Organisational Democracy

Chapter 14 of The Values-Driven Organisation

What is clear from my research is that wherever people operate in their daily lives, be it at work, in their home or in their local communities, they want to experience values that align with democratic principles. Let me remind you of the words I used at the start of this book:

At this point in our collective human history, we are witnessing an unprecedented shift in human values. Millions of people all over the world are demanding their voices be heard, not just in how our nations are governed, but also in how our organizations are run. They want equality, fairness, openness and transparency; they want to be responsible and accountable for their lives; and, they want to trust and be trusted. They also want to work for ­organizations that are seen to be ethical and do the right thing in the eyes of society. They want to be proud of the organization they work for.

In terms of the history of modern organizations this development is very new. Most organizations in the twentieth century operated with top-down hierarchical power structures that avoided giving employees a voice. Leaders and managers represented the elite. They gave orders. Employees were the workers. They took orders.

Although such organizations still exist in all parts of the world, the most successful organizations in the twenty-first century, as I pointed out in Chapter 3, are those that align their structures, policies, procedures and incentives with employees’ needs. Collectively, these are known as the best companies to work for; they practise some degree of conscious capitalism; and they embrace democratic principles. These companies are successful not just because of how they make their employees feel, but because of the impact these feelings have on the productivity and creativity of employees.

In Part Two of my book, Love, Fear and the Destiny of Nations: The Impact of the Evolution of Human Consciousness on World Affairs, I speak of the evolution of democracy as a journey from freedom to trust. Democracy begins with freedom, and evolves through equality, accountability, fairness, openness and transparency to trust. Each step of this journey, in other words each value, is an essential foundation for the development of the next value, and if you want to reap all the benefits that democracy provides, you cannot miss a step. Without equality, accountability, fairness, openness and transparency there can be no trust, and without freedom (autonomy) people cannot individuate and self-actualize.

In other words, the journey from freedom to trust is not only the journey of the evolution of democracy, it is also the journey of the evolution of human consciousness from the beginning of transformation (Level 4) to the end of internal cohesion (Level 5), and the journey of psychological development from the beginning of individuation to the upper reaches of self-actualization.

In Love, Fear and the Destiny of Nations, you will find a full chapter on each of these seven values—freedom, equality, accountability, fairness, openness, transparency and trust.1 For the purposes of this book, I am providing a one­paragraph description of the importance of each of these values in an organizational setting.

Freedom (autonomy)

People work best when they are given a goal or objective and are then left to get on with it, knowing they have a coach or mentor they can consult if they find themselves getting into difficulty. People with self-authoring minds relish this type of opportunity. However, there is a danger. In an organizational setting you have to be very careful about choosing the people who get this type of opportunity and the level of supervision they get. They have to be well-balanced, responsible individuals. In recent years, there have been several high-profile court cases where relatively young banking professionals have been poorly supervised and have caused the collapse of a bank or created huge losses that have impacted a bank’s financial viability. If you are giving people the opportunity to operate with autonomy in an organization, you must start small; let people prove themselves on tasks that do not expose the company to significant financial risk; then as they prove themselves give them more responsibility and accountability. If they make ­mistakes, celebrate them. Making a mistake is the best way to learn. Viewed from this perspective, our lives are full of learning.

Equality

People work best when they feel they operate on par with others and are treated equally. Equality recognizes that everyone, no matter who they are or what they do, has a contribution to make. There are no privileges in organizations that embrace equality. No one gets a bigger office than someone else, unless there is a functional reason. No one gets a designated parking space close to the entrance. Women and men are treated equally. There are no racial or gender divisions related to operational functions. Whilst people may have different salaries based on their years of experience and talents, bonuses from profits are shared equally among all team members. Equality is an essential prerequisite for creating a high-functioning team. Wherever there is inequality there is fear and suspicion and feelings of unfairness.

Accountability

When you give someone autonomy, you must also give them accountability. Autonomy without accountability is a recipe for chaos: People get to do ­whatever they want without any sense of responsibility to the organization. Furthermore, it is important to make the distinction between accountability and responsibility: They are not synonymous, at least in English. In many languages they are.

Accountability is often confused with responsibility. One can have responsibility without accountability, but in most circumstances you will not have accountability without responsibility. For example, I am responsible for how I lead my life, but as long as my actions and behaviours do not harm others or adversely impact the common good or break the law, I am not accountable (answerable) to anyone, other than myself: I have responsibility without accountability (to another person).

If, however, I am accountable for achieving an outcome or result that someone has entrusted me with, then I have responsibility to deliver that outcome or result for that person. I have accountability for the task with responsibility for delivering the result.

Accountability presumes:

1.     There is some level of hierarchical or functional relationship between the person who is accountable and the person or group of people who have delegated the task.

