After surveying more than 1,500 managers across business and the public sector, it found most organisations are suffering from overbearing and dogmatic leadership, in spite of overwhelming evidence that the authoritarian approach is ineffective.
Managers at every level of responsibility were asked to describe the organisation in which they worked. They could choose three characteristics from a list of 10, ranging from "authoritative", "risk averse" and "secretive" to "accessible", "empowering" and "trusting".
The institute said: "The most widely experienced management styles in UK organisations are bureaucratic (40%), reactive (37%) and authoritarian (30%). Worryingly, all three have become more common, increasing by at least 5% since 2004."
Over the same period, the proportion of managers saying they worked in empowering organisations fell from 37% to 25%. The institute said staff in organisations with a top-down dictatorial style were less likely to enjoy their work and more likely to have high rates of sickness absence.
In authoritarian companies, 44% of managers said they got job satisfaction, compared with 71% in other organisations. In innovative and trusting companies, 10% of managers said absence was increasing, compared with 45% in organisations where the culture was suspicious.
The most successful businesses had empowering management styles. By contrast, 56% of declining companies were stifled by bureaucracy and 26% had a secretive environment.
The institute said organisations should have learned long ago that the authoritarian style was ineffective. "If not from the management schools, they should have picked up the message from sitcoms such as Blackadder and the Office," a spokesman said.
But whenever organisations failed to meet their targets, it appeared that senior managers responded by creating secretive and bureaucratic environments. This might be due to a shortage of managers with the right mix of skills.
An organisation in difficulty faced more pressure to deliver good results with fewer management resources.
Jo Causon, the institute's marketing director, said: "The effect of management styles on performance can be marked. It has a direct bearing on the levels of health, motivation and commitment linking employers and staff. Of course, improving the sense of wellbeing, determination and productivity, is no easy task, but it is one that cannot be ignored."
The report said: "It is disappointing that bureaucratic, reactive and authoritarian styles prevail in the UK, when entrepreneurial, accessible and empowering styles are associated with far higher levels of motivation, health and productivity."
The researchers found a gulf between the views of directors, who generally thought they presided over organisations with a good quality of life, and junior managers, who knew the reality. Organisations with an unrealistic boardroom culture had difficulty managing change.
"The impact of too many change programmes appears to be a substantial drain on the motivation levels of UK managers and will have a harmful long-term impact on organisations' productivity," the report said.
Guardian Unlimited © Guardian Newspapers Limited 2007
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