Does organisational democracy scale?

Looking up the Shard

The first objection I hear when I talk to people about organisational democracy, is ‘Well yes that was all well and good for your little company in Brighton, but it would never work at a large organisation.’

Well there are now many examples of large companies making democracy work and reaping the rewards. This excellent article in Fortune Magazine talks about Whole Foods, Morning Star and W.L.Gore (makers of Gore-Tex.) Each turn over hundreds of millions or billions of dollars and have not only scaled up democratic principles, but have proven that it’s actually more successful than traditional command-and-control hierarchies. It’s actually a much more difficult to control a huge enterprise with standard processes, job descriptions and multiple layers of management when it turns out that if you trust, empower and set people free to do a great job, they will do just that.

There are some great examples of democratic practices in the article. Here are some nuggets.

1. Hiring:

Whole Foods (WFM) offers the right to vote to local teams when it comes to hiring. New hires serve for a period of one to three months on a team, after which the team approves (or rejects) the candidate as a permanent team member by two-thirds vote. It turns out that peers are much better at predicting who will be a great teammate or leader than any executive committee.

2. Job descriptions and managing performance:

At the center of [Morning Star’s] design for work is a mechanism that produces a sort of order. It’s called the “Colleague Letter of Understanding”  (or CLOU, pronounced “clew”), a contract in which each individual defines his or her personal mission (and how it relates to the organizational mission), work commitments, key activities, and success metrics — all negotiated with 10 or 12 core colleagues (called CLOU colleagues). The CLOUs are available online to everyone in the company, they can be updated at will, and are embedded in a social network that includes a real-time feed of performance data, CLOU colleague activities, and peer feedback.

Instead of hewing uncomfortably to a rigid, top-down hierarchy, the CLOU system allows Morning Star’s colleagues to operate in a “natural” hierarchy based on expertise, achievements, and accountability. People don’t move “up” at Morning Star, they grow in respect and responsibility (and compensation) based on their contribution.

3. Scaling up:

Gore famously caps the population of any given facility at around 200 people — the size where, founder Bill Gore observed, “we decided” becomes “they decided.” The emphasis at every turn is on direct, personal communication. The negotiation of roles is often laborious and time-consuming but it pays dividends.