Should "Democracy Now" Be Your Company's Mantra?
The question may conjure up nightmarish visions of employees convening to vote on the brand of paper towels in the break room. But Traci Fenton, the CEO and founder of WorldBlu, an organization that promotes and supports workplace democracy, insists that when companies adhere to democratic principals, it shows up in the bottom line. WorldBlu just announced its fourth global list of Most Democratic Workplaces, and the list contains some of my very favorite brands: Zappos, Guayaki, Great Harvest Bread, Sweet Riot, Orpheus Chamber Orchestra, BrainPark, and MeetUp - all widely-admired companies that also happen to be champions of organizational democracy. I recently spoke with Fenton about why entrepreneurs should take organizational democracy seriously. By the way, approximately half of the companies on the list have fewer than 100 employees.
BNET: What is organizational democracy and why is it important to entrepreneurs?
Fenton: It's a way of operating a company based on freedom rather than fear and control. I'm not talking about workers having a vote on everything, but workers having a voice in the things that matter. It's important for two major reasons: it will impact your bottom line; and it will allow you to attract and retain top talent, increase productivity and decrease absenteeism. Gallop Management Journal did an annual employee engagement survey that showed that 73% of the U.S. workforce is disengaged and that the cost of these disengaged workers to the U.S. economy is $300 billion a year.
BNET: But doesn't democracy in a company setting slow down decision-making?
Fenton: Making decisions can take longer, but you make up for that when it comes to execution. In a command and control environment, when decisions are made on high, the decision is made faster but when it comes time to execute, it can take longer because there's no buy in when people don't understand why the decision was made. In a democratic organization, when it comes time for execute, people are invested, committed, and they want to see success.
BNET: What are the primary criteria you used when selecting the companies on the list?
Fenton: Company employees complete a survey evaluating their organization's practice of ten democratic principles, including transparency, dialogue and listening, integrity, accountability and choice on three levels: leadership, individual, and systems and processes. 70% of employees need to fill out the survey or, if it's a very large company, we'll take 100% of a random sample.
BNET: What similarities did you find among the companies?
Fenton: They all practice open book management. Some practiced open salaries, with all employees having access to salary information. Another similarity was the characteristics of the CEO. The CEOs tend to be equal parts ambitious and humble. This is a different model of a leader. You have to be willing to listen and to really believe that maybe you're not the smartest person in the room. That takes passion and humility. Ideas are happening everyone in a company, at every level, and you have to be willing to listen to them.
What do you think about organizational democracy? Are these principles familiar to you and do they resonate with your own management style?
Democracy image by Flickr User Squish E, CC 2.0