Historic and archaic management structures more closely resemble the North Korean dictatorship than a flourishing Democracy; and history shows us what happens to innovation and ambition in authoritarian societies and structures.
Organisations that utilise a “typical“ top-down structure are emulating a management model that, like Ford Model T (available only in black for $850), was conceived at the turn of the 20th Century. The difference is that Ford managed to evolve their car in terms of flexibility, functionality and purpose, while the management model used at that time, has varied little in the subsequent 100 years.
Top down structures have the following negative characteristics that impact on an organisation;
- Communication is a downward flow of instruction rather than a bi-directional flow of ideas
- Stifling of creativity
- “Them vs Us” segregation results in low employee morale
- Lack of contribution to their own environment creates a disengaged employee base
- The concept of “team” is replaced with the concept of “I”
- Employees dream of what they can do when they leave the organisation rather than what they can do in the organisation
- Decisions are made in the absence of the experience that exists in the lower part of the organisation
- Senior appointments are frequently externally sourced because of a lack of confidence in middle and junior staff
- Lack of recognition of achievements further demoralises staff
The opposite of top-down is not necessarily bottom-up; there are many alternatives to the traditional autocratic style of management. The “Let the people decide” style of management simply means that by engaging employees in the decision making process, the effectiveness of existing structures are amplified.
In a democracy, voting decides the President, the local government, the city mayor, the party candidate, the decision to be a republic or a monarchy, whether to allow minorities equal rights and many other important factors.
Does it therefore seem such a far-reaching concept that employees should decide the leader who is going to run their company? I would argue not; indeed other factors could be decided by a mass opinion such as:
- Expanding operations (taking on new risks)
- Acquiring companies (putting existing employee interests at risk)
- Performance Management (peer review process)
Adoption of a more democratic working environment would have a culture shift for an organisation in every area of the business and would significantly impact:
- Decision making would be done on an inclusive basis without the ability to have senior veto over-riding the populous vote
- Communication would be required of potential leaders in order to gain and maintain their positions; transparency would be critical
- Motivation would increase because employees would feel that their voice carried equal weight independent of their salary, social standing or position
- Employee engagement would rise because common interest would exist between senior and junior employees
- Teamwork would be a natural outcome of a less defensive environment where objectives would be aligned
- Mutual Reward would be on offer because a leader could only succeed with a positive result from the entire organisation
- The entire organisation’s incentive structure, from the bottom to the top, should be aligned along common objectives
- All factors in decision making must be made available to the entire organisation
- All meetings should be open for anyone to observe if they desire
- Status should be recognised only as a result of being elevated by a vote, and for no other reason
- The organisation should develop a constitution; detailing its principles, purpose and values against which all employees can be judged. This should be voted into existence.
Difficult not to agree with the idealism. The Challenges section does not even begin to see the problems. Why did Knowledge Management fail? Why is Enterprise 2.0 a non-starter? It sought to provide the tools to carry forward the very philosophy presented here, i.e., openness. The problem was time, energy and volition. Overloaded personnel had to drive all three. The MIX does have some excellent presentations on openness and how to realise it with technology.
Regards,
Dhiraj
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Dhiraj, these are good points. The openness you refer to is not the goal, but rather a beneficial outcome of achieving the goal. This article is about reversing the power structure in organisations, one of the results of which would be transparency and openness. The main objective of this power shift is about employee engagement and motivation; the idea that through this empowerment, more productive employees will result because of their power (transparency, motivation, engagement, belief, trust etc). The example of the mid-term election is perfect, Barrack Obama is the worlds most powerful man, whose agenda has just been changed by the people.
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Interesting idea - what role do you think shareholders should have in the election of a new leader? At the moment most boards have to be voted in by the shareholders - are you proposing a change here as well? How would you execute this idea in privately owned firms?
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Currently, most boards are elected entirely by shareholder. In most companies, especially public corporations, the shareholders are passive investors – absent and transient. In terms of stakeholder consideration, it would seem more logical for a board to be representative of those most involved and affected by the company’s activities.
If you take the view that the employee is a citizen of the organization and you believe in the rights of the citizen as recognized by democracy then the current system for electing board members is not just bad business, it is a violation of the employee’s rights.
Marjorie Kelly writes in detail about this in The Divine Right of Capital: Dethroning the Corporate Aristocracy. It is a thought provoking read.
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Shareholder involvement in the “Let the People Decide” thought depends upon scale. I think that small private companies are effectively dominated by their shareholder interests, while larger organisations consider more stakeholders in their decisions. The purpose of the constitution was to protect the interests of the shareholder, but “who” is ultimately responsible for that protection should be decided, or considerably influenced, by the people. Of course, like any democracy, there should be a balance of stakeholders involved in decision making, and perhaps getting this balance right will be a sign of maturity in this process.
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