2.     There is an agreed outcome or result, in an agreed timeframe, that the person who is accountable is responsible for delivering to the person or group of people to which he or she is accountable.

3.     That the person who is accountable is given or has bestowed on them a position of authority (and the resources they require) by the person or group to which he or she is accountable, which is commensurate with the outcome they are expected to achieve (the delegated powers are sufficient to deliver the outcome or result).

When you are a leader, manager or supervisor working within a framework of democratic principles, you are not only accountable for outcomes and results, you are also accountable for ensuring those who report to you have the autonomy they need to do their work.

Responsibility is one of the five principles of how the firm Mars operates. This is how they describe responsibility and accountability:

As individuals, we demand total responsibility from ourselves; as associates, we support the responsibilities of others.

We choose to be different from those corporations where many levels of management dilute personal responsibility. All associates are asked to take direct responsibility for results, to exercise initiative and judgment and to make decisions as required. By recruiting ethical people suited to their jobs and trusting them, we ask associates to be accountable for their own high standards.2

Fairness

One could argue that just as the concept of equality only has meaning when you commit to giving people freedom, fairness only has meaning when you commit to treating people equally. Without freedom there is not much point worrying about equality, and without equality there is not much point worrying about fairness. Freedom, equality and fairness naturally follow each other. Equality is therefore a measure of freedom and fairness is a measure of equality.

Fairness also has an important link to justice. John Rawls, one of the most important political philosophers of the twentieth century, successfully argued in A Theory of Justice (1971) that “the most reasonable principles of justice are those everyone would accept and agree to from a fair position.”3

People want to be treated fairly. When they are not, they get bitter and resentful. They disengage. Fairness is critical for creating a high-performing culture. When organizations that practise fairness cut costs, they reduce everyone’s salaries rather than fire people. Some will reduce the salaries of higher paid workers more than the lower paid workers.

With increasing pressures to create a sustainable world for future generations, a new issue around fairness has come to the fore: the issue of intergenerational fairness.

The issue of intergenerational fairness, from an ecological perspective, began to attract public attention shortly after the Brundtland Report was published in 1987. This report commissioned by the UN General Assembly provided long-term development strategies for achieving sustainable ecological development. The Brundtland Commission defined sustainable development in the following manner: “Sustainable development is development that meets the needs of the present without compromising the ability of future generations to meet their own needs.”

It contained within it two key concepts:

  • The concept of “needs,” in particular, the essential needs of the world’s poor, to which overriding priority should be given.
  • The idea of limitations imposed by the state of technology and social ­organization on the environment’s ability to meet present and future needs.

Increasingly, these concepts are being used to evaluate the environmental and social impact of the decisions and actions of organizations. As I explained in the Foreword, business is a wholly owned subsidiary of society and society is a wholly owned subsidiary of the environment. If we cannot sustain our environment then humanity has a very bleak future.

Openness

The definition of openness I like best is, “having the interior immediately accessible.” In this regard, openness is one of the key requirements for authenticity, which in turn is a key requirement for trust.

Openness, in terms of “having the interior immediately accessible,” requires an absence of fear. People will not be open with each other if they have fears—if they have fears that what they say might be used against them, if they are afraid of repercussions or punishment, or find it difficult to handle personal conflict. Openness requires us to master these fears. We are supported in alleviating our fears at the societal level by a commitment to democratic principles. We are supported in alleviating our fears at the individual level by a commitment to personal growth.

If we feel we have something to hide—something that we feel guilty about, or something that we feel covers us in shame—we will not be open. Owning your guilt and shame, and being willing to be open about it, requires great courage and great honesty—the hallmarks of true authenticity.

Openness facilitates the value of fairness because it requires those in authority to fully disclose their motivations when making decisions. Only when motivations are disclosed can suspicions be lifted and fairness established.

Transparency

There is much confusion between openness and transparency. Let me try to abate some of this confusion by defining these two terms. Openness is “having the interior immediately accessible,” whereas transparency is “the degree to which you are able to see through something.” Openness is relational and deals with motivations. Transparency is factual and deals with processes and information.

Clearly, in an organizational setting, complete transparency could put a company at risk, particularly when it comes to sharing details of innovations to products or services that are being considered or declaring expansion plans prematurely. In some companies, full transparency can also raise issues regarding the disclosure of salaries and bonus payments. However, there is much that can be done to increase transparency that is not being done: For example, the practice of open book management, where monthly financial information is provided to employees to let them know how well the company is doing. This lets employees know they can be trusted with such information, and it allows them to see how the results of their efforts are showing up in the bottom line. It also helps them understand during hard times why cost reductions may be necessary.

