Back to the Future of Management

Resourceful Humans just won the coveted HR Excellence Award 2014 in the category Outstanding Management Innovation for enabling Organisational Democracy at Haufe.umantis. Imagine that: a company run by employees!

But actually, the idea is nothing new at all. In fact, it’s been around, either in whole or in part, in renowned companies such as HP, W.L. Gore and at less famous names such as AES, Crytek and SEMCO. In these organizations intelligent entrepreneurs recognized, just as Marc and Hermann, although in some cases decades before them, that humans, machines or armies cannot be led effectively without realizing their potential continuously over a long period of time. So why hasn‘t democracy in business been practiced more widely, despite our successful pioneers? You can summarize the answer in 3 words: contrariness, fear and sustainability.

Contrariness

Imagine that the employees at Haufe-umantis voted unanimously against further growth and demanded consolidation, despite the current market opportunities. Against a well thought-out strategy. Against good business sense. What would happen then?

Business exists to serve people, not the other way around. This principle knocks out the example of the field of tension outlined above, between commercial interests and democracy. This is just as true in macroeconomics as it is in microeconomics. But as the word “macro” suggests, macroeconomics means everyone in the society, while “business democracy” is practiced in the microcosm of a single organization. Nevertheless, freedom and democracy are not business goals, they are the goals of all humanity.

Our experience of the last decade has shown us that democracy does not guarantee prosperity. It only creates a framework of freedom which offers the maximum potential in sustainable prosperity. However, this framework is only as strong as the people who maintain it. So seeing democracy as a turbine to boost revenue would be tantamount to putting the cart before the horse.

In spite of this, it was entrepreneurs such as Bill Hewlett and Dave Packard, Bill and Vieve Gore and Ricardo Semler, who, thanks to their dynamic personalities, succeeded in conjunction with their employees in resolving this contrariness by reaching an extremely profitable “Yes, and” scenario for all concerned. So democracy in business leadership, just as in politics, is shaped by great personalities and by how leaders deal with resistance and contrariness. That means leaders have to be highly competent in seeing criticism, tensions and contrariness as positive sources of energy in a democratic workplace and in leveraging these challenges, instead of seeing them simply as problems to be removed.

But there is a “sweet spot” where democracy can win through. Just look at the latest developments in the Middle East. Without a visible improvement in security and prosperity, people quickly turn back to the old ways.

This “Yes to Democracy, Yes to Profit” will play a central role in the further developments at Haufe-umantis.

Fear

David Cole, Chief Risk Officer at SwissRe, cited “fear” as the biggest stumbling block on the road to freedom-aligned work on the SwissRe project “Own the Way you work”. Fear of losing power and influence on the part of managers. Fear of losing control in a new autonomy-driven system and still being held accountable for whatever went wrong. Fear on the part of “unfettered” employees of suddenly not having as a clear idea about their own jobs, as those who are prepared and capable of structuring themselves. Fear of having to give up what seemed like linear career and salary progression, and of replacing it with tireless self-starter thinking. Fear of leaving behind the apparent security of Command & Control, without another towline to hook up to.

Let’s be clear about this, we’re talking here about mature business democracies, where fundamental changes happen in the system – not about validating a new dictatorship by democratic vote. Because if we’re not careful, the same thing will happen as in Command & Control systems. It’s all easy to blame the age-old enemy: The process is crazy. The manager is nuts. The strategy is a no-brainer. In a real democracy, every individual is a protagonist, not a victim. The old excuses are no longer any use. Every individual is called to do their duty. But wherever people have learned this and put it into practice, whether taking turns to clean the communal kitchen in a student dorm, or taking responsibility for caring and raising self-sufficient and responsible children, they will still have a lot to rethink and learn anew in the business context and they will need to proceed slowly but surely. But the market around us won’t wait around and the reorientation phase can be painful and lead to loss of competitive edge to classically led organizations. It is change that happens at the speed of people, not plans.

And if democracy doesn’t bring the desired effect quickly enough? What then? Cling to it for dear life? For better, for worse? Permanent binding ties can be frightening.

Sustainability

Contrariness and fear are detrimental in fiercely competitive markets. They tie up energies. Turn the focus in on yourself. Place fundamental values in the shadow of doubt. Throw us all into phases of turmoil. Now it’s time for 2,3,4 quarters with no significant growth on the balance sheet. Does that mean you have to tear up the ballot papers? Is democracy only an experiment, or a permanent commitment with no way out?

These are exciting times for pioneers like Haufe-umantis. But pioneer stories make better box-office proceeds when the treasure is recovered, the dragon is slayed and the princess safely married to her prince. Without knowing how it will all turn out, our hero will have had his moments. Tough, painful and difficult. There are so many questions. How do we redefine leadership? What role do we play? How can we establish co-determination in a sensible way? Who in the company is responsible for the vital checks and balances that in the wider society are handled by the justice system and the Press?

Every single employee at Haufe-umantis, regardless of their position in the hierarchical structure, will have to think about these questions and about their own inner contrariness and fears if we stand a chance of turning the potential of a brave experiment into real, concrete results. Because if freedom and democracy are not business goals, but goals of humanity – the answers to these questions must lie in the hands of the people.

Because Haufe-umantis is made of people. People who lead the company.

https://vision.haufe.de/blog/en/back-future/