Do you want to see the magic of how a democratic workplace could nurture team belongingness? Read on to find how democracy at work can be implemented!
Democracy at work
The benefits of democracy in countries are well-documented. But can companies be democratic? Will it lead to higher productivity and a happier work environment? A problem in many companies is that employees lack the feeling of ownership. Research done by the firm Towers Perrin and Gallup shows that 71 to 8% of employees feel disengaged from their organization.
If you want your employees to act as stakeholders, treat them like owners. Democracy is not limited to countries. Democracy at work is imperative if you want to develop a culture of ownership in your organization. Workplace democracy helps to improve competitiveness and productivity.
It helps to create an atmosphere that fosters creativity and innovations. Democracy at work helps to lower employee turnover and disengagement. You need to remember the foundation of a democratic company is sharing information and rewards with all employees.
In this blog, we have attempted to underline the benefits of democracy at work. We let you know how to implement democracy at work. Through the case study, we hope to illustrate benefits ownership in the workplace. We have shown decision-making examples in the workplace.
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Define democracy at work
Democracy at work is using democratic principles like voting, referendum, and public debate in the workplace. The degree to which the democracy is applied can vary from full-scale, employees can vote in the company essentially carries the same weight to smaller projects that may apply to specific areas or departments.
Management scientists and industrial and organizational psychologists have been studying democracy in the workplace for several years now. The movement for workplace democracy first grew in the 1960s when experts noticed that the top-down approach leads to unengaged employment and the likelihood of biased decisions.
Several companies have adopted a popular form of workplace democracy, is employee ownership. The idea of employee ownership is the employee is given equity shares and voting right. The employee becomes more invested in your company’s success. Another approach adopted by companies is combing employee ownership with participatory management to implement democratic principles in the decision-making process.
Significance of workplace democracy
Several firms have researched workplace democracy focuses on three concrete areas,
- Effect on productivity – An extensive analysis of worker participation found a positive correlation between worker democracy and higher efficiency and productivity. The report that focused on companies in the US, Europe, and Latin America found that organizations with democracy with work were more efficient on a larger scale than hierarchy-driven organizations. A report on workplace democracy, in the United States, documented that the staff’s incomes increased by 70 to 80%, grew 2% faster, and had 9-19% higher levels of productivity.
- Effect on business longevity – An analysis of different companies in Canada, carried in the 2000s, showed that democratic workplaces were half as likely to fail as a business with hierarchical workplaces. Similar results recorded in studies carried out in Uruguay and Europe.
- Effects on workers – The overall effects of workplace democracy on workers are positive and were happier. Studies carried in countries South Korea, Italy, France, and the US show that democratic workplaces recorded a higher level of job satisfaction and motivation.
- Social benefits- A study in Italy showed towns with more democratic workplaces, employees reported mental and physical health. Their children were less likely to drop out of school. The towns showed lower crimes and incidence of domestic violence and higher social participation.
Benefits of democracy in the workplace
There are several advantages to democracy in the workplace,
- Democratic companies attract talent – Given a choice, most employees prefer to work in an open company, and their opinions are valued. Employees feel unhappy and fearful in autocratic companies. It is vital to employees feel appreciated and heard. Business owners need to focus on democracy at work rather than gimmicks to propel their business forward.
- Democratic companies have better ideas – There a well-known saying in the business world, “Innovate or die”. But you cannot create ideas in a vacuum. You will receive help in developing your product and services, handling consumer service, and selling if you are open to listening to your employee’s ideas.
- Democratic companies work fast – It may seem like a paradox, but a democratic workplace can work faster. The decision-making process may take longer, but since you have heard your staff’s opinions, the execution phase is faster. In the top-down decision-making process, employees may feel resentful. The plans may fail in the execution phase. Plans often fail in the execution phase because your staff did not have a say in the plan and may feel resentful. When employees understand the reasons behind the decision, they work faster and without resistance.
- Democratic companies have happier employees- A survey by Gallup Organization shows that three-fourth of all employees in the US are disengaged, which costs the economy a whopping $300 billion every year. Employees feel that not being engaged, affects their mental and physical health. Corporate democracy definition is an engaging system. If employees feel engaged at work results in a happier workplace and improve the physical and mental health of your staff.
- Democratic companies have healthier profits – Democracy improves profit margins. It helps to attract and retain talent, improves turnovers, and with lower absenteeism rates. Workplace democracies tend to be less bureaucratic and decentralized allow you to hire the best talents. Democratic companies are leaner, faster, happier, and more innovative which helps to improve profits.
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Top 10 ways to build democracy at work
Democracy at work has its pros and cons. Despite its flaws, democratic workplaces make employees more engaged. Several employees leave their organization if they could get more control in work or enjoy more autonomy. We have listed 12 ways to build democracy at your workplace,
- Establish transparency – Democratic countries are more transparent. It is vital companies operate transparently. Transparency in the workplace definition is an organization that operates in a manner that creates openness between the management and staff. It improves trust and leads to a successful organization. Ideally, the management, should not have secret agenda. Ideally, the top management in your company should share information with your employees to build trust and improve engagement.
- Start a dialogue – Employees are hesitant or intimidated to highlight issues to the top management. Company leaders should proactively engage with employees. In a democratic company, people working in management proactively find out about their questions, concerns, and ideas. Your employees should feel free to bring small and big issues your attention. Employees will feel happier and appreciated if you hear what they have to say and act on it.
