Contrary to most companies, the vacation policy at Netflix is quite simple: “there is no policy or tracking.” Netflix CEO Reed Hastings referred to vacation limits and face-time requirements as “a relic of the industrial age.”
Several years ago, employees had argued that it wasn’t logical for the company to track vacation days since employees’ hours worked per day or per week were not being tracked.
Netflix executives agreed and did away with vacation policy after the legal issues were taken care of. In a presentation that was leaked to the media, Neflix realized that they “should focus on what people get done, not how many hours or days worked. Just as we don’t have a 9-5 day policy, we don’t need a vacation policy.”
Netflix employees are encouraged to take as much vacation time as they want as long as it doesn’t interfere with their work.
To executives who might worry about such a policy vacuum being taken advantage of by employees, Brian Carney, the author of Freedom, Inc., responds “In a large enough organization, there might be a couple of people who would take two or three months’ vacation–but if a vacation policy is the only thing holding them back from that, they’re probably ‘vacationing’ at their desks anyway.”
Last week, WorkplaceDemocracy.com spoke with Lisa Joins to get an inside look at one of the nation’s largest and most successful democratic companies. Joins is a director of people services at DaVita, a FORTUNE 500 company and a leading provider of dialysis services in the United States.
DaVita has serves approximately 115,000 patients in over 1,500 outpatient dialysis facilities and acute units in over 700 hospitals. DaVita has been selected by FORTUNE as one of the World’s Most Admired Companies for the past 4 years and has been ranked by Modern Healthcare as one of the 100 Best Places to Work in Healthcare.
DaVita has been selected to the WorldBlu List of Most Democratic Workplaces. Can you talk a little about DaVita’s history and how the workplace democracy idea began?
The idea of workplace democracy began when DaVita was formed in June 2000. Kent Thiry, our CEO, saw that the company was in need of a different level of leadership with the team concept as its driving force, so he decided to make the company culture one of the areas of priority. He made a concerted effort to ensure that everyone had a voice promoting full buy-in to our new strategy and direction.
How does democracy work at DaVita?
Each local area of the company is managed independently by its local leadership team. And it is that team’s responsibility to be creative to meet and maintain the company’s strategic goals. Each area gets to decide on how to best achieve its goals according to their local market. This philosophy includes not only the senior leaders but those who sit on the front lines of the organization. DaVita is unique in how we communicate with each other, and this speaks to all levels within our organization. Our CEO is very active in communicating with the teammates about the company’s progress. Virtually every large team meeting provides an opportunity for a question and answer session. For example, we conduct local town hall and homeroom meetings. We also host ‘Voice of the Village’ calls where all teammates in our Village are invited to call in and to receive company updates from our core senior leadership team. Anyone participating in these calls can ask the CEO and the core team any questions about the business, policies, etc.
Another example is our profit-sharing program, which is given on a regular basis multiple times per year. At many other companies, the top managers determine the specifics of their profit-sharing programs. At DaVita, each leadership group together with the help of their local teams chooses their goals of measurement. These goals are used as the key factors for measuring the success of the team and profit-sharing payouts are tied to those accomplishments.
There is a village atmosphere here at DaVita which helps people feel as though they are part of a community and less like they are part of a large company full of “red tape”. Local teams are given the opportunity to name themselves and create identities. Ongoing communication plays an important part in helping the teammates connect with each other and to the company. And this feature is critical in keeping a company that has 30,000 plus teammates alive and full of energy. There are daily ‘Homeroom’ meetings that are hosted in local clinic/office environments and weekly ‘Village Voice Communications’ go out in email to all teammates. These venues give teammates the opportunity to receive valuable real-time information regarding policies, company updates, items of recognition, etc.
There are a number of village-level programs that help enrich the lives of teammates. For example, there is a program called the ‘DaVita Village Network,’ where people can donate money to emergency funds to help other village teammates in times of need. There are also educational funds which are given to teammates and their families, and there are vacation award programs that our CEO personally donates to reward teammates for outstanding work and service to the Village. We also have many programs that reach out beyond our company such as the Bridge of Life. The Bridge of Life program gives our teammates an opportunity to participate in starting dialysis clinics in several under developed countries around the world.
What is the hiring process at DaVita? How does it differ from the hiring process at other companies?
