Becoming a democratic organisation: where to start


When Will and I decided to make NixonMcInnes a democratic company we were lucky in that we hadn’t hired any employees yet. This meant we could be democratic right from the start and didn’t have to go through a large change process.

It’s more difficult for established businesses, particularly large ones, who have a well-established legacy culture, systems and processes and people within the company who may not be compatible with a democracy.

Traci Fenton, the founder of Worldblu has defined 10 dimensions of organisational democracy. These 10 dimensions are inter-related and work together to form a democracy, and to become certified by Worldblu, an organisation much benchmark well across all of the dimensions.

The difficulty is that to change an organisation across all 10 dimensions is probably far too big a change to happen in one go, especially in a large business. So where do you start?

Fortunately there are two excellent case studies for this, both for businesses with turnover in the $100M’s range, but what they did is replicable in much smaller businesses too.

Semco, the Brazilian conglomerate, is perhaps the most famous case study of organisational democracy, described by its CEO Ricardo Semler in his books Maverick and The 7 Day Weekend. More recently, Vineet Nayar wrote about transforming the Indian IT outsourcing company HCL Technologies to a democracy in Employees First, Customers Second. I highly recommend all three of these books.

There is a common theme in both of these transformations which was in order to prepare the company for the large changes that lay ahead, the very first step was to build a culture of trust in the organisation. Only with sufficent trust would the organisation be ready for further change.

At Semco, they removed the clocking-in/out machines and abolished the practice of searching employees for stolen goods. And at both companies they set to work creating a deep level of transparency, opening up company finances, performance information and having public forums for discussion about company issues which are dealt with openly. At NixonMcInnes, we borrowed another idea from Semco which built trust by having two open seats at board meetings so employees could come and participate.

All of this helps to build two-way trust, demonstrating to employees at all levels that they are valued and trusted to have access to the inner workings of the company that would previously be reserved for senior management, and showing that the leaders could be trusted by making their work and information visible for everyone to scrutinise and participate in. This new-found trust changed the businesses from being ‘them and us’ to ‘we.’ Both companies then went on to develop across all of the 10 dimensions of democracy, reaping enormous rewards both in market share and profit and in the happiness of everyone working there.

So if you want to change an existing organisation to a democracy then make sure that building trust is your first step.