Wednesday, December 31, 2008

Top Small Workplaces of 2008 Are All Democratic

All the 15 businesses of the Wall Street Journal's Top Small Workplaces 2008 are proactively transparent, 86% share a large portion of profits with employees, all of the businesses de-centralize and limit managerial power, and all of the businesses inspire a euphoric purpose greater than themselves.

All of the 15 Top Small Workplaces are proactively transparent. At Integrated Project Management Co., "each employee sits down for a weekly one-on-one meeting with his or her manager in which they discuss work progress, the employee's performance, and the skills that need improvement." At Jump Associates LLC, "every morning, all employees meet for a "scrum" -- a short get-together where they're briefed on company news." And, the office is laid out so that "all employees, including senior management, sit out in the open in "neighborhoods" of five or six workers." At Lundberg Family Farms, the President hosts a monthly "Meet the CEO" event "where a small group of seven or eight employees chats with him to provide feedback and discuss any concerns." New Belgium Brewing Co., also holds monthly meetings "where it walks employees through the company's financial statements." And finally, at Rainforest Alliance, "employees can do stints in foreign offices to learn more about the organization and work on the front lines."

86% of the Top Small Workplaces share a large portion of profits with employees, and five of these businesses are 100% employee owned. This is especially impressive because employee owned businesses make up only one per cent of all American companies.

All of the Top Small Workplaces de-centralize and limit managerial power. At ATA Engineering Inc., "At least eight to 10 ATA employees are involved in interviewing every job candidate. If one employee objects to the hire, the candidate may not be offered a job unless that employee changes his or her mind." Also, employees "can pursue projects that s/he feels are good for the company or that s/he is personally interested in without needing more than one person's approval." At J.A. Frate Inc., during the only layoffs in 37-years, "the board of directors asked employees to vote on taking a 10% pay cut, promising to reinstate their normal wages after three months. The majority of the employees voted for the cut and all the laid-off employees were later rehired. At Landscape Forms Inc., "if the whole team agrees on one employee's idea, it can be implemented -- without approval from senior management." Rainforest Alliance "gives many junior employees the chance to spearhead research and other initiatives for the organization, later promoting them to oversee those initiatives." And finally, the President of Redwoods Group Inc. caps his own salary at 10 times that of the lowest-paid employee.

All of the Top Small Workplaces inspire a euphoric purpose greater than themselves. The President of ATA Engineering Inc., was "nominated for a local "Entrepreneur of the Year" award. But he turned down the honor, feeling he shouldn't take all the credit for the company's success." At Decagon Devices Inc., "employees take turns bringing home-cooked meals to work for their colleagues." At Jump Associates LLC, "a coach stops in the office a few days a month to help employees with any issue, such as improving their communications or resolving conflicts with a colleague." At King Arthur Flour Co., "even employees who don't work directly with flour are encouraged to learn about baking." At New Belgium Brewing Co., employees are enthusiastic about supporting the company's environmental cause. "Each New Belgium employee is given a cruiser bike," and each year they "dress in costumes and lead local residents on a bike tour." And, "an on-site recycling center allows employees to recycle goods." And finally, At Redwoods Group Inc., "each full-time employee is required to do at least 40 hours of volunteer work annually for nonprofits of their choosing -- on company time." In addition, the company "donates up to $300 annually per employee to charities where employees volunteer their own time."

These companies empower their employees by being proactively transparent, offering ownership, decentralizing and limiting power, and inspiring a euphoric purpose greater than themselves. Democracy is not just giving people a voice. Democracy empowers the voices that people already have.

(Quotes taken from http://online.wsj.com/article/SB122347733961315417.html)

Tuesday, December 30, 2008

Oligarchical Businesses Breed Oligarchical Governments

Oligarchical corporations brought Mussolini and Hitler to power. In fact, oligarchical corporations have assisted nearly every dictator in his rise to power. In the US, oligarchical corporations plotted to bring a Fascist dictator to power in the United States during the Great Depression.

Major General Smedley D. Butler overturned the plot by leaders of JPMorgan, GM, US Steel, and DuPont to overthrow Franklin Delano Roosevelt and install General Smedley Butler as a fascist dictator in order to re-establish 'order' and 'efficiency' to the US economy.

General Smedley's accusations were backed up by several testimonies and were evaluated by The Committee on Un-American Activities of the House of Representatives.

