and leisure were launched, but mostly applied only to higher level creative workers such as software developers, not to people doing more routine work.

Are work and leisure mutually exclusive spheres?
Can individuals condemned to alienating "scientifically managed" work environments ever really function as free players in their "free" time? versus Taylorism
Workplace democracy is too complex to offer more than a general overview of its advantages and its disadvantages in this article. Two obvious differences are that lockouts can't happen without the support of the majority of the workers, and strikes will not be motivated by lack of control over who manages.
Centralization and change management take place only by request: work teams and units must retain at least the power to resist changes and centralization of work functions they have performed. Presumably, though, any private sector work team recognizes legitimate arguments to centralize or change.

Advantages and disadvantages
Employee development, job enrichment, job rotation can be arranged ad hoc by the work team itself to suit its own schedule. Job sharing is also possible and desirable if a worker wants time off and another is in a position to do overtime, without the concern that this will set a precedent for management abuses or job losses.
Succession planning is everyone's problem: senior management will be replaced by whoever is elected to replace them. Mentoring specific people to do those jobs may be more risky, as management development is uncertain: a highly effective manager who is disliked can simply fail to achieve the position that they have been groomed for. This is also true in representative democracy, where "groomed" leaders can fail to win an election or lose their party's support. But in organizations there is less talent ultimately to choose from, and losing people is more serious, especially if leadership development is more certain elsewhere.

Individual career development
Office politics in such an environment can be extreme: people might devote a lot of time to keeping their colleagues satisfied and supporting them socially and politically, and there is less surety of success. Performance appraisals in particular is extremely sensitive, as it's conducted by peers. Meetings and meeting systems must generally be extremely efficient, and require strong models of chairmanship and sophisticated models of how to handle consent and dissent. Open-space meetings and wiki methods to define their agendas have been used by some organizations, notably political party and management consultant organizations. One example is the Living Agenda pioneered by Canadian political parties.
Organizational commitment cannot be promised without extreme consultation. This may be an edge, in some industries, but it certainly takes longer. Organizational development, metrics for same, changes in the structure also take longer to negotiate. Organizational culture should however be generally more accepting of organizational learning and peer review of performance.
Performance improvement, self-assessment and coping with one's own resistance to change is easier if the rate of change or depth of assessment is negotiated with one's peers who must deal with the same changes and challenges. However, this is not to say those skills always apply in management: Peter principle applies if anything faster: people who are perceived as effective are elected to run things, which they promptly fail at. However, there is much more acceptance of returning to the shop as a worker if someone fails at management, which is much more difficult in organizations where there is a culture gap between managers and workers. Process improvement is often thought to be facilitated by such swaps, e.g. the CBC television show Venture runs a regular series called Back to the Floor, a corporate reality show where Chief Executive Officers and a low level employee change jobs for a week. Process management is usually reported as benefiting from the direct attention of the CEO, and professional development of the lower level employee is also facilitated, as they discover whether they feel fit to take leadership or not.
According to proponents, Servant leadership is inevitable: leaders who do not serve are simply voted out of the job.

Organizational structure and management
Talent identification and management take place at the same time, on the shop floor where it is easy to assess competence. Team building and management rely on the same interpersonal relationships as did hiring. Termination of employment is also by the same people. This is a simple, perhaps even tribal, model of how human teams must work. Work stoppages are common but very short in such an environment, due mostly to interpersonal problems that are soon worked out, because the team has the power to resolve the issue itself.
Unfair dismissal claims are impeded because any firing is due to losing the support of one's fellow team members and the faith of the social network of one's peers on the shop floor. In any jurisdiction, this is a legitimate criteria for dismissal, that one is not able to retain the faith of one's colleagues.
"The co's" (Co-determination, co-operation, coaching, collaboration and collective bargaining) may be easier in environments where consensus or consensus-seeking decision-making is already practiced for the most important decisions: who leads. Consensus democracy methods already exist to make very large scale decisions in social organizations.

Not always applicable

Common ownership
Guild socialism
Workers' Control
Responsible autonomy
participatory democracy