It asserts that rule by an elite, or oligarchy, is inevitable as an "iron law" within any democratic organization as part of the "tactical and technical necessities" of an organization.
Michels' theory states that all complex organizations, regardless of how democratic they are when started, eventually develop into oligarchies. Michels observed that since no sufficiently large and complex organization can function purely as a direct democracy, power within an organization will always get delegated to individuals within that group, elected or otherwise.
Michels argues that democratic attempts to hold leadership positions accountable are prone to fail, since with power comes the ability to reward loyalty, the ability to control information about the organization, and the ability to control what procedures the organization follows when making decisions.
All of these mechanisms can be used to strongly influence the outcome of any decisions made 'democratically' by members.
Michels stated that the official goal of representative democracy of eliminating elite rule was impossible, that representative democracy is a façade legitimizing the rule of a particular elite, and that elite rule, which he refers to as oligarchy, is inevitable." (sourced from Wikipedia)