The business case for democratic business

I’m using this post to collect links and quotes from articles and research that support the business case for democratic business. If you know of anything that should be added here, please submit a comment. I’m also interested in seeing any counter-examples to avoid confirmation bias.

One out of every four working Americans (25%) describes their workplace as a dictatorship, while just 34% of bosses react well to valid criticism.
Workplace Democracy Association/Zogby Interactive poll, 2008

Gallup: Globally, 73-91% of people
are disengaged at work with physical
and psychological ramifications.

Engagement and physical health

Engagement and psychological well-being

In 1987, when the Conference Board first surveyed fulfillment, 61% of people were satisfied with their jobs. By 2011, it had dropped to 45%. More.

According to the consultancy BlessingWhite, only 20% of people are engaged with their jobs.

From David Erdal’s book ‘Beyond the corporation‘: ‘There is overwhelming support from well-designed and rigorous academic studies showing that companies become more productive in employee ownership’

Between June 2007 and December 2008 the proportion of U.S. employees who professed loyalty to their employers slumped from 95% to 39%; the number voicing trust in them fell from 79% to 22%.
Centre for Work-Life Policy (more)

Twenty years ago the salary difference between a US CEO and a factory worker was 40:1. A few years ago it was more than 400:1.
J. Micklethwait and A Wooldridge, writers on globalisation, 2000

We studied 50 companies across the globe, looking at both their employee engagement scores and their financial data. Our analysis focussed on the impact of employee engagement on operating income, net profit and earnings per share (EPS). Over the 12 months studied, organisations with high levels of employee engagement outperformed those with below average levels of employee engagement on all three financial measures.

  • Operating income. Companies with highly engaged employees collectively saw operating incomes rise by $389.95 million or 19.2%, but companies with below average levels of engagement collectively saw it fall by $664.14 million or 32.7%.
  • Net income growth. The group of companies with highly engaged employees saw net income grow by 13.7% or $121.38 million but it fell by 3.8% or £33.67 million among companies with low levels of employee engagement.
  • Earnings per share. Organisations with highly engaged employees collectively saw earnings per share increase by 27.8% compared to companies with low levels of engagement which saw a fall of 11.2%.”

“Recruitment and retention of top talent (80% of top talent wants
more freedom at work)” – Zogby International/Workplace Democracy Association 2008

“We firmly believe that happy employees make for a better business. We believe democracy is important to keeping our employees happy, engaged, and passionate about what they do everyday. We are a service company that just happens to sell shoes, clothing, handbags, etc. In order to be about the best customer service you have to start by providing that to your employees. Democracy is one way we go about making our environment a great place to work.” – Tony Hsieh, founder, Zappos (sold to Amazon.com for close to $1BN)

“HCL recognizes that its greatest asset is its employees – the
79,000 “HCLites” deliver value and directly interface with HCL’s
customers every day. The job of the CEO is to enable, enthuse
and encourage employees and to transfer the onus of change at
HCL from executive management to the employees. Creating a
democratic workplace within HCL has enabled the company to
achieve this goal.” – Vineet Nayar, CEO HCL Technologies, India

“At Great Harvest we believe an organization is only as good as the sum of its parts. Great Harvest is made up of smart, capable individuals whose ideas are crucial to our long-term success. Listening and aggregating ideas is non-linear and time consuming, but well worth it. Nothing we do is “mechanical,” right down to daily milling whole grains and handcrafting bread. It requires more time and attention, but the end product is amazing. We’re into our third decade in business and truly believe the democratic principles we follow have kept Great Harvest relevant and agile.” – Mike Ferretti, CEO, Great Harvest Bread Co.