Organizational Democracy at Methodlabs (India)

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At Methodlabs India, we are in the process of designing a democratic organization. This note outlines our current thinking on the Democratic principles we seek to follow. This note does not discuss our positioning, strategy or business plan.

To learn more about organizational democracy, please visit the worldblu.org website . If you have read Ricardo Semler’s books Maverick! and The Seven Day Weekend , you would better understand what we are trying to do. The difference between Ricardo Semler’s path breaking work at SEMCO and us is that SEMCO was an existing industrial group, but we are starting from  scratch, now designing, later growing. This we believe gives us advantages as well as disadvantages but isn’t that true of any choice situation?

To start with let us describe the 10 principles of Organizational Democracy listed by worldblu.org and how Methodlabs India proposes to follow these principles.

1 :: Purpose and Vision
“A democratic organization is clear about why it exists (its purpose) and where it is headed and what it hopes to achieve (its vision). These act as its true North, offering guidance and discipline to the organization’s direction.”– worldblu.org

We do not make any vision or mission statements because as our team expands our vision would expand. However to explain what we do: Methodlabs India works to offer Knowledge services to its clients and hopes to set high standards of quality, integrity and efficiency in the Industry. We start with three business units providing

  1. Marketing research data and analytic services called MarketLab
  2. Social and Developmental research data and analytic services called PeopleLab
  3. Test bed and Hatchery for New and creative knowledge services called” HatchLab” that would initially also serve as a central coordination unit for what is traditionally called “marketing”, “administration” and “HR” functions

As we expand and recruit more partners and teams, our existing units may decide to split into specialized service units or form new units. The first two units will start earning profits from their first few contracts and the third lab would always be a cost center for designing, testing, incubating and developing new knowledge services besides central coordination tasks.

2 :: Transparency
“Say goodbye to the “secret society” mentality. Democratic organizations are transparent and open with employees about the financial health, strategy, and agenda of the organization.”-Worldblu.org

Methodlabs India at the moment is a proprietorship. One person owns the company and there are 4 other employees. As we take on more leaders and teams the company will be registered as a privately held company (one year from the first business activity and income) with shareholders from:

  1. The investors
  2. The partners – heads of the business units, leaders- an employee could also grow to make partner
  3. The teams – A negotiated percentage of the profits will be distributed to all people in the company as A: profits made by/attributed to their lab B. Profits of the entire company (besides a fixed salary)

All shares would be held in trust by a suitable system. Quitting Investors, partners, employees would only get the value (suitably calculated) of the shares and not carry the shares away when they go away. Particularly sons, daughters and relatives will not get any undeserved role in the company because recruitment itself would be a democratic process.

The company accounts including the salaries and profits made by all the three shareholder types will be open to all employees and employees who do not understand the numbers would be guided to understand the accounts. If a senior person including the founder or a partner or a highly skilled employee feels uncomfortable about drawing an obscene income and wishes to keep it a secret, he would be an undemocratic person and not suitable to work in a democratic organization. This is not radical or socialist. We respect Individualism and Individual abilities and skills. We are only asking high worth employees or partners to be open and proud about their incomes and not hide it from the employees. Disclosing the income levels to the public of course would be discretionary and subject to the laws of the land.
We do not even believe that quotation of prices to clients are confidential. We are not comfortable with competitive financial-only bidding for knowledge services because a compromise on the pricing means compromise on the inputs that we would never agree. Will we survive in business? we think we will and there is always a market for people like us.

3 :: Dialogue + Listening + decisions
“Instead of the top-down monologue or dysfunctional silence that characterizes most workplaces, democratic organizations are committed to having conversations that bring out new levels of meaning and connection.” – wroldblu.org

Not just conversations:
Within each methodlab as well as across the company we would evolve bottom-up decision making mechanisms and not just have conversations but also allow the units and teams to take their own de-centralised decisions based on discussion and debate and voting where required. yes these conversations take a long time and sometimes never get resolved but that will not hold up any implementation because status quo or an ad-hoc decision would be always in place for critical processes till a democratic process improves the ad-hoc decision or status-quo process. In fact democratic teams are known to implement work processes faster because they have the power to apply common sense and not refer upwards or read huge manuals. The only manual in the organization would be a small cartoon filled booklet as implemented by SEMCO in brazil outlining the organizations principles.

