Democratic principles making businesses more transparent

When senior managers at Continuum, a design and innovation firm, decided to renovate their quarters in an old shoe factory west of Boston last year, they took what some businesses might consider a radical step: They eliminated most interior barriers, creating a vast open space.

"We do not have doors," says Freda King, a vice president. "It's structured that way to stimulate conversation and to allow people to work collaboratively. Anyone from the chief operating officer to our interns shares space and sits next to each other. You can stop in and have a conversation with anyone, anytime you want."

That egalitarian environment is one of the innovations that placed Continuum among 34 corporate recipients of a Democracy in the Workplace award this month. The recognition comes from WorldBlu, a Washington, D.C,. business specializing in workplace democracy. The international list features such industries as technology, manufacturing, telecommunications, retail, and media. It even includes a firm in Russia.

"Democratic organizations operate on freedom, not fear," says Traci Fenton, founder and CEO of WorldBlu. "They understand that the future of business is less about titles and more about meaning. They represent the new school of business design."

In hierarchical companies, the phrase "democratic workplace" can be an oxymoron. A top-down management style sometimes leaves workers with little voice or power. But with the growth of technology and the arrival of Generations X and Y in the workplace – a group that expects to be treated with openness – more businesses are reshaping themselves around such democratic principles as decentralization, accountability, and choice.

When the modern corporation began in the 1900s, Ms. Fenton says, it was typically based on a military, command-and-control model that often remains today.

Her own views of democracy underwent a transformation in college. A campuswide conference on the subject broadened her perspective beyond its role in government and politics. A student tour to Indonesia in 1997, when Suharto was in power, gave her a sobering view of what it was like to be in an undemocratic environment.

After graduating, Fenton took a job with a division of a Fortune 500 company in Iowa. "I went to work that day all bright-eyed, ready to give," she says. But she was quickly disillusioned, sensing that she would be told what to do and how to do it. "My potential was not going to be tapped at all," she says.

She left after four months. Later, a two-year stint at the Nasdaq stock market convinced her that technology was creating a new model for business. In 2003, she established WorldBlu.

"The Information Age has brought us into a democratic age, an age of participation and influence," Fenton says. "People have influence because they have information. Because of the Internet, we have the ability to connect with others and engage with others about that information, and to mobilize and act on it."

A backlash against the greed practiced by companies such as Enron and Tyco has also sparked interest in a more participatory workplace, she says.

The need for change becomes apparent in statistics showing that 40 percent of employees say they don't have the decisionmaking authority they need to do their jobs well. And nearly two-thirds believe that decisions in their company are usually not made at the appropriate level, according to Bruce Katcher, author of "30 Reasons Employees Hate Their Managers."

"Employees should be encouraged by senior management to exercise more decisionmaking authority," Mr. Katcher says. He wants workers to feel free to say to their bosses, "Look, I can do that work, you don't need to do it."

Many supervisors don't delegate, he finds, because they cling to a false assumption that they need to amass as much power as possible. "The truth is, the more you empower others, the more power you'll actually have, and the whole organization will be more powerful. There will be more work being done," says Katcher.

Even companies with a top-down structure can improve employee productivity by training managers to delegate, he says.

At Motek, a warehouse software company in Beverly Hills, Calif., CEO Ann Price practices "open-book" management. "I created the philosophy from the beginning that we would share information," she says. Instead of a hierarchy, the company operates with self-managed work teams. For an example. "Anybody can buy anything [for the company] as long as they have three signatures. They just bought an $8,000 copier. I'm sure they scrutinize the money more closely than I would."

Whole Foods, the supermarket chain, also uses open-book management. Each store makes available a salary book listing the salary and bonus for each employee. In addition, Fenton says, "The highest-paid executive can't be paid more than 19 times the lowest worker."

Beyond this kind of transparency, Fenton observes two things happening in democratic organizations. One, it offers a method for handling disputes, which varies from company to company. "Second, it's not only conflict resolution, but conflict prevention. There are outlets for people to express their ideas, rather than having them bottled up. There's a forum usually for people to constructively disagree and not take it personally. And employees have a say in decisions that impact them in their work."

At Continuum, a monthly "open town forum" gives the nearly 100 workers an opportunity to share ideas and concerns.

Even hiring becomes a collective activity. "If we're interviewing for an engineering position, we also include designers and strategists as part of that hiring process," Ms. King says.

Mike Feretti, CEO of Great Harvest Bread Co. in Dillon, Mont., brings an egalitarian approach to the company's 224 franchises. Calling it "freedom- franchising," he says, "We require that you use an approved wheat flour to bake your bread with, and you must build on an approved location. Otherwise, we don't make decisions for you." He finds owners are happier and more involved.

Yet even advocates of democratic workplaces agree that they do not work for everyone. "People who need a lot of structure, who live by a job description, would not be happy in our environment," King says. "A job description to us is a guideline. We expect people to go beyond it."

But for those who do "fit," the more casual approach to corporate positions can bring new rewards. "Many of the reasons people get upset at work are eliminated because of the democratic structure," Fenton says. "That translates to more productivity, more efficiency, higher morale, and a better climate."

1-800-Got-Junk? – Vancouver, Canada
AIESEC International – Rotterdam, Netherlands
Axiom News – Peterborough, Canada
Berrett-Koehler Publishers, Inc. – San Francisco
BetterWorld Telecom – Reston, Va.
Beyond Borders – Norristown, Pa.
Collective Copies – Florence, Mass.
Continuum – West Newton, Mass.
Dancing Deer Baking Co. – Boston
Equal Exchange – West Bridgewater, Mass.
FBS Data Systems – Fargo, N.D.
GE Aviation – Durham Engine Facility – Durham, N.C.
Great Harvest Bread Co. – Dillon, Mont.
Guayaki Sustainable Rainforest Products, Inc. – Sebastopol, Calif.
Honest Tea – Bethesda, Md.
i-Free – St. Petersburg, Russia
KI – Green Bay, Wis.
Linden Lab – San Francisco
Motek – Beverly Hills, Calif.
New Belgium Brewing Co. – Fort Collins, Colo.
Orpheus Chamber Orchestra – New York City
Rite-Solutions – Middletown, R.I.
Roche Salon – Washington, D.C.
Sedgebrook – Lincolnshire, Ill.
South Mountain Company, Inc. – West Tisbury, Mass.
SRC Holdings Corporation – Springfield, Mo.
TakingITGlobal – Toronto, Canada
Ternary Software – Exton, Pa.
The Do LaB Event Creations – Los Angeles
The Russell Family Foundation – Gig Harbor, Wash.
Threadless – Chicago
Union Cab of Madison Cooperative – Madison, Wis.
Zaadz – Topanga, Calif.
Zingerman's Community of Businesses – Ann Arbor, Mich.

source: WorldBlu