Workplace Democracy at W.L. Gore & Associates

Last week, WorkplaceDemocracy.com spoke with Steve Shuster about what it’s like to work at one of the nation’s largest and most successful democratic companies.  Shuster is part of the enterprise communication team at W.L. Gore & Associates, his employer for the past 27 years. 

With more than $2.5 billion in annual sales and 8,000 employees in over 50 facilities worldwide, Gore is a leading manufacturer of thousands of advanced technology products for the electronics, industrial, fabrics and medical markets.  Gore is one of only 12 companies that have been on the Fortune 100 Best Places to Work list since it began.

What is it like to work at Gore?

You feel like you’re part of a family.  I have been working at Gore for 27 years, and I still get excited coming to work each day.  There is a sense of being among family, and this creates a special bond between associates and a connection with the company.  

Everyone is an owner in the company and shares in the good times and in the bad times.  Everyone works in teams, and there is very little hierarchy at Gore. 

How would you describe Gore’s company culture?

The company culture at Gore gives people a sense of belonging and gives us a sense that we are making an impact on society via our products.

There are four principles that are the foundation of Gore’s culture: fairness, freedom, commitment, and waterline.  The waterline principle means that it’s ok to make a decision that might punch a hole in the boat as long as the hole is above the waterline so that it won’t potentially sink the ship.  But, if the decision might create a hole below the waterline which might cause the ship to sink, then associates are encouraged to consult with their team so that a collaborative decision can be made. 
 
Our culture is based on integrity and a high level of ethics.  The organization operates as a flat, or ‘lattice,’ organization, where all employees are referred to as ‘associates.’   There are no bosses, only ‘sponsors’ who are similar to sports team coaches.  Sponsors are responsible for leading the teams and who are mainly focused on their team members’ growth and development.  The process of becoming a sponsor is through followership, and each group chooses their own sponsor.

Do team members have the power to remove or replace their sponsors?

In the event that a sponsor is not doing a good job, the team members speak with the sponsor about the problems.  If they are unable to resolve the problem, then the sponsor or team members might suggest an alternative team member to become the team’s new sponsor  This type of situation happens fairly often at Gore, as the teams are fairly fluid and adapt to the changing environment and market. Often when associates change commitments, they will seek out a new sponsor.

Do team leaders have the power to remove members of their team? 

If a leader doesn’t feel that a certain team member is contributing sufficiently but the other team members disagree, then the team will first meet to decide about how to make the decision.  Most often, the decision will be made collaboratively with all of the team members  being able to voice their opinions and vote on the outcome. Leadership at Gore is defined by followership, not by being given a title.

Gore has been described as having a democratic workplace.  Can you give us a few examples of innovative and unique HR/management policies that Gore has implemented?

Gore’s lattice, team-based organizational structure and the opportunity to provide feedback about other team members are two of our innovative work practices.  Associates get to manage what type of projects they are working on.  Also, associates’ compensation is based in part on their contribution to the enterprise.  All associates rank each of their colleagues according to what they feel their contribution has been to the enterprise.

What is the hiring process at Gore?  How does it differ from the hiring process at other companies?

The main difference is that Gore looks for individuals who fit Gore’s unique culture.  We look for people with an entrepreneurial spirit who are not focused on titles and hierarchy.  We conduct behavioral interview questions to help determine whether candidates fit our culture.  Gore includes several team members and representives from the business in the interview process to ensure the right candidate is selected.  Gore is not for everyone; some people don’t mesh with Gore’s culture because they can’t work without a title, or because they want to be directed.

How does Gore encourage its associates to be more innovative?

The innovative culture, which started with our company founder Bill Gore, helps foster innovation and gets people working towards a common goal.  The company culture makes associates feel that it’s ok to take risks and make mistakes.  For example, Gore asked me early on how many mistakes I’ve made so far.  He then told me that if I’m not making mistakes, then it means that I’m not taking enough risks and trying to innovate as much as I should be.

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3 Democratic Companies Featured on CNN.com

Fortune Magazine featured seven small companies as ‘great places to work.’ Not surprisingly, three of these top-ranked employers are run as democratic workplaces.

