Workplace democracy refers to the application of democratic principles to the workplace, such as voting, referendums, and public debate. Workplace democracy can take many forms, ranging from full-scale direct democracy in which every employee's vote carries equal weight to smaller initiatives that may apply only to a specific area or department of the business. It can be deployed in a number of ways, depending on the size, culture, and other characteristics of an institution.
Arguments of Workplace Democracy
- Economic argument.
- Citizenship argument.
- Ethical justification.
- Employee power and representation.
The researchers sought to determine whether involving employees in organizational decision-making results in increased organizational effectiveness and productivity. According to Lewin, those involved in decision-making also exhibit a greater capacity for change. Different participatory techniques may have a greater effect on morale than on productivity, while others may have the opposite effect. Mondragon's success demonstrates the economic benefits of workplace democracy.
Workplace democracy serves as an agent for increasing public participation in the political process of a government. Democracy-related skills acquired in the workplace can be transferred to improved citizenship, resulting in a more functional democracy. Workers in a democratic environment may also develop a stronger sense of responsibility for the common good, which translates into basic citizenship.
According to philosopher Robert Dahl, 'if democracy is justified in the governance of the state, it must also be justified in the governance of economic enterprises.' However, some political scientists have questioned whether the analogy of the state-firm is the most appropriate one for justifying workplace democratization.
Employee power and representation
Employees who work for democratic leaders report positive outcomes such as group member satisfaction, friendliness, group mindedness, 'we' statements, employee motivation, creativity, and commitment to organizational decisions.
Implementing Workplace Democracy
- Encouraging contribution.
- Improving dialogues between the teams.
- Assigning tasks.
- Recognizing individual performance.
1. Encouraging contribution:
One democratic method that can be implemented is to encourage everyone to contribute. To be effective, the team must first feel valued for their opinions and ideas.
- This can be made by:
- Regular questionnaires or surveys.
- Voting when making team decisions.
- Inquiring whether anyone can think of a more efficient way to complete a task.
- Directly acquire the opinion of colleagues, rather than leaving questions open.
- Suggestion boxes for those who prefer to provide feedback anonymously.
2. Improving dialogues between the teams:
Establishing a dialogue within teams (which does not have to be about work) demonstrates to them that they can talk if they have any questions or suggestions. When in a management position, managers want to be alerted to any issues immediately. Thus, ensuring that their team feels comfortable bringing them items can expedite this process.
3. Assigning tasks:
Delegating tasks to other team members (wherever possible) demonstrates to them that their manager trusts them to do a good job. Not only that, but it allows them to demonstrate their capabilities to their manager and may eventually relieve them of tasks.
4. Recognizing individual performance:
Workplace democracy also entails providing feedback to the team, not just the other way around. Therefore, if a manager notices someone doing an excellent job, they must acknowledge it and inform the employee. Recognizing the team's accomplishments on a regular basis helps