Staff are most motivated when working for managers who show integrity and fairness, says the report from The Industrial Society.

But intimidating executives who rule by fear kill innovation, it reports.

Control and command management began in the armed forces

The Industrial Society study said organisations no longer wanted bosses, but preferred leaders who gave employees the space to perform well without having to be watched over.

Firms wanted a wide range of staff to be able to take a lead in projects, and wanted people to be trusted to work with minimal supervision.

The control and command style of management popular in the 1960s and 1970s was developed from the armed forces.

But in the 1990s it is outmoded and ineffective, the report says.

Professor Nigel Richardson, of the London Business School, said: "Co-operation doesn't mean you have to take a vote every time you make a decision.

"In military organisations commanders often work in very close co-operation with their men but at times of action people have to make decisions."

Pushing back management boundaries at St Luke's

The advertising agency, St Luke's, has adopted the new approach with all staff having shares in the business. The number of shares depend on their years in service not on their seniority.

St Luke's joint owner, Andy Law, said: "I think it radically enhances the performance of the company.

"It is less stressful in that you are working among people and not isolated from them.

"Chief executives isolated in their ivory towers are in quite a lonely place."

The Industrial Society survey of 1,000 workers found that four out of five admired leaders were not in formal positions of authority.

The most admired leaders showed enthusiasm, supported others, recognised individual effort and listened to other people's ideas and problems.