The past, present, and future of workplace democracy

Defora Blog
Oct 15, 2019 · 12 min read

We’re constantly in search of new ideas to create a better workplace. From early economic years centered around mom and pop stores to today’s world of, what some would call, unfettered capitalism, companies and managers of all sizes and fields have experimented with different incentive and organizational structures. This search serves multiple purposes: to help keep employees motivated and vested in the future of an organization ensuring that it is sustainably rooted, to help companies produce better product and service ideas, and to objectively evaluate when to abandon projects which bleed perfectly good finance.

Despite the seemingly endless funds poured into human resources, countless HBR papers on effective human resource management and multidisciplinary research across management science, psychology and sociology, motivating an interested and active workforce has interestingly remained a constant challenge for organizations. The WHO in its 11th Revision of the International Classification of Diseases (ICD) this year, included burn-out as an occupational phenomenon, which results from “chronic workplace stress that has not been successfully managed”. The WHO is also in the process of developing evidence-based guidelines on mental well-being in the workplace. Organizations have taken two broad approaches to tackle this persistent inability to motivate employees, which is epitomized by burn-out, but also to enable more efficient and streamlined operations within the organization: physical infrastructure solutions and organizational structure solutions.

On the physical infrastructure side of the story, organizations have since upped their game at providing an attractive workplace environment — from the inception of cubicles as ‘Action Office’ by Herman Miller in the 1960s to allow employees more privacy, freedom to personalize their workspace and ability to do simple physical exercises, to modern-day standards of having a Nespresso machine at work, instagram worthy neon-lit shared workspaces, and the more recent superfluously extravagant champagne vending machine.

On the organizational side, we’ve seen a plethora of new management structures and techniques ‘guaranteed to revolutionize the workplace’ over time. The matrix structure introduced in the 1970s was intended to prescribe a management style that allowed firms to be more flexible across their product businesses, geographies, and employee functions. Similarly, deviating from ‘standard’ hierarchical organizational structures are three other well-known methods: the pioneering sociocracy, holacracy, and the more recent teal organization.

Sociocracy was coined in 1851 by Auguste Comte, who believed that a government led by sociologists would be able to ‘scientifically’ meet the needs of the people, better than that of an elected government. This idea was gradually developed to encompass the idea of a highly educated and informed group of individuals who reason together to reach a decision. Here, equality is not incorporated in the premise of the discussion i.e., the belief that each individual is equal to another and hence must have equal say or must adopt a one vote per person system. Rather, equality is incorporated in the result of the discussion i.e., the solution reached must be agreed to by all participants. Sociocracy reached its heyday in the 1960s-70s, when it gave rise to certain methods that are still widely used by other organizational structures today — the circular process and feedback loops, and circular hierarchy.

Sociocracy also greatly influenced the emergence of another organizational structure — holacracy, which was introduced in the late 2000s. Holacracy also incorporated the idea of circular hierarchy, and is centered around the idea of ‘roles not jobs’, wherein individuals are given a large degree of freedom to implement ideas that would help the organization in their ‘domain’. This ‘role’ (individual) would remain responsible and accountable for their relevant ‘domain’ and business procedures are aligned according to operational needs.

Lastly, the Teal organization, introduced in the early 2010s is loosely based on the idea that an organization must evolve similar to living organisms. It revolves around three concepts: self-management (a system of peer relationship), wholeness (a consistent set of practices that invite employees to share “all of who they are”), and evolutionary purpose (treating the Teal organization as a living entity). Sounds confusing? At its core, the idea behind a Teal organization is that an organization must function as a living entity with its own purpose, beyond the profitable bottom line: members are invited to listen and acknowledge the purpose it wants to serve, the organization will respond to ‘stimuli’ and evolve to adapt.

The three organizational structures are chief examples of flat organizations. They incorporate the idea of allowing members within an organization to be involved in management-level decisions, both to improve members’ morale and business efficiency.

Flat organizations incorporate the idea of allowing members within an organization to be involved in management-level decisions, both to improve members’ morale and business efficiency

Nevertheless, they come with their own set of critiques. Sociocracy, in its original form, represents decision making controlled in the hands of a few technocrats. This dangerously assumes that the selected technocrats will always be fully informed about the needs of various groups, understanding that in the 1850s when sociocracy was first introduced, slavery in the United States was still not abolished. Moreover, who holds these technocrats accountable for bad decisions and based on what standards? On another note, are ‘scientifically’ made decisions without space for emotional feedback by people directly affected truly good decisions? Sociocracy in its more modern applicable form operates under the idea that all opinions can be reconciled to reach an outcome acceptable to all, struggling with questions of efficiency but more importantly, ignoring circumstances where a mutually agreeable decision may not be possible.