Companies that have adopted participative management practices typically have more highly engaged employees who are more hardworking, creative, and feel greater loyalty towards their employer.

The South Mountain Company of Martha’s Vineyard, is a design and construction company with annual revenues of $9 million that provides integrated development, architecture, building, and energy services. South Mountain has been practicing workplace democracy for over 20 years.

Currently 17 of its 33 employees are owners, and the rest are on the five-year process to become ’employee owners.’ Employee ownership has played a big part in helping South Mountain retain its workers, who have been with the company for an average of 12 years.

Each employee owner has an equal vote in major strategic decisions, one of which authorized a profit sharing program which distributes 33% of South Mountain’s profits amongst all employees.

Similarly, the New Belgium Brewing Company credits workplace democracy with helping them become the third largest craft brewery in the US, with $93 million in revenues. All of New Belgium’s 320 employees become owners after their first year of employment, and the company’s open-book management policy ensures that all workers know where the company is going and how it’s progressing.

Another democratic company that shares financial data and strategic information with its employees is Badger Mining Corporation, which is the fifth largest manufacturer of industrial silica sand, limestone and other aggregates.

The company has been operating under a flat organizational structure for close to 25 years. Bosses are called coaches, employees are referred to as associates, and the executive management is called the advisory team. All 170 employees share 20% of the company’s profits.

Treating its workers like responsible adults and sharing information, decision-making abilities, and profits among all team members has helped Badger minimize employee turnover, which is very expensive and disruptive to a company’s operations.


Workplace Democracy at Brainpark

Imagine a rapidly-growing startup company where the CEO answers not only to his board of directors but also to his employees.  Mark Dowds, who founded Brainpark about a year and a half ago, decided that he only wanted to lead a company if the employees accepted his leadership.  As a result, any of the employees, including Dowds, can be removed by a vote of their coworkers.
 
WorkplaceDemocracy.com spoke with Dowds to get an inside look at how this innovative company is embracing innovation in its management practices.  Brainpark has made it a priority to democratize its policies and culture in order to develop a transparent and engaged work environment. 
 
The company conducts off-site meetings every six months to discuss Brainpark’s performance and recalibrate their strategy.  As opposed to many company strategy-setting meetings, where the CEO determine the agenda, Brainpark has adopted an ‘open agenda’ system, where each employee writes down their concerns, interests, and goals on papers which are posted on the wall.  Everyone reviews the papers and votes on which of the items are most important and will be included in the off-site agenda and strategy discussions.
 
Any of the team members can suggest potential candidates for open positions.  The job candidates are interviewed by two coworkers, and the new hires are selected collectively by Brainpark employees. 
 
Managers at Brainpark choose not to exercise their power to fire employees.  Instead, if a manager is having problems with one of their subordinates, then a team is put together to make a decision about whether the person should leave or stay with the company.
 
If anyone, including the top managers and CEO, is not pulling their own weight and delivering value to the company, their coworkers can talk to them to dicsuss the problem and to give them a chance to improve their performance.  If the person in question fails to change by a certain period of time, their colleagues can then decide to find them a replacement.
 
To help facilitate better decision-making throughout the organization, Brainpark has adopted an open book management policy, where company financial data is shared among employees, who are all granted ownership stakes in the company through a stock option program.  
 
New employees are usually very surprised when they learn about Brainpark’s innovative workplace policies, but most adapt quickly and can’t imagine working anywhere else.  The company’s outside investors strongly support its democratic practices after having witnessed their impact on the employees’ engagement and motivation levels. 
 
Brainpark, which has been named to the WorldBlu List of Most Democratic Companies, is proof that employees act like owners when they are treated like owners.


Workplace Democracy and the Layoff-Furlough Dilemma

There is a debate going on about whether companies hit hard by the recession are better off conducting layoffs or ordering furloughs in order to align expenses with rapidly-shrinking budgets.  The opinions of executives differ widely as to whether layoffs or furloughs are less damaging to employee morale and productivity. 