The congressional committee determined, "In the last few weeks of the committee's official life it received evidence showing that certain persons had made an attempt to establish a fascist government in this country...There is no question that these attempts were discussed, were planned, and might have been placed in execution when and if the financial backers deemed it expedient." (Public Hearings Before the Special Committee on Un-American Activities, House of Representatives, Seventy-third Congress, Second Session, at Washington, D.C. p.8-114 D.C. 6 II)

(Facts taken from History Channel's: The Plot to Overthrow FDR)

In the aftermath, however, there was no attempt to pursue legal or criminal actions against any of the prominent individuals implicated by General Smedley Butler.

Monday, December 29, 2008

CEO Joe Is Worth 344 Times More than Average Joe

Is it possible for someone's work to be worth 866 times more than another person's or are oligarchical corporations exploiting American workers? The average Fortune 500 CEO makes 866 times more money than a minimum wage employee.

Exploitation is no longer an "overseas" occurrence. "Last year, average CEO pay rose 2.6 percent to $10,544,470, according to an Associated Press survey of S&P 500 firms. That’s 344 times the pay of an average American worker. The gap between CEO's and minimum wage workers runs even wider. In 2007, CEO's averaged 866 times as much as minimum wage employees." (Taken from http://www.faireconomy.org/files/executive_excess_2008.pdf)

"There has been a massive shift of income from the bottom and middle to the top. The richest 1% of Americans has increased their share of the nation’s income to a higher level than any year since 1928—the eve of the Great Depression." (Taken from http://www.letjusticeroll.org/pdfs/Why10in2010.pdf)

Friday, December 26, 2008

Oligarchical Corporations Are Psychopathic "Persons"

According to the fourteenth amendment of the United States constitution, corporations have the equal right to life, liberty, or property that you and I have. Don't believe me? Read it for yourself...

"14: All persons born or naturalized in the United States, and subject to the jurisdiction thereof, are citizens of the United States and of the State wherein they reside. No State shall make or enforce any law which shall abridge the privileges or immunities of citizens of the United States; nor shall any State deprive any person of life, liberty, or property, without due process of law; nor deny to any person within its jurisdiction the equal protection of the laws..."

If you're still not convinced that the fourteenth amendment protects corporations' right to life, liberty, or property, don’t worry…neither am I. Originally, the fourteenth amendment was made to protect the rights of newly freed slaves after the end of the civil war. After the industrial revolution, however, some very clever lawyers convinced the Supreme Court that the fourteenth amendment protects corporations also.

Why is this a problem? Prior to this Supreme Court ruling, corporations had to prove that they served the public interest to get a charter and to maintain a charter. A corporation with the same rights as a living, breathing person only has to serve its own good. This is a problem because "corporations have no soul to be saved and no body to incarcerate." (Baron Thurlow)

I don't intend to label the leaders or citizens of oligarchical corporations as immoral or unethical anymore than I would label a slaveholder as immoral and unethical. In his personal life, a slaveholder may have been a kind and gentle person to children, the elderly, and even his own slaves. The institution however is most obviously unethical and immoral, and it breeds immoral and unethical practices.

Conversely, I cannot label the leaders or citizens of a church as moral or ethical. The only conclusion that I can deduce is that churches breed moral and ethical practices because of their structure and what they stand for.

So, if we must label a corporation as a person, then what kind of "person" is he? To answer this question, we must find what is common among all corporations; the answer is that all corporations are legally bound to place the financial interests of their owners above competing interests. Therefore, a corporation is a "person" that lives, first and foremost, to make money. And history shows us that the more oligarchical and less democratic a corporation is run, the more a corporation will attempt to pass off his own obligations and costs to an unaware or uncaring public--in order to make more money. Unmet obligations and unpaid costs result in environmental exploitation, human exploitation, slavery, the sale of harmful products, sweatshops, negligence resulting in employee deaths and injuries, and job outsourcing. Here are a few specific examples of costs that corporations unsuccessfully passed on to the public during the 1990's: (1) Exxon pled guilty to criminal charges related to the Valdez oil spill and paid $125 million (2) GE was guilty of defrauding the federal government and paid $9.5 million (3) Chevron was guilty of environmental violations and paid $6.5 million (4) Mitsubishi was guilty of anti-trust violations and paid $1.8 million (5) IBM was guilty of illegal exports and paid $8.5 million (6) Pfizer was guilty of anti-trust violations and paid $20 million (7) Odwalla was found guilty of food and drug violations and paid $1.5 million (8) Sears was guilty of financial fraud and paid $60 million. (If you want to read about 1,000's of more violations visit http://www.multinationalmonitor.org/)

