Opinion

Even big companies are embracing a democratic style

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

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Imagine a company that:

•Lets you vote on the CEO's performance – and lets you, not your boss, determine your work projects.

•Uses e-mail discussion lists to make critical decisions, practicing full transparency so everyone is kept in the loop.

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•Rotates all leadership roles on a regular basis.

Sound far-fetched? It's not. These innovative examples of organizational democracy – and many more like them – are being practiced in companies around the world. And it's not just a fad among startups. It's a growing trend that reflects an inescapable fact: Businesses that embrace a democratic style are building healthier workplaces – and better bottom lines.

Even giant companies are waking up to this reality. Last April, our company, WorldBlu, inaugurated the WorldBlu List of Most Democratic Workplaces. Most were small to midsize firms. But this year, a Fortune 500 company, DaVita Inc., is among the winners. And we expect more in the years to come.

Progress may come slowly. After all, it took thousands of years – and a monumental change in human thought – for nations to cast off command-and-control models of government and replace them with democracies. However, with advances in technology and the Internet, shifting generational views about the need for more collaboration, and growing interest in responsible business practices, democracy may come quicker than we think. Regardless, it's a shift all businesses must make.

Why? Because in recent years the hierarchical corporate model has begun to reveal its weaknesses, leading to a breakdown in transparency, accountability, and integrity. The results – from Enron to the HP spying scandal – speak for themselves.

I've spent more than a decade studying organizational democracy and have come to realize that businesses have an ethical and moral responsibility, as well as a fiduciary duty, to operate democratically. And it's time we close the gap between demanding democracy as the way we want to live – but not the way we get to work.

As business leaders consider the prospect of establishing democratic practices, they'll undoubtedly face obstacles – some real, some invented. Size shouldn't be one of them. Think about it. In the spread of political democracy, countries ranging from a few hundred inhabitants to more than a billion people have all embraced it. So why should corporate giants fear it?

Democracy isn't perfect, of course, nor does it guarantee prosperity. And anyone who has ever lived in a democratic society knows that more people increases the complexity. But with the right systems in place, democracy is not only scalable and effective, it also creates the kind of communities – and workplaces – in which most people want to live.

Organizational democracy doesn't mean that business leaders give up all control. It simply means that a company is committed to a system that empowers people – rather than just the CEO – to generate solutions and make decisions.

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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