4 :: Fairness + Dignity
“Democratic organizations are committed to fairness and dignity, not treating some people like “somebodies” and other people like “nobodies.” – worldblu.org
Knowledge services, particularly research services use a large number of contract employees on a project to project basis. Even supervisors employed by the largest and most respected research agencies are paid daily wages with no job security. Quite often these people are the lowest paid and most often have low self esteem and are prone to minor misdeeds even research frauds, or accounting jugglery. At methodlabs we hope to change the working conditions of the least paid employees over time and when we have regular business in a geographic area, offer secure employment to the contract employees. Meanwhile our teams and partners would be trained to respect and accord dignity to all categories of humans working for the company including contract employees, consultants. Also the contract employees working on a project would have full access to all the information about the project within the limits of client confidentiality. This means that there will be no unnecessary “need to know -basis” restrictions that are in practice in the knowledge industry. The last worker would be encouraged to grow intellectually and understand why he collects a certain piece of data? or why a question is worded in a certain way? and even why he is paid what he is paid?.
A lot of talk is on in the country about affirmative action and here at methodlabs we would practice it and lead the private sector. Women still face a glass ceiling elsewhere and we are working to shatter that(true, this is not particularly difficult in the knowledge services Industry). Other ceilings for neglected sections of the society would not be allowed to form. If we find that our employee profile after two years of operations are skewed unfavourably despite our affirmative action towards disadvantaged sections of the society, we would not hesitate to introduce “reverse discrimination” or “reservations” as they are called in this country. Fairness and Dignity to all humans will be an uncompromising attitude of the company.

The research subjects would also be provided fairness and dignity and there are well documented ethical guidelines that only need to be understood and followed.

5 :: Accountability
“Democratic organizations point fingers, not in a blaming way but in a liberating way. They are crystal clear about who is accountable to whom and for what.” – worldblu.org
Accountability is ensured easily when a strong democracy is in practise. Employees whose incomes / profit shares will be affected would not hesitate to correct mistakes, leakages and problems.

6 :: Individual + Collective
“In democratic organizations, the individual is just as important as the whole, meaning employees are valued for their individual contribution as well as for what they do to help achieve the collective goals of the organization.”-worldblu.org
Our system of two types of profit sharing as well as the power given to the teams to decide how the profit would be shared or recruiting new employees and leaders (yes a leader or “manager/supervisor” as they are traditionally called would have to face interviews from the employees before she/he is selected) as well as the incentive of growth in salaries, promotions up to the highest levels would help in providing this importance.

We also would have a “Rotation policy” where all the partners as well as employees would have to work for other labs within methodlabs after a certain period (period will be decided jointly and severally). We believe that nobody is irreplaceable and people need not be restricted to a specialization. For example, a social researcher need not be restricted to social research projects but may have to supervise construction of a green building project of our ” GreenLab”. This policy has many advantages. for instance this would help evoke an interest among all employees in all the activities of the entire company. This would also prevent  territorial domination  or personal fiefdoms as Ricardo Semler calls it.

7 :: Choice
“Democratic organizations thrive on giving employees meaningful choices.”

Methodlabs believes that all employees are adults and individuals first and employees and team members later. Flexitime, work from home or another place of choice, open office systems, choice to remodel the workplaces would all be team choices so that productivity is not affected. Dresscodes, vacations, transfers to other units (within rotation policy), use of personal time to work even for competitors (without affecting company interests of course) or decision to take sabbaticals or any other personal choices such as sexual orientation or love affairs would all be personal choices. Any deviations would not be punished but allowed to be corrected by peer pressure.
When employees grow and want to be a partner or start their own business even in competition to methodlabs, we would facilitate the process and encourage the effort.

8 :: Integrity
“Integrity is the name of the game, and democratic companies have a lot of it. They understand that freedom takes discipline and also doing what is morally and ethically right.”-worldblu.org
The power of democracy we believe would ensure integrity at all levels particularly at the highest levels in the company. The company would not however encourage anonymous complaints and there wont be any need for a “company secret service” or whistleblower protection program” in a democracy where the minority wrongdoers would naturally fear the majority.

There is a need for some training and interventions to ensure work ethics and integrity and all employees would be made to understand that honest work will be the foundation of a long term success in the industry even if sometimes honesty affects the short term profitability of a project or unit.

Again, interventions when deviations happen would be only to the extent of protecting company interests and rest left to the democratic peer pressures to effect control. Decisions such as retrenchment or dismissal or other punishments would be a long and difficult democratic process. ‘Long’ because, over a longer period of time emotions will disappear and objectivity would set in. However the interests of the client and the project will not be compromised with in any manner.

Integrity will be maintained not just by employees in their implementation but by the entire company in business generation as well as implementation. To Methodalbs, money and short term growth is not more important than integrity, honesty and corruption free work.

9 :: Decentralization
“Democratic organizations make sure power is appropriately shared and distributed among people throughout the organization.” – worldblu.org
The units we call “labs” would not be allowed to grow beyond a reasonable size and businesses would be split across more specialised units as we grow. Decision making would be at a project team level first followed by unit level and much later company level. Even within a project level if there are large teams, no team would be more than 7 members (why 7?- long explanation) and the smallest team or even the units would not have “Managers” or “sultans” or any bureaucratic hierarchies. There would be team members and coordinators and partners and if there is a need for a role differentiation, suitable terminology would be evolved by the individuals and teams.