In psychiatry there is a name for this kind of person that lack's moral and ethical intentions. I will give you the qualifiers of this psychiatric condition and you give me the diagnosis:

(1) Callous unconcern for the feelings of others
(2) Incapacity to maintain enduring relationships
(3) Reckless disregard for the safety of others
(4) Deceitfulness: repeated lying and conning others for profit
(5) Incapacity to experience guilt
(6) Failure to conform to social norms with respect to lawful behaviors

Give up? These are the psychiatric qualifiers of a psychopathic individual. What does this lead us to conclude about our decision to give corporations the same status as "persons"? Probably a conclusion similar to the one that Doctor Frankenstein came to after he created his own imitation of a "person".

(Information taken from the documentary The Corporation)

Monday, December 22, 2008

Democratic Business Can Save Our Economy

We are on the verge of the second worst (if not the worst) economic times in the history of our country. The best suited organizations to weather these times will be democratic organizations.

Suppose that Company A and Company B each have 3000 employees. Company A's citizens own 70% of the company. Company B is owned by the founder and two investment firms. Company A only has three layers of management and most of the company decisions are made by the citizens themselves. Company B has eight layers of management and the only time anyone knows about company decisions is when they read about them in the weekly memo.

What will happen when times become tough in the industry? Which company's citizens will take a voluntary pay cut? Which company will increase our nation's unemployment rate? Which company's citizens will work through the night for an entire month to make sure the company stays afloat? and Which company will survive?

You can be assured that many sacrifices will be required of American citizens during the coming years. A lot of us will be tested to our limits. If our businesses, communities, and country are important enough to us we will decide to endure. Our collective decisions will determine the future of our country.

Cisco Is Democratizing

You may know Cisco from their routers and switches that you can buy at most computer/technology stores, but now you may come to know them by their new, "revolutionary" business model.

Cisco is democratizing. According to legendary CEO of Cisco (and staunch republican), John Chambers, "The goal is to spread the company's leadership and decision making far wider than any big company has attempted before, to working groups that currently involve 500 executives.” In other words, Cisco is giving the decision making power of its executives back to its citizens. Formerly, “all decisions came to the top 10 people in the company” and the orders were sent back down from there.

Secondly, Cisco is encouraging an ownership mentality of its citizens by initiating a “new financial incentive system” that is causing “executives to work together like never before.”

Thirdly, "Cisco citizens are blogging, vlogging, and virtualizing, using social-networking tools that they've made themselves and that, in many cases, far exceed the capabilities of the commercially available wikis, YouTubes, and Facebooks created by the kids up the road in Palo Alto."

What is the result of all these “revolutionary” changes? John Chambers is most proud of Cisco’s ability to execute their collective decisions. Chambers noted, "The boards and councils have been able to innovate with tremendous speed." "One week to get a [business] plan that used to take six months!"

Cisco is democratizing our world. As a result of Cisco’s success, Cisco is sharing detailed case studies of their experiences and best practices with companies like AT&T, General Electric, and Procter & Gamble, and with customers in emerging markets from Russia and China to Mexico and Brazil. "We did it first ourselves; now we teach our customers. And the neat thing about it is that they'll use our technology to do it."”

(quotes taken from Fast Company’s article, How Cisco's CEO John Chambers is Turning the Tech Giant Socialist)

Friday, December 19, 2008

If Democratic Businesses Are More Profitable, Why Isn't Every Business Democratizing?

If Democratic Businesses Are More Profitable, Why Isn't Every Business Democratizing? Ask GE that question. Their most profitable plant is run democratically and they plan to run all future plants democratically; yet, they are not converting any of their current business to become more democratic.

I would guess that management doesn't make the change to democracy because managers in democratic businesses do not take as great a percentage of the profits and must decentralize the power.

Thursday, December 18, 2008

Democracy is Common Sense, Not Political, Cont.

Just think if King Arthur had established the Knights of the Rectangular Table. Do you think anyone would remember them? Do you think they would have been so successful?

