Wednesday, November 26, 2008

A $6 Billion U.S. Company Turns Democratic!

Take DaVita. Today, the El Segundo, Calif., company is the largest independent provider of dialysis services in the United States, with more than 30,000 employees and annual sales of nearly $6 billion.

But back in 1999, the situation was bleak: the company was functionally bankrupt, under investigation by the U.S. Securities and Exchange Commission, being sued by shareholders, and the majority of senior executives had left. Its new CEO, Kent Thiry, understood that changing course meant embracing a fresh, democratic approach. So he and his team implemented the following:

“Town Hall” meetings to share information about new programs, spotlight achievements, and answer questions. Quarterly “Voice of the Village” meetings allow “teammates” the opportunity to ask the CEO and senior leadership any questions they want.

Opportunities for all employees to engage in democratic decision-making through voting on a range of issues including the renaming of the company, its core values, job titles, logos, and new initiatives.

Annual forums at which DaVita’s CEO and COO publicly share their personal successes and failures in front of more than 2,000 colleagues.

Decentralization that lets each of its 1,300 clinics be its own “boss.”

As a result, DaVita dramatically reduced its turnover rate, stimulated organic growth above the industry average, and became the industry leader. Net operating revenue grew from $1.45 billion in 1999 to $5.26 billion in 2007. And over the past five years, DaVita’s stock has soared 279 percent, while the S&P 500 Index has returned 52 percent.

“We feel our approach adds more value to the American health system, not just in savings but also in transparency and accountability,” says Mr. Thiry. “I firmly believe that every company can be a democratic community. And I know it’s worth it!”

His statement underscores the potential of democracy to transform not only corporations but the millions of lives they affect. That, in turn, raises a pressing question: Do big businesses have a responsibility to be organized democratically because of the power they wield?

(Taken From: Even Big Companies Are Embracing a Democratic Style -- Traci Fenton)

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How Will You Measure Your Life?

I recently read this article by Clayton Christiansen out of Harvard entitled, “How will you measure your life?” It is what he tells his students on the final day of his class.

One of the items that he mentions sticks out to me. It reads as follows:

“One of the theories, . . . . . how to be sure we find happiness in our careers—is from Frederick Herzberg, who asserts that the powerful motivator in our lives isn’t money; it’s the opportunity to learn, grow in responsibilities, contribute to others, and be recognized for achievements. I tell the students about a vision of sorts I had while I was running the company I founded before becoming an academic. In my mind’s eye I saw one of my managers leave for work one morning with a relatively strong level of self-esteem. Then I pictured her driving home to her family 10 hours later, feeling unappreciated, frustrated, underutilized, and demeaned. I imagined how profoundly her lowered self-esteem affected the way she interacted with her children. The vision in my mind then fast-forwarded to another day, when she drove home with greater self-esteem—feeling that she had learned a lot, been recognized for achieving valuable things, and played a significant role in the success of some important initiatives. I then imagined how positively that affected her as a spouse and a parent. My conclusion: Management is the most noble of professions if it’s practiced well. No other occupation offers as many ways to help others learn and grow, take responsibility and be recognized for achievement, and contribute to the success of a team. More and more [people think] that a career in business means buying, selling, and investing in companies. That’s unfortunate. Doing deals doesn’t yield the deep rewards that come from building up people."

I’m sure you can see why it sticks out.