The problem with transparency, like openness, is that when it is missing it creates suspicion. Organizations should keep their policies with regard to transparency under review and disclose as much information as they possibly can to employees.

Trust

Finally we come to trust. Trust is an “end” value. All the other values listed above are the “means” to that end. Without them, trust is impossible. Without trust there is no internal cohesion. The idea that internal cohesion based on strong bonds (trust) builds successful human group structures is not new. The fourteenth-­century philosopher Ibn Khaldun noticed that the most successful tribes in North Africa operated with asabiya, which can be translated as “a capacity for collective action.” He further noticed that, in the most resilient groups, the level of asabiya was strongest at the highest levels of leadership. They operated with a high level of trust and internal cohesion.4

In Trust: The Social Virtues and the Creation of Prosperity, Francis Fukuyama states: “As a general rule, trust arises in such a way as to create expectations of regular and honest behaviour. To some extent, the particular character of those values is less important than the fact they are shared.”5

In The New Leadership Paradigm I write:

Trust is the glue that holds people together and the lubricant that allows energy and passion to flow. The ability to display and engender trust corresponds to the fifth level of personal consciousness. Trust increases the speed at which the group is able to accomplish tasks and takes the bureaucracy out of communication.6

In The Speed of Trust, Stephen Covey states that trust means confidence, and the opposite of trust (distrust) means suspicion. In other words, trust breeds connectedness. When we trust someone, we know he or she will have our interests at heart. Suspicion, on the other hand, breeds separation. When we are suspicious of someone, we will not disclose our innermost thoughts. Openness disappears. We keep things back. We avoid connecting with someone we do not trust. “Trust always affects outcomes—speed and cost. When trust goes up, speed will also go up, and costs will go down. When trust goes down, speed will also go down, and costs go up.”7

Conclusions

To prosper in the twenty-first century, the leaders of our organizations will need to embrace democratic principles. They will need to give their employees a voice; listen to what they say, treat them fairly and give them autonomy. They will need to create a culture of trust based on equality, fairness, openness and transparency. They will need to do this, because this is the only way they will be able to attract the most talented people—those who want to be accountable for their own futures and the future of the organization.

Summary

Here are the main points of Chapter 14:

1.     Wherever people operate in their daily lives they want to experience values that align with democratic principles.

2.     Democracy begins with freedom, and evolves through equality, accountability, fairness, openness and transparency to trust.

3.     Each value in this journey forms an essential foundation for the development of the next value.

4.     If you want to reap all the benefits that democracy provides you cannot miss a step.

5.     Without equality, accountability, fairness, openness and transparency there can be no trust, and without freedom (autonomy) people cannot individuate and self-actualize.

6.     People work best when they are given a goal or objective and then left to get on with it, knowing they have a coach or mentor they can consult if they find themselves getting into difficulty.

7.     When you give someone autonomy, you must also give them accountability.

8.     Accountability is often confused with responsibility. One can have responsibility without accountability, but in most circumstances you will not have accountability without responsibility.

9.     Without freedom there is not much point worrying about equality, and without equality there is not much point worrying about fairness. Freedom, equality and fairness naturally follow each other.

10.  Openness is “having the interior immediately accessible.” In this regard, openness is one of the key requirements for authenticity, which in turn is a key requirement for trust.

11.  Openness, in terms of “having the interior immediately accessible,” requires an absence of fear.

12.  Transparency is “the degree to which you are able to see through something.” Openness is relational and deals with motivations. Transparency is factual and deals with processes and information.

13.  Trust is an “end” value. All the other values—freedom, equality, accountability, fairness, openness and transparency—are “means” to that end. Without them, trust is impossible.

14.  Trust always affects outcomes. When trust goes up, speed will also go up, and costs will go down. When trust goes down, speed will also go down, and costs go up.

Notes

1   Richard Barrett, Love, Fear and the Destiny of Nations: The Impact of the Evolution of Human Consciousness on World Affairs (Bath: Fulfilling Books), 2012, pp. 195–302.

2   See http://www.mars.com/uk/en/the-five-principles.aspx (last accessed 2 April 2013).

3   John Rawls, A Theory of Justice (Cambridge, MA: Harvard University Press), 1971.

4   Peter Turchin, Historical Dynamics: Why States Rise and Fall (Princeton, NJ: Princeton University Press), 2003.

5   Francis Fukuyama, Trust: The Social Virtues and the Creation of Prosperity (New York: Free Press), 2005, p. 53.

6   Richard Barrett, The New Leadership Paradigm (Asheville, NC: Fulfilling Books), 2011, p. 73.

7   Stephen M.R. Covey, The Speed of Trust: The One Thing That Changes Everything (New York: Free Press), 2006, p. 13.