(if you aren't familiar with the story, the table was round to signify that everyone had the same power in the group. No one could sit at the head of the table because there was none.)

Friday, December 12, 2008

How Do You Define Democracy?

Every day I talk to at least one person about democratic business, usually for the first time, and most everyone I talk to has the first impression that democratic business means that employees vote. While voting may be involved, it does not define a democracy. A truly democratic business is defined by these four elements:

(1) The company is proactively transparent. If the average employee is expected to make critical decisions for the company the average employee must have access to the most critical information. Examples of transparency include (a) the manager's cubicle is placed in the middle of the action like at GE/Durham (b) every employee has access to daily company financials like at Linden Lab (c) employees switch jobs for a day like at Southwest airlines (d) everyone knows how much everyone else makes in the organization like at Semco (e) each employee sits down for a weekly one-on-one meeting with his/her manager like at IPM Co.

(2) Everyone has ownership in the company. I am referring to literal ownership of shares in the company and also ownership of work and tasks. Examples of ownership of work include (a) each team is given a due date for when their work is to be finished and the team decides how they will get it done like at GE/Durham.

(3) The companies management is limited. This means that there are few layers of management and that power is decentralized. Examples of limited management include (a) the company only has one, two, or three layers of management even though there are hundreds or thousands of employees like at GE/Durham (b) Employees, not managers, hire and fire employees like at Semco.

(4) The company's purpose inspires a euphoric feeling. In all democratic businesses there is a sense among everyone in the company that they are all contributing to something bigger than themselves and bigger than profits.

If I were to give a definition of a democratic business, it would be this...

A democratic business is a business that encourages an ownership mentality from bottom to top.

Sunday, December 7, 2008

No Longer As Strangers on Earth Need We Roam



"For there is nothing covered, that shall not be revealed; neither hid, that shall not be known. Therefore whatsoever ye have spoken in darkness shall be heard in the light; and that which ye have spoken in the ear in closets shall be proclaimed upon the housetops."

Gone are the days when controlling a country was as simple as putting up walls. Gone are the days when Washington D.C. exclusively decided foreign policy. Gone are the days when the people of other countries seemed like strangers. Gone are the days when corporations could commit atrocities in other countries without our hearing about it back home.

Here are the days when people all over the world are realizing that we are all appendages of the same body. If we cut an arm, we all bleed. If we cut an eye, we all go blind. Here are the days when the people, through information, are democratizing the world, and not the politicians.

Be part of the movement! Pass the word along! and Merry Christmas!

The People Are Democratizing the World and Not the Politicians

Friday, December 5, 2008

Democracy Is Common Sense, Not Political

True democracy is not a political platform. Democracy is still just as much common sense as when Thomas Payne wrote the historic pamphlet, Common Sense, that inspired the American Revolution.

Let's imagine, for all intensive purposes, that it became known that you can make money by running long distances. Now suppose that to make this money you organized two groups.

The first group was told to come in at 6:00 AM and leave at 9:00 AM and they had to ask when they wanted to go to the bathroom. In addition, they were told that all of the profit would be managed by someone that would be brought in. He would keep track of the money and pay everyone exactly the same (so that everything was fair) and he would keep the rest of the money for himself. Also, he would make sure that they clocked in at exactly 6:00 AM and left no earlier than 9:00 AM. He would also make sure they were all running fast enough and not cutting corners. You can probably see where this is going.

The second group decided they would run 3 hours a day. Together they decided to run in groups of at least 7 to encourage team work and safety. Group leaders, hirings, and firings were all decided by secret votes of the group members. In addition, each person chose his/her own salary based on needs and desires and obviously...peer pressure.

Which group do you think would create the biggest profits? Which group would have the happiest runners? Which group would be more creative and innovative?

You may also be thinking what I thought the first time I heard of the idea...If everyone chooses their own salary, wouldn't everyone choose the highest salary they could get and work the least they can? The truth is, a company called Semco, which has over 5,000 employees, revenues of more than $1 Billion, and is one of the fastest growing companies in Brazil does exactly this. Ricardo Semler's (CEO of Semco) employees choose their own wages and work whenever they want to. Wouldn't you like to have that kind of boss? What is his secret? The secret is that he doesn't act like a boss. Ricardo Semler doesn't even have the power to fire an employee. There are only three levels of management and he treats his employees like adults and not adolescents. Novel idea? No...common sense.