Holacracy has received criticism that it entrenches a new form of hierarchy within the governance ‘circles’. As organizations become larger and require cross-team and cross-operation collaborations, efforts at aligning a common view to take actions that could affect another domain become unnecessarily complicated and time-consuming.

Teal organizations, on the other hand, leave the idea of who determines the organization’s purpose vague, which could inevitably give way to hierarchy. A more concerning idea is that of an organization that functions as an entity, and that we allow to function as an entity, incapacitating us of any tools to steer the organization when its operations pose great harms, bringing Joel Balkan’s idea of a corporate as a functioning psychopath to life. Overall, the largest drawback is that these processes do not necessarily lead to an absence of hierarchy and fail to achieve a truly ‘flat organization’.

The common ideal behind the ‘new’ and ‘revolutionary’ organizational structures revolve around motivating members of an organization, making work more rewarding and increasing an organization’s adaptability and sustainability — all essentially values that any good organization strives to achieve. These ideals and values are embedded in the concept of a ‘workplace democracy’. While there is surprisingly no real agreed-upon definition of ‘workplace democracy’, there is a broad understanding that the term refers to adopting democratic principles in the workplace, or as the Cambridge English Dictionary puts it, “a situation in which everyone within a company is involved in its decisions”. If you’re rolling your eyes at this point, I won’t blame you — ‘workplace democracy’ does sound like a recent management science buzzword. Yet usage of the term ‘workplace democracy’ has actually steadily declined in use since its peak in the 1980s. The highlight in the 1980s isn’t surprising. The 1960s to 1980s were exciting times to be a scholar in management science: introduction of new forms of organizational structures such as matrix structures, sociocracy and workplace democracy, as well as the advent of Mondragon, the Spanish cooperative that became a standard case-study for any management course, into the public consciousness. Research on management science and philosophy saw a rising interest in workplace democracy, led by Henry Mintzslerg, Donella Meadow and Peter Drucker. This also coincided with Ricardo Semler’s decision to radically transform the management of his family firm based in Sao Paulo, which has today grown into Semco Partners.

Motivating members of an organization, making work more rewarding and increasing an organization’s adaptability and sustainability — all are essentially values that any good organization strives to achieve. These ideals and values are embedded in the concept of a ‘workplace democracy’.

Workplace democracy fits more ideally into the realm of management philosophy, along with questions about what an organization should really represent in our present-day society. In line with this, the types of organizational structures that incorporated and supported the idea of workplace democracy were designed and popularized with varying degrees of success (as we’ve seen above). The debate on workplace democracy appears overdone and tired, we’ve gone through the same iterations of efficiency vs. equality time and time again. However, in light of newer technologies and the unprecedented effect of a more connected world with a 24-hour news cycle, if we intend to create better organizations that mirror advances in technology, social and cultural norms, as well as respond to the limitations in previous organizational structures, we need to revisit the idea of workplace democracy.

To begin, the standard arguments for adopting workplace democracy are fourfold:

  1. Analogy of democracy as a political system: Democracy as a political system functions with various aims that are shared collectively by organizations of different sizes and missions. It is a favourable way of making collective decisions on a macro level, empowers individuals and groups to be involved in the system, increases the diversity of ideas and opinions, and integrates accountability and transparency into its structure by design.
  2. Encouraging civic culture: Democracy as a political system functions well for a given sense of civic democratic culture, as outlined in Almond & Verba’s seminal work in 1963. Civic culture is “based on communication and persuasion, a culture of consensus and diversity, a culture that (permits) change but (moderates) it”, and as such not ingrained into us from birth, but something we learn over time. As we spend a significant amount of our lifetime at our workplace, adopting workplace democracy can help foster a sense of civic culture, which can both serve as an important foundation for our political system, motivate the workforce and encourage good communication within the business.
  3. Meaningful work: To remain motivated and involved in work and avoid burnout, employees must find work meaningful beyond receiving a monthly paycheck. Whether they believe they are making the world a better place or that the business’s product will positively change someone’s life, human beings are motivated by value and inspiration. Employees who are interested and invested will contribute actively to the organization, increasing the pool of good ideas and providing an extra layer of checks & balances against decisions. The argument behind meaningful work has its roots across history and disciplines, from labour theory proposed by Marx and Engels, labour research by Weber, to research in psychology and corporate culture of emblematic Silicon Valley firms.
  4. Relational equality: Lastly, the principle of egalitarianism in social relations. Adopting workplace democracy gives room to advance relational equality, where employees can be equally treated at least at their workplace.

