Yesterday I posted on communication blindness. Today, I stumbled upon CareerJournal.com’s Can a Business Be Run As a Corporate Democracy? A stunning thought that I have never considered. Yet, I suspect Gen Y has some ideals that favor this approach.
Ternary runs itself as a democracy, and every decision must be unanimous. Any of Ternary’s 13 other employees could have challenged the incentive decision and forced it to be revisited.
Running a company democratically sounds like a recipe for anarchy, and it can prompt bureaucratic whiplash: Ternary, a company with annual revenues of around $2 million, adjusted salaries for employees up and down several times last year.
At first blush, this approach seems as if there is too much communication, too much anarchy and not enough command-and-control structure. We’ve never encountered a company that incorporates this management approach.
The article references some skepticism for this approach also:
Harry Katz, dean of Cornell University’s School of Industrial and Labor Relations, doubts a system like Ternary’s could work on a large scale. In bigger companies, “there’s an inevitable conflict of interest between managers and employees,” Mr. Katz says. General Motors Corp.’s Saturn plant in Spring Hill, Tenn., for instance, experimented with giving employees a strong voice in management, but later moved back to a more-traditional structure, he says.
However, it is quite a testament to communication, isn’t it? Well, I was hooked until I got to this section of the article (my emphasis):
The repeated changes to Ternary’s pay scale last year demonstrate employee empowerment in action. The company shares financial data, including everyone’s salary, with all employees. In 2005, Bill Schofield proposed cutting the salaries of senior programmers, including his own, by 15%, and boosting compensation for junior programmers. The council agreed.
Then, last summer, Ternary ran into a cash crunch because some customers weren’t paying their bills on time. The strategy council slashed salaries by 22%. That rattled Chad Wolfe, a 29-year-old Canadian programmer who told his representative on the strategy team that he would have trouble paying his personal bills. So the team devised no-interest loans for needy employees.
That’s it for me. As a Utilitarian I would fail wildly in this company. However, if we were helping them to hire more team members, we would certainly stress the Social motivation in all hires.