Thursday, December 4, 2008

People Are Honest 85% of the Time

While striving for perfection, we may have lost our greatest strategic advantage; i.e., trust.

Paul Feldman understood the advantage of trusting others when he set up a bagel business. Feldman started his bagel days "as a casual gesture: a boss treating his employees whenever they won a research contract. Then he made it a habit. Every Friday, he would bring in some bagels, a serrated knife, and cream cheese. When employees from neighbouring floors heard about he bagels, they wanted some too. Eventually he was bringing in 15 dozen bagels a week. In order to recoup his costs, he set out a cash basket and a sign with the suggested price. His collection rate was about 95 per cent."

"In 1984, when his research institute fell under new management, Feldman took a look at his career and grimaced. He decided to quit his job and sell bagels. Driving around the office parks that encircle Washington, he solicited customers with a simple pitch: early in the morning, he would deliver some bagels and a cash basket to a company’s snack room; he would return before lunch to pick up the money and the leftovers. It was an honour-system commerce scheme, and it worked. Within a few years, Feldman was delivering 8,400 bagels a week to 140 companies and earning as much as he had made as a research analyst."

"When he started his business, he expected a 95 per cent payment rate, based on the experience at his own office. But just as crime tends to be low on a street where a police car is parked, the 95 per cent rate was artificially high: Feldman’s presence had deterred theft. Not only that, but those bagel eaters knew the provider and had feelings (presumably good ones) about him."

"He came to consider a company “honest” if its payment rate was above 90 per cent. He considered a rate between 80 and 90 per cent “annoying but tolerable”. If a company habitually paid below 80 per cent, Feldman might post a hectoring note, like this one: “The cost of bagels has gone up dramatically since the beginning of the year. Unfortunately, the number of bagels that disappear without being paid for has also gone up. Don’t let that continue. I don’t imagine that you would teach your children to cheat, so why do it yourselves?”

Despite losses from theft, not only did Feldman save money by not setting up a bureaucratic system to enforce payment, he appealed to people's most positive, uniting characteristics of trust and integrity.

Feldman scrupulously collected and analyzed data that led to his discovery of two very interesting things that say a lot about people's innate desire to unite and trust one another: (1) offices were more honest when employees like their bosses and their work (2) after 9/11, the theft rate immediately dropped 15% and stayed there.

Most large companies spend thousands of hours and millions of dollars exorting people to subscribe to a "culture" so as to keep everyone in line and increase the bottom line.

What if you created a corporate structure based on the "golden rule", unity, and trust; i.e., democracy? (1) workers would be socially incentivized to be honest, and (2) a small bureaucracy would save a lot of money.

No wonder our founding fathers decided to create a democratic government.

(Quotations from Freakonomics by Steven D. Levitt and Stephen J. Dubner)

Tuesday, December 2, 2008

Democratic business translates to saving lives!

The following is an evaluation of two companies in the same town in one of the most dangerous industries in the U.S.--sewer and water pipe manufacturing.

Guess which one is run democratically and which one is not:

J.R. McWane founded McWane Co. in 1921. John Eagan founded ACIPCO in 1905. McWane's employee turn-over rate is near 100% per year. ACIPCOs turn-over is less than half a percent per year. To deal with high turnover rates, McWane hires ex-convicts. Contrastingly, 10,000 people recently applied for 100 positions at ACIPCO. McWane's management style is called "disciplined management practices". ACIPCOs management style is simply stated, "What if it applied to me? Is it fair?" Over the past seven years, nine McWane employees have been killed and atleast 4,600 have been injured. ACIPCO ranks sixth on Fortune's 100 best companies to work for. McWane's production philosophy is "REDUCE MAN HOURS PER TON". ACIPCOs production philosophy is, "If we can't do it safely, we don't do it." McWane was sited for more than 400 safety violations between 1995 & 2000. ACIPCO was sited 10 times. The McWane family is one of the richest and most secretive families in the South. Collectively the employees of ACIPCO own the entire ACIPCO company.

In 1920, when John Eagan announced that ACIPCO would operate on "The Golden Rule", the president of the company quit--his name was J.R. McWane.

(Statistics taken from PBS Frontline: Dangerous Business)

Monday, December 1, 2008

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.