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There are several examples of organizations that have implemented non-hierarchical organizational democracy. These range from worker cooperatives to companies experimenting with new management styles.

Worker Cooperatives

A worker cooperative is a business owned and democratically controlled by its workers. Unlike traditional companies where ownership and decision-making power are concentrated in the hands of shareholders or a management hierarchy, in a worker co-op, the people who work there are the ones who own it and make the decisions.

Mondragon Cooperative Corporation is a well-known example of a worker cooperative based in Spain. Described as a successful alternative to the capitalist organization of production, Mondragon operates on democratic principles with workers having significant input into the company’s direction.

Suma Whole Foods is another example of a worker cooperative that operates on non-hierarchical principles. Worker cooperatives emphasize democratic decision-making and shared ownership.

Companies with Democratic Practices

An organization with democratic practices is one that incorporates principles of democracy into its structure, decision-making processes, and overall culture. This means that, to varying degrees, members or employees have a voice in how the organization operates and a say in the decisions that affect them. It’s not necessarily a pure democracy like a worker cooperative, but it integrates democratic values.

Here’s a breakdown of what that looks like:

  • Participatory Decision-Making: Employees or members are involved in decision-making processes. This could involve voting on key issues, participating in committees, or providing feedback on proposed policies.
  • Transparency: The organization is transparent about its operations, finances, and decision-making processes. Information is readily available to members or employees so they can make informed decisions.
  • Accountability: Leaders and decision-makers are accountable to the members or employees they serve. This means they are responsible for their actions and can be held to account for their decisions.
  • Inclusivity: The organization is inclusive of all members or employees, regardless of their background or position. Everyone has an equal opportunity to participate and contribute.
  • Open Communication: There is open communication between leaders and members or employees. Feedback is encouraged and taken seriously.
  • Empowerment: Members or employees are empowered to take initiative and contribute their ideas. They feel valued and respected for their contributions.
  • Fairness and Equity: The organization strives to be fair and equitable in its treatment of all members or employees. This includes fair compensation, opportunities for advancement, and access to resources.

Semco, a Brazilian company, gained attention in the 1980s for its radical approach to management. Ricardo Semler transformed the company into a democratic establishment where managers were elected by workers, and all managerial decisions were subject to democratic review.

W. L. Gore and Associates is known for its lattice structure, which promotes collaboration and empowers employees to make decisions.

Sociocratic Organizations

A sociocratic organization is structured around the principles of equality, transparency, and effectiveness in decision-making. Sociocracy seeks to create psychologically safe environments and productive organizations. It’s a system of governance where decisions are made with the consent of all participants, rather than by majority vote.

Core Concepts of Sociocracy

  • Consent-Based Decision Making: Policies are adopted when there are no paramount objections from participants, ensuring everyone’s voice is heard and valued.
  • Circles: The organization is structured into semi-autonomous circles, each responsible for specific domains and tasks. These circles operate with a high degree of self-management within their defined responsibilities.
  • Double-Linking: Individuals connect different circles, ensuring information flow and alignment across the organization. Typically, the operational leader of one circle is a member of the next higher circle, facilitating communication and coordination.

Sociocracy For All (SoFA) is a non-profit that supports organizations and communities in making decisions with equity, empowerment, trust, and transparency. Sociocracy is used in various workplaces, communities, non-profits, and schools.

10Pines is a software development company with agile values that uses sociocracy in its operations.

Enkindle Village School in Australia is a democratic school where student decision-making is central to the school’s operations.

Holacracy

A holacratic organization is structured around holacracy, a method of decentralized management and organizational governance. Instead of a traditional management hierarchy, authority and decision-making are distributed throughout a holarchy of self-organizing teams.

Key Aspects of Holacracy

  • Roles Instead of Job Descriptions: The building blocks are roles, not static job descriptions. A role has a purpose and accountabilities that are regularly updated.
  • Circle Structure: Roles are organized into self-organizing circles (teams). Each circle has a clear purpose and is given the authority to self-organize to achieve its goals.
  • Governance Process: Each circle uses a defined governance process to create and update its roles and policies. Holacracy specifies a structured process for proposing changes and addressing objections.
  • Distributed Authority: Authority is distributed, enabling individuals to make decisions within their roles without needing permission.

Benefits of Holacracy

  • Transparency and Clarity: Expectations of each role are laid out in detail and made visible throughout the organization.
  • Agile Decision-Making: Teams have autonomy to execute and propose ideas without navigating a chain of command. Decisions don’t require consensus, and changes can only be rejected if they interfere with another role’s work.
  • Increased Ownership: Employees are empowered to lead in their roles, fostering an entrepreneurial spirit.

Challenges of Holacracy

  • Significant Time Investment: Holacracy has a steep learning curve and may require training to implement.
  • Potential for Too Many Meetings: Employees may have to attend frequent tactical and governance meetings.
  • Difficulty with Change Management: Adopting holacracy requires a shift in mindset, and employees must learn to take ownership and be accountable.

Holacracy is a method of decentralized management that distributes authority through self-organizing teams rather than a management hierarchy.

Zappos famously adopted holacracy, though the implementation faced challenges.

Lessons from Oticon and Vagas

Oticon and Vagas are examples of organizations that have successfully implemented non-hierarchical frameworks to foster creativity and enhance performance. Oticon redesigned its headquarters to facilitate communication and collaboration, while Vagas embraced self-management and eliminated functional hierarchies.