- Avoid a hierarchy – In workers democracy, all departments in the organization are equally important. It does not matter if the sales team brings in the business. Your organization will not function efficiently without HR, accounts, design, marketing, and so on. All departments are inter-dependent. It is vital to treat each department fairly and equally.
- Delegate responsibility – Delegating responsibility is a part of democracy at work. Task and job responsibilities need to be clear and concise. You need to ensure nothing slips to the cracks. The definition of ownership in the workplace requires delegation and accountability. Delegating responsible will let your team feel responsible, and they will shine. Studies have shown that delegates more perform better than companies that do not.
- Hold people responsible – Once you delegate responsibility, remember to hold the employee accountable when things go wrong. You can hold them responsible, but avoid doing it publicly. Instead, set up a face-to-face meeting to clearly explain how they can correct the situation. The employee should understand what constituent success or failure. We recommend you follow up and provide guidance when required.
- Recognize individual achievements – When an employee achieves something, you should publicly recognize their achievements. Even a shout-out during your weekly meeting is enough. Employees feel motivated when their accomplishments are recognized. It helps your employees may feel engaged and motivated. Another benefit of recognizing achievements is it spurs other employees to perform.
- Give employees freedom – Freedom is an integral part of democracy. Try to give your employees freedom. Many organizations allow their staff to wear casual clothes once a week. Consider introducing flexible timings. As long as your staff is completing their work as per the schedule and not abusing their freedom, you can afford to establish a flexible schedule.
- Evaluate yourself – Democracy generally has a system of checks and balances. Evaluate how you conduct business. Examine how you conduct business and modify practices if required. For democracy at work to function effectively, you should be willing to change your assumptions and adapt. Involve your employees in the process and ask for their input.
- Encourage leadership at all levels – For democracy at the workplace to work, try to ensure leadership roles are available at all levels in the company. It may not necessarily translate to a lot of power, but having someone take responsibility when required. The research underlines the leadership at all levels helps democracy to grow.
- Avoid strict and rigid policy – Companies need to operate based on certain principles that everyone follows. The principles should be flexible to allow decisions and make them on an individual basis. You need to use common sense and logic not just what is stated in the policy layout. When you want to implement democracy at work, ensure the company culture that works for everyone.
- Forgive Failure – Staff should be held accountable for their mistakes, but you need to forgive failure. Failure allows your staff to learn from their mistakes and grow. Forgiveness encourages staff to work harder and increases the sense of loyalty towards their company.
- Encourage input from everyone – We may have mentioned it early, but workplace democracy gets ambushed without your employee’s input. Everyone has a unique perspective, and to succeed in business, you need to look at a situation from all angles. Asking for inputs from employees ensures you have missed anything and gives you a fresh perspective.
Case study on a democratic company
One of the most famous case studies on democratic companies was done on a Brazilian company called Semco. Founded in 1953, Semco originally manufactured centrifuges. The centrifuges were used in the vegetable oil industry. The company was run in an autocratic management approach and had a pyramid hierarchy.
Richard Semer took over as CEO in 1982, he found the practices followed were unproductive and unsatisfying. When Mr. Semer took over, he diversified the business into manufacturing mixers for various industries.
The management system was modified, on the principles of democracy, profit sharing, and information. Following these changes profitability of Semco’s annual revenue grew from $ 4 million in 1982 to $212 million in 2003. Semco employed 90 employees in 1982 meanwhile in 2003 Semco employed 3000 people in 2003.
Brazil was rocked by political instability in the period which resulted in the closure of several industrial units. Presently Semeco is considered to be one of the best places to work for. When Mr. Semer first took over, he found four big obstacles,
- Lack of motivation
They tried to implement several worker participation programs, quality circles, kanban systems, and motivational schemes in their biggest plant (150 persons). These programs started with enthusiasm but eventually petered out. They decided to break up the facility into three units.
Though the initial cost was high, and involved duplication the long-term results exceeded all expectations. Within a year, sales doubled, inventory reduced by two-thirds, and products that were stalled in RND were released. The quality of the product improved, with rejection rates reduced substantially.
Semco replaced its pyramid structure with an organizational circle made up of three concrete circles. The central circle had six members who were vice-presidents, the second circle consists of partners and the outer circle contained coordinators and associates. Semco ensured the staff was treated as adults.
It meant the management trusted the staff. Another practice started by Semco was job rotation to prevent stagnation at the job. These practices helped in job enrichment. Employees at Semco attended classes to learn how to read and analyze the balance sheet, profit and loss, and cash flow statements. Profit share was another motivational tool.
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Use unremot to build workplace democracy
Water coolers in the workplace are places where employees can have non-work and casual conversations. Water coolers help people to relax and connect with their colleagues. It helped to improve water cooler efficiency. Companies around the world opting for remote working or working from home in light of the global pandemic.
Remote working has made connecting with colleagues more difficult. Virtual water coolers are dedicated virtual rooms allowing your staff to check-in and converse. Unremore virtual water coolers provide a virtual platform for remote employees to interact even if they are in different time zones.
But why do need virtual water coolers? Remote workers are generally self-reliant and can work independently. They correspond with their colleagues when required. But it can get lonely, virtual water coolers provide a platform for employees need to interact and connect over shared interests. It helps improve performance and eases communication between coworkers.
Virtual water coolers help to improve workplace democracy as it provides a safe platform for management and employees to interact with one another. The management can discuss pertinent issues transparently on the platform.
You can have a brainstorming session with your team and use the space to get everyone’s creative juices to flow. The virtual room helps to reinforce the sense of belonging. The virtual water cooler can help remote organizations function as democratic companies where every employee has a voice.