What’s interesting is that this is the type of decision that, purportedly because of its highly sensitive and potentially damaging nature, is made by executives behind closed doors without consulting with the very employees whose motivation the managers are trying to preserve.  The decision, once made and finalized, is then revealed to employees (who are often shocked and traumatized) and hastily executed.

This gut-wrenching dilemma does not have to be one that keeps executives up at night.  Executives do not have to try to guess which option would be less disruptive to workers.  In fact, many problems in the workplace originate from miscalculations by managers about how their decisions will affect their employees. 

There is a much better way to reach a decision about which would be the lesser (and more effective) of the two evils: ask your employees. 

Managers should inform employees about the company’s financial situation and should encourage an open discussion about which cost-cutting measures should be taken.  Having participated in the decision-making process, workers will take ownership of the final decision and its outcome, and management won’t be blamed for a decision that was dictated to the employees without seeking their input. 

Involving workers in the decision-making process is one of the best ways that companies can boost loyalty and employee engagement.

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Democratic Company Profile: The John Lewis Partnership

The John Lewis Partnership is a large retailer based in the United Kingdom which generates revenues close to $9.9 billion from its 27 John Lewis department stores and 199 Waitrose supermarkets.
 
What separates John Lewis from its competitors (and from most other companies) is the fact that the stated purpose of the company, which is owned by its 69,000 employees, is to ensure “the happiness of all our members, through their worthwhile, satisfying employment in a successful business.”

The John Lewis Partnership calls itself “a unique and vibrant democracy.  We share knowledge and information about the business between Partners, giving everyone the opportunity to contribute to decision-making as well as to challenge and question.  We recognize every Partner’s right to be listened to and heard regardless of their point of view.”

In addition, every employee at John Lewis receives an annual bonus equivalent to 9%-18% of their salary, depending on the company’s profitability, with everyone receiving the same percentage.  These democratic company policies of sharing information, decision-making powers, and rewards among all employees have had a significant impact on shielding John Lewis from the impact of the current recession.

In 2008, when most retailers were hit hard by the economic crisis, the John Lewis Partnership made a $403 million profit on revenues that were 3.6% higher than in 2007, and every employee received a bonus of 13% of their salary, equivalent to about seven weeks’ worth of pay.

Here’s what the chairman of the John Lewis Partnership had to say about the secret to their success:

We’re a partnership, which means our business is owned and run by the people who work in it. It makes John Lewis a different kind of place to work for our 68,000 staff – known as Partners – and a different place to shop for over eight million customers.

Our success…over the years has everything to do with our Partners owning the business. Retailers often suffer from high levels of staff turnover. Our turnover is around half of the industry average.

Because people stay with us for longer, they know our products and our customers better. When success depends on getting a lot of things right, having experienced and motivated Partners is the difference between success and failure.

Our ownership structure also means we are stewards of the business for Partners working today and for future generations. We invest our capital carefully and demand a good return, but we make investment decisions for the long-term interests of our partners, rather than trying to satisfy outside shareholders.”

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Gore’s Democratic Culture Drives Innovation

The CEO of W.L. Gore & Associates recently gave a lecture at MIT titled “Nurturing a Vibrant Culture to Drive Innovation.”

Gore is a highly successful and innovative company that has developed a unique democratic environment.  Gore’s culture, which despises bureaucracy and hierarchy, has been credited as one of the key enablers of its explosive growth and market leadership over the past several decades as well as its expansion into entirely new product areas. 

At Gore, there are no job titles, bosses, or chains of command.  Instead, everyone is an “associate,” and team leaders are chosen by their coworkers.  New associates, who are interviewed and hired by groups of their peers, are assigned a “sponsor” to introduce them to Gore’s team-based culture.  New associates are then encouraged to join groups whose projects are best suited to their skills and interests.

Innovation and experimentation are encouraged, and mistakes are not punished.  It is therefore not surprising that Gore, which was started out as a small chemicals company in 1958, has been able to invent numerous industry-leading technologies that have dominated their markets, such as GORE-TEX fabric and Elixir guitar strings.  The 8,000 associates working at Gore’s 45 locations around the world currently generate over $2 billion per year.

Gore has been named to FORTUNE’s list of “100 Best Companies to Work For” in each of the past 12 years.