10 :: Reflection + Evaluation
“Democratic organizations are committed to continuous feedback and development and are willing to learn from the past and apply lessons to improve the future.” -worldblu.org
Methodlabs would never hesitate to accept a mistake, even to the outside world and not just to the clients. Every mistake will be documented in more detail for internal knowledge and later reflection.
There would be bi-annual evaluations and coordinators , partners and the working investors would be subject to reverse evaluation by their team members at all levels for their performance as well as democratic attitude.

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About Gunasekar C Rajaratnam

Social Entrepreneur, Guna has been working 28 years with market research and social research agencies and as an independent research consultant. Volunteers most of his time on social and public causes and has travelled extensively within India and has visited Africa. Trained as a barefoot manager, Guna leads a de-cluttered life of simplicity and personal Integrity and aims to be a 'Karmayogi'. He works with marginalised and rural communities and helps them set up sustainable enterprises in rural and urban areas. He holds these Positions: Director - Methodlabs Services Private Limited Co-Founder - Coworking Chennai Started as a freelance field data collector in 1985, grew up to a Senior General Manager in 1998 working for professional research agencies and as an Independent Research Methodology Consultant since 1998. He has designed and played a role in implementing a variety of research and analytic projects in retail markets, consumer behaviour, health, environment, social development, hard to reach communities and indigenous people. Specialities: Research Methodology, recruiting, training and managing large research teams, online collaboration tools, open source software, qualitative and quantitative research techniques, clinical and laboratory research practices and Knowledge management. Domain knowledge in Industrial diversification, marketing, retail markets, appropriate technologies, social development, health, sexual health, environment, urban wildlife, communities and indigenous people

7 responses »

  1. This is just the first draft and represents the half baked thoughts of the author. Help us bake it fully. This draft will go through a democratic process within our organization as well as among anyone interested in democratic organizations. Your comments and questions are most important. please be ruthless and criticize us as much as you can. All your criticism will go towards improving our thinking or explaining our ideas better.

  2. Good website. I hope you see great outcomes soon. I think most organisations and people will not disagree with the 10 principles. however since all have different understanding (or lack of ) and definition of them, adopting the principles will not necessarily lead to a successful company. People make of break it. There needs to be a process to create sharing understanding before committtiment has a chance to grow.

    • The way Ricardo Semler at SEMCO is going about creating a shared understanding is through his small cartoon filled survival manual that has replaced the huge manuals and rules tome that they had earlier. They are also conducting rapid courses for the people in the organization at all levels to understand the balance sheets, P&l and other financial records.

      Here at Methodlabs we are picking up ideas not just from Ricardo Semler but from other experiences across the world and India and from our own experiences. I had a leader once who introduced me to democratic organizations and Ricardo Semler’s writings as well as actually implemented several of the ideas from SEMCO. Unfortunately the company ran out of steam because the real owners of the company did not buy-in to the democratic principles among other reasons. There is never a better teacher than failure. I will take all time and efforts it takes to avoid repeating the mistakes. of course we could make newer mistakes and one of our principles discussed here is that we would be open to admit our mistakes and quickly correct them.

  3. Hello Gunasekar.

    Maverick, SEMCO….It is amazing to see like minded people venture into business with the vision of creating a democratic workplace. I began my entrepreneurial journey around 7 months back in the field of Humans & Resources. I always wanted to create a workplace not only for me but also for my clients, where designations don’t define you, but your mettle does.

    I would want to know more about you, your company, your products. It would be great if we could do some business together or just share our experiences. I have been facing the challenges of running a democratic organization myself for the last 7 months.

    Lets connect!

    Bhavesh Agrawal
    Founder
    SenseHR

    • Hello Bhavesh,
      certainly, lets talk. Are you in mumbai? I will certainly need to be in Mumbai to take inputs from potential clients for my business plans.
      Give me some time. Planning, starting up and decision making in a democracy is a very time consuming and at times a chaotic frustrating process. However we believe that it is worth the strain. This is because, our implementation on ground will be blazing fast when it comes to common sense spot decisions.
      guna

  4. Is there a way to form an enterprise where all the employees senior or junior have one vote each on decisions that affect the enterprise. share in the profits in a proportion that they agree upon. But when they leave the company they cannot take away their shares. The nearest such organization form I could find is to form a cooperative. But government controls are too restrictive on cooperatives. That is why mine is a sole proprietorship or call it a benevolent dictatorship for now.

    What i am working towards .. first to establish democratic culture and then to establish a successful business in terms of profitability and then to transfer the structure to a company or organization form that would ensure sustainability of the profitability, ethicality as well as democracy. Tough? yes it is , Impossible? I hope not!

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