Even big companies are embracing a democratic style

What if you could vote on your CEO's performance?

from the May 6, 2008 edition

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Take DaVita. Today, the El Segundo, Calif., company is the largest independent provider of dialysis services in the United States, with more than 30,000 employees and annual sales of nearly $6 billion.

But back in 1999, the situation was bleak: The company was functionally bankrupt, under investigation by the US Securities and Exchange Commission, being sued by shareholders, and the majority of senior executives had left. Its new CEO, Kent Thiry, understood that changing course meant embracing a fresh, democratic approach. So he and his team implemented the following:

•"Town Hall" meetings to share information about new programs, spotlight achievements, and answer questions. Quarterly "Voice of the Village" meetings allow "teammates" the opportunity to ask the CEO and senior leadership any questions they want.

•Opportunities for all employees to engage in democratic decisionmaking through voting on a range of issues including the renaming of the company, its core values, job titles, logos, and new initiatives.

•Annual forums at which DaVita's CEO and COO publicly share their personal successes and failures in front of more than 2,000 colleagues.

•Decentralization that lets each of its 1,300 clinics be its own "boss."

As a result, DaVita dramatically reduced its turnover rate, stimulated organic growth above the industry average, and became the industry leader. Net operating revenue grew from $1.45 billion in 1999 to $5.26 billion in 2007. And over the past five years, DaVita's stock has soared 279 percent, while the S&P 500 Index has returned 52 percent.

"We feel our approach adds more value to the American health system, not just in savings but also in transparency and accountability," says Mr. Thiry. "I firmly believe that every company can be a democratic community. And I know it's worth it!"

His statement underscores the potential of democracy to transform not only corporations but the millions of lives they affect. That, in turn, raises a pressing question: Do big businesses have a responsibility to be organized democratically because of the power they wield?

If more Fortune 500 companies operated democratically, it could mean less corporate malfeasance, happier employees, and a more stable economy. And it would allow a powerful alignment between the political system much of humanity embraces and the places we work in each day.

• Traci Fenton is the founder and CEO of WorldBlu, Inc., which publishes the annual WorldBlu List of Most Democratic Workplaces.

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