It was once said that the former Soviet Union was a dictatorship where workplaces were democracies (due to the principle of collective working) and the US was a democracy where workplaces were dictatorships. This may be a bit extreme, but it can’t be denied that, historically, most organisations have been run in a hierarchical manner with a supreme leader, a layer or two of management, and an army of workers.
As we observe Freedom Day and celebrate our democracy, let’s take a look at democracy in the workplace. Just how democratic are the organisations where we work, and how much democracy is actually feasible?
What does democracy in the workplace look like?
Workplace democracy can be defined as the application of democratic practices, such as voting, debate and participatory decision-making systems, to the work environment.
But how this works in practice varies considerably, depending on the size of the firm, the industry sector, and even the country where the organisation is located. There are small companies, start-ups and not-for-profit organisations that exercise direct democracy. A co-op is a good example of a democratically run company. In reality, a truly democratic model is extremely difficult to manage. Opening up the decision-making process to all employees would drastically reduce productivity. And not everyone has the requisite skill and experience to understand all the factors involved in a decision, e.g., regulatory requirements, supplier issues, client concerns, etc. People at technical and management levels are employed for their particular expertise; leaders must weigh up the concerns of all areas of the business before making a decision. To allow a majority vote on business-critical matters could expose the firm to risk that could ultimately hurt all employees.
More commonly found, and easier to implement, are democratic processes within the framework of strong leadership. These include staff surveys, participatory management and employee share ownership plans (ESOPs), among others. Increased participation in decision-making and ownership is associated with heightened employee engagement, which in turn leads to greater productivity.
A degree of democratisation in the workplace yields enhanced employee morale and efficiency. How democratic are the structures we are most familiar with and how can we introduce greater democratisation without sacrificing leadership and the accountability demanded by stakeholders from management?
By far the most common organisational structure is the hierarchy. Based on a military model, its use in commercial organisations can be traced to the industrial age, when workers were expendable and a source of physical labour, not brainpower. In this structure, communication flows from the top and there is little employee engagement or collaboration. While familiar to all of us, fortunately there are very few absolutely hierarchical organisations anymore and most have embraced some degree of employee empowerment.
One step removed from traditional hierarchy is a “flatter” structure, with fewer layers and more open channels of communication. This is the model that most large organisations globally have moved to or are moving toward.
Completely flat companies are characterised by having no job titles, seniority, managers or executives. Everyone is equal. They may also be called self-managing organisations. Truly flat structures are difficult to scale and it is hard to see how they could work in anything but a very small company. The benefits of this structure are probably most obvious in high-tech and highly innovative, fast-moving industries. The drawbacks to a completely flat structure may include the unintentional evolution of informal hierarchies based on seniority and a lack of accountability. Human nature being what it is, cliques may develop which can impede communication and collaboration.
The “flatarchy” is a cross between a hierarchy and a flat structure. It is defined by the presence of a hierarchy for general management but the emergence of ad hoc flat teams for certain activities. An example of this is a company with an incubator or innovation programme. This allows employees the freedom to suggest and try out new ideas.
The latest trend in organisational structure to come out of the United States is “holacracy”, which, according to holacracy.org, is a “new peer-to-peer ‘operating system’ that increases transparency, accountability, and organisational agility.” Holacracy uses rules and meeting processes that distribute authority to employees and involve them in decision-making in a meaningful way. Roles are defined around the job rather than the person and are frequently updated. The rule set applies to everyone in the organisation, including the CEO. So far, companies using holacracy are based in the US and Europe (for a full list of organisations implementing holacracy see structureprocess.com), but inevitably the model will reach our shores eventually.
Work with what you have
However intriguing you may find the alternatives to a hierarchical structure, completely changing the shape of your organisation is probably beyond the scope of what you can achieve in the short term. So how can you make your company more democratic while still retaining good governance and effective management?
As with so many aspects of organisational development, communication is critical. Communication needs to be clear, transparent, and unapologetic. Employees will see through evasiveness. If bad news needs to be conveyed, don’t shy away from the task, and be prepared to answer queries and concerns openly and honestly.
Solicit ideas from employees and demonstrate that ideas are taken on board. This does not mean using every suggestion put forward, however impractical. But it does mean taking employee input seriously and implementing or at least considering genuinely relevant and workable ideas.
Empower your workers by giving them a say in their outcomes. Set objectives together rather than dictating them at the annual performance review.
Above all, don’t punish mistakes. Use them as teaching/learning opportunities. Nothing stifles innovation and engagement more than fear of being punished if things go wrong. If employees are afraid to make mistakes, they will never try new things and your organisation will stultify. You will stay where you are while your competition forges ahead.
If you can incorporate these behaviours into your organisational culture, you will succeed in democratising the workplace to a degree that will satisfy the majority of your employees, even those hard-to-please, entrepreneurial millennials, who demand democracy in all aspects of life (think the “sharing economy” e.g. Uber, Airbnb) and expect to be treated as an asset to be nurtured and developed at work.
Need help with your structure?
EOH Human Capital Solutions is an expert in Human Resources and employee engagement. We have deep experience in ESOPs and industrial psychology, among other human capital services. If you are thinking of re-structuring your organisation or introducing a participatory ownership scheme, we can guide you through the process. We can analyse your current state and help you get where you want to be.
Contact us today on 012 940 6300 or firstname.lastname@example.org and discover how we can help you.