A Case for Workplace Democracy

A case for workplace democracy – relevance for 21st century managers and leaders operating in a new world order.

By Ingrid Ashwin | 10 July 2013

Challenging South African Business Leaders to leverage their influence to achieve workplace democracy
According to two of the world’s most powerful business leaders, Ellen Kullman and Dominic Barton, the business leaders most likely to succeed are those that expect and plan towards a business environment that will be very different in two years’ time, never mind a decade or half century.
There is also further growing pressure from the Gen X and Gen Y talent in your organisation who are no longer willing to accept a career that does not firmly embrace their values and emotions.

Formal employment is governed by businesses that lead workplace populations larger than some small countries
Governments are continually challenged to change, acknowledge and practise democracy. But when one considers that businesses lead and govern populations larger than some countries in the world we have to ask ourselves why we go to workplaces that still operate with a 20th century autocratic business model or perhaps a diluted version of a democratic workplace? 13 million people are formally employed in South Africa. Source: Free Market Foundation Bulletin March 2013. A vast majority of these people report into hierarchies that defy our political dispensation of democracy.
“Corporate pyramids are the cause of much corporate evil. Pyramids emphasise power, promote insecurity, distort communications and make it difficult for the people who plan and the people who execute to move in the same direction”, according to Ricardo Semler.

Building a better business with undiluted democracy
Ricardo Semler, acknowledged by the World Economic Forum as a Global Leader of Tomorrow, has championed his workplace democracy model for the past 25 years. He has constantly challenged 20th century management thinking and actively combats hierarchical business practise.
Think about this he says, “Outside the factory, workers are men and women, who elect governments, serve in the army, lead community projects, raise and educate families, and make decisions everyday about the future. Friends solicit their advice. Salespeople court them. Children and grandchildren look up to them for their wisdom and experience. But the moment they walk into the factory, the company transforms them into adolescents.”
Source: Harvard Business Review

Workplace democracy makes money and delivers record profitability
Since committing fully to a participatory management model, the SEMCO model has produced significant bottom line performance. Whichever way you slice- and- dice it, the people at SEMCO have come through achieving 27% growth for 25 years each year. What follows are just a few statistics to appease the cynics and evidence the hard core business value further:
– Heightened involvement in one facility led to double the sales, inventories fell from 136 days to 46 days, 8 new products that were previously stalled in R & D were unveiled. Quality improved from a one third rejection rate to 1%. Increased productivity led to a workforce reduction of 32%.
– In another facility, employees were given full rein to set up a new flexible manufacturing system. The units productivity in dollars, jumped from $14 200 in 1984 to $ 37500 in 1988 and the goal in 1989 was $ 50 000. Over the same period market share went from 54% to 62%.
– “People” turnover is just 2% in an industry with 18% of people turnover.
*At SEMCO they do not refer to workers or employees – they refer always to people

Still not convinced? An investment of $100 000 made in Semco, 20 years ago, would be worth $5.4 million today. All of this was achieved in a volatile Brazilian economy, with banks failing and countless business collapsing.
Semler says, “Rethinking ways of doing business will rarely be popular or easily adopted. But we like it our way, and hope that we will sow some seeds out there.”
Applying deep democracy in the workplace for a better South African future
Ricardo Semler asks, “Why do we demand and go to war for democracy as nations, yet accept with docility that no one has the right to choose their own boss?” We send our children, grandchildren and loved ones to war and yet we show up and spend the lion’s share of our time in a workplace willing to be dictated to and controlled by leaders, managers and employers who take control of our lives.

If we can agree that a better future for South Africa is firmly reliant on leaders wanting to start new businesses or grow the businesses they currently have, and, then agree further that aspirational leaders in both the private and public sector recognise that the business environment will be very different in the years to come, then we can surely remain optimistic that a better participatory workplace for ourselves and generations to come will deliver real economic and business success.

Ricardo Semler will present his unconventional leadership thinking at The 2nd Annual FNB Progress Conference on Happiness@Work on the 17th September 2013. Click here for more information.