First of all, DaVita places a great deal of importance on promoting from within. We are constantly evaluating our internal talent and looking at these individuals for promotional opportunities. DaVita offers ‘stretch assignments’ where people can learn and apply new skills.
Prospective job candidates often have the opportunity to interview with a team of representatives from the department so they can meet all levels with the team and learn more about the company from those who hold different levels of roles. Job interviews at DaVita are very interactive, and we encourage candidates to ask questions about the role, team, the company and culture. During the onboarding process, we make strategic efforts to ensure that our new teammates receive an in depth acclamation to DaVita’s philosophy, culture and our “village-like” way of operating.
Is the process of firing an employee different at DaVita than at other companies?
Yes, we do our very best to ensure that every teammate who is performance managed receives every opportunity to improve, receive “on time” feedback and get back on target in their role. We have a multilayered progressive discipline process that includes not only reviewing performance but also evaluating whether or not a teammate who is not successful has the right attributes for the requirements of the position. Often times, we will consider looking at other roles within the organization for teammates who we find are great teammates who add value but are not in the right role for their levels of experience.
What is it like to work at DaVita?
It’s the best company I’ve worked for. DaVita is a fun, energetic company that stresses collaboration and a team-based environment. The company offers tremendous opportunities to its teammates for growth and development. This is the first company that I’ve had the opportunity to work for where the culture resonates throughout all facets of the organization.
Zappos, the online shoe retailer famous for its quirky company culture and unconventional management practices, recently announced that it is being acquired by Amazon.com for $847 million. Founded in 1999, it took Zappos less than a decade to achieve revenues of over $1 billion, and the company has been profitable since 2006.
Tony Hsieh, Zappos’ CEO, credits his company’s meteoric rise in a highly competitive market to the company’s laser-like focus on providing excellent service and support.
As many democratic and decentralized companies have realized, the key to offering fantastic support is to enable employees to rely on their instincts and to trust them to make their own decisions. At Zappos, customer service call center reps are not required to read from scripts. Instead, they are encouraged to use discretion in making their own decisions without seeking approval from their supervisors.
Zappos has worked hard to blur the lines between managers and employees that are common in traditional organizational hierarchies. The company’s goal is to develop a fun, playful work environment where coworkers and bosses feel more like friends. Managers are required to spend time socializing with their employees.
Inc.com provides a detailed look at ‘the Zappos way of managing’.
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.
Management guru Gary Hamel provides an excellent explanation as to why only 21% of employees are highly engaged at work. Contrary to common belief, it is not the type of job or salary level that determines the extent of one’s motivation, which is why companies such as Wegman’s Food Markets and QuikTrip convenience stores in “unglamorous” industries like retail consistently rank among the best places to work.
“The real damper on employee engagement is the soggy, cold blanket of centralized authority. In most companies, power cascades downwards from the CEO. Not only are employees disenfranchised from most policy decisions, they lack even the power to rebel against egocentric and tyrannical supervisors. When bedeviled by a boss who thwarts initiative, smothers creativity and extinguishes passion, most employees have but two options: suffer in silence or quit.
“In a well-functioning democracy, citizens have the option of voting their political masters out of office. Not so in most companies. Nevertheless, organizations here and there have taken steps to make leaders more accountable to the led. HCL Technologies, a progressive Indian IT services company, encourages employees to rate their bosses, and then puts those ratings up online for all to see. Bullies and bunglers have no place to hide. And W.L. Gore, the Delaware-based maker of Gore-Tex and 1,000 other products, lets its highly decentralized teams appoint their own leaders. These are interesting aberrations from the norm, but in most organizations, power is still allocated top-down.”
Until people are free from a system where their boss wields compete power over their livelihoods, companies will find it difficult to harness and benefit from the full potential of their most valuable asset.
The key to unlocking employee engagement lies in flattening the organizational hierarchy and democratizing the decision-making powers. A good place to start is to allow employees to set their own salaries. Teams of employees must also be trusted with the power to hire and fire their leaders and coworkers.
More and more people are coming to the conclusion that command-and-control is no longer an effective way to manage a company. There is no reason why responsible adults should be treated like irresponsible and dishonest children as soon as they arrive to work. In a later post, we will explore additional democratic policies that companies can implement in order to cultivate a more innovative and engaged workforce.
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.”
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.