The following is an interview that WorkplaceDemocracy.com conducted with Traci Fenton. Traci is the Founder and CEO of WorldBlu, a non-profit organization that champions the growth of democratic organizations worldwide. She is also author of the forthcoming book, Democracy at Work.
What makes a company ‘democratic’?
A company is democratic when it operates using the principles of organizational democracy, such as accountability, transparency, and decentralization, as opposed to a top-down, command-and-control model. This mode of operation is fundamentally determined by the design of the organization, and it influences performance on the individual, leadership, and systems and processes levels.
Why should companies consider democratizing their workplace? What are the advantages of democratic companies?
Operating democratically can have a huge impact on the bottom-line. A recent Gallup poll showed that 73% of the workforce in the U.S. is disengaged at work, costing the US economy over $300 billion a year. This is an incredible waste of resources and talent. Democratic workplaces tend to have lower turnover and absenteeism, attract and retain top talent, have higher levels of productivity and efficiency, and are more innovative. Gallup has also found than people who work in democratic or highly engaged workplaces are both physically and psychologically healthier. Plus, the people who work in democratic organization are just plain happier too!
Additionally, in today’s economy, advances in technology are requiring organizations to be faster, more creative, networked, and non-hierarchical. Generations X and Y expect their workplaces to be authentic, personal, and flexible, and they thrive in that type of environment. Customers are eyeing companies with increasing scrutiny and are demanding more transparency and accountability. The current economic crisis has caused companies to rethink their rules of corporate governance, systems and processes, and operating values. Organizational democracy offers a new business design that addresses these challenges.
In addition to being financially successful, democratic organizations can make a social impact, fighting corruption, and increasing economic prosperity, peace, and civic engagement in their communities, according to research by the Ross School of Business at the University of Michigan.
Please tell us about the WorldBlu List of Most Democratic Companies.
The annual WorldBlu List of Most Democratic Workplaces™ is a global award that shines a spotlight on visionary companies successfully practicing organizational democracy.
Any for-profit, non-profit, governmental or non-governmental organization can apply for the WorldBlu List award as long as they have a minimum of five full or part-time employees in have been in operation at least one full year. The process is simple – once they sign up their employees compete a survey evaluating how democratic the organization is based on the WorldBlu 10 Principles of Organizational Democracy. Unlike other awards and certifications, the employees themselves – not an outside panel of judges — let us know if the organization is democratically designed or not.
The WorldBlu List award has been recognized by global media worldwide, including The Wall Street Journal, The New York Times, The Christian Science Monitor, The BBC, BusinessWeek, US News & World Report and Fast Company magazine, to name a few.
We are accepting applications now for the WorldBlu List 2010. I invite your readers to learn more by clicking here. The deadline to apply is November 30, 2009.
Can you give us a few examples of innovative and successful democratic policies that some of the WorldBlu companies have implemented? How have these policies impacted those companies?
One of the companies on the WorldBlu List 2009 that used organizational democracy from the very beginning was Menlo Innovations, based in Ann Arbor, MI. I had the opportunity to visit Menlo back in January of this year and was so impressed with how they work. For example, team members are paired together and do their work on a shared computer. Yes, that’s one computer, two people. The pairs then change each week to ensure transparency and accountability across the organization. By using this system, Menlo avoids bottlenecks that occur when only one person knows information and builds high levels of trust among team members. Menlo’s employees also get to design their open work environment. The space contains lightweight tables and electrical/network drops from the ceiling that provide for infinite flexibility in layout.
Most people think that organizational democracy can only work in small companies. But DaVita, a healthcare company that provides dialysis services, proves that it can work in FORTUNE 500® companies too. But it wasn’t always that way.
Back in 1999, DaVita was struggling and they brought a new CEO, Kent Thiry, on board. He then transitioned DaVita into a democratic company, a decision that resulted in an increase in annual revenue from $1.4 billion in 1999 to $6 billion in 2008. DaVita’s democratic practices include opportunities for employees to vote on significant decisions for the company, regular Town Hall meetings between the senior leadership and staff members, and a decentralized structure that allows each of DaVita’s 1,400 clinics to determine their own rules and guidelines.
What are some initial steps that companies can take in order to become more democratic?
1. Open the books. Provide information to employees about the company’s financial health, strategies, and even salaries, and teach them what the numbers mean. The Great Game of Business and Zingerman’s offer courses on how to practice open-book management.
2. Create and strengthen opportunities for dialogue and listening across all levels. This practice can take the form of DaVita’s Town Hall meetings that I mentioned before, having an employee participate in management meetings at every level, or having seats on the Board reserved for elected employees.
3. Co-create the company vision and purpose statements. This practice give employees a greater feeling of ownership of the company’s purpose and vision, and it also allows each staff person to find the greatest alignment between his or her individual purpose and vision, and that of the company.
4. Give employees a voice in decisions that impact their work. This practice can range from letting employees participate in strategic planning and goal setting, to letting them to choose their work, projects, and teammates, to letting them determine new hires and salaries.