The arguments against adopting workplace democracy are primarily threefold:

  1. Inefficiency: The standard argument against workplace democracy, and democracy as a whole, is that it is inefficient and time-consuming. Especially for organizations where time amounts to money, being indecisive or taking too long to reach what appears to be a simple managerial decision is costly. Given that there is still no conclusive proof that group or collective decision making is better than individual decision making, this leap into workplace democracy is filled with uncertainty and declining profit margins.
  2. Adoption challenges: Reorganizing and restructuring an organization is enormous work, which only increases exponentially as the size of the organization grows. This restructuring not only includes formal reorganization of management hierarchy but also retraining workshops and seminars to encourage employees to participate in the workplace democracy. From the perspective of organizations, this is a huge leap of faith that is both costly and risky.
  3. Property and asset ownership: Perhaps the most contentious argument against workplace democracy is that it endangers the rights of property and asset ownership by allowing all employees a hand in decision making. Decisions made through workplace democracy may run counter to the desires of the BOD and shareholders, and workplace democracy in its strongest form — a cooperative — runs almost antithetical to the idea of individual monopoly over private property.

Look closely however and you’ll realize that the arguments against workplace democracy are in fact arguments against any organizational changes. Dangers of inefficiency and unsuccessful adoption are arguments for the preservation of a static hierarchical organizational structure, despite substantial research which have shown us that such organizational structures indeed lower efficiency and output. Besides, people are no longer interested in businesses that merely care about their profit margins, as consumer activism has highlighted. That is not to say arguments about inefficiency and unsuccessful adoption should be ignored. Rather, these arguments should be incorporated into discovering which transition mechanism works best for organizations: how do we help organizations transform from hierarchical top-down management structures to one that espouses workplace democracy? How can we encourage the civic culture behind a successful workplace democracy? Are these decisions inefficient or do they, in fact, provide us with valuable insights, which would otherwise have been overlooked?

While debating on the merits of property rights and libertarianism is beyond the scope of this article, property rights arguments against workplace democracy run along the same lines as arguments against CSR. These arguments often fail to consider the value and scope of influence an organization potential wields, narrowing it down to simply increasing short-term gains of direct shareholders. Instead, I will merely point out here that workplace democracy with regards to property ownership is a sliding scale, beginning with employees being an active part of the decision making process to cooperatives and shared assets being on the other end of the scale.

Arguments against workplace democracy are in fact arguments against any organizational changes.

Workplace democracy, however, should not just be confined to rebutting arguments against it that are all related to maximizing the organization’s profit margin. Workplace democracy holds intrinsic value, beyond just making better decisions that directly serve the organization — it also positively impacts employees and increases the quality of life, which should be considered as a substantial, incomparable benefit. If including employees in management-level decisions, allowing a bottom-up feedback cycle and encouraging work morale improves both efficiency and decision making, as well as employee satisfaction and retention levels, seen across many successful cases, the question is: how can organizations start to adopt workplace democracy?

An important aspect to remember about workplace democracy, and democracy in general, is that it is built across hundreds of small steps. There is no overarching set of principles that must be introduced and followed simultaneously to achieve a perfectly democratic system. The foundational setting stone begins with the commitment to adopt workplace democracy at the management level because of the value it represents. This commitment should be followed by small but deliberate actionable steps. Some examples of a granular approach to adopting workplace democracy are:

  • Including all employees in decisions made about shared common spaces, such as the air conditioning temperature, fridge, and microwave
  • Including all employees in decisions made about the company’s workshop and retreat
  • Creating a space for open, honest and inclusive feedback for product, service or marketing strategy reviews
  • Designing a method to allow all employees equal opportunity to express their opinions (roundtable discussions, giving employees equal time limits).

The list is endless. Workplace democracy doesn’t begin with sweeping broad reforms and doesn’t stop at a level of decisions — it cannot be restricted to merely simple routine procedural tasks nor can it be restricted to big decisions about the organization’s future.

Going forward, it would be exciting to see academia research organizations that have already adopted forms of workplace democracy to assess their impact, given that we now have data on a sizeable number of firms of all sizes that have adopted workplace democracy over a period of time. This could give us a more informed and valuable insight into both the organization’s performance through workplace democracy and potential positive externalities across society and our political systems. On the other hand, it’s high time for organizations to change their approach — especially ones that have remained stuck in the quagmire of top-down approaches, fuelling burn-out, demotivation and bad products and marketing strategies that should have been caught internally (standout recent examples are Gucci’s The Great Show fiasco, and the “MeToo” DIY rape kit and Preserve Kit).

Some might attribute the revived interest in flat organizations to the start-up boom (bust?) and the growing idea of a sharing economy, while others might attribute it to a cycle in trends clubbed together with the resurgence of pop culture’s obsession with the 70s and 80s and a frighteningly similar political landscape. This time, however, workplace democracy might very well be here to stay.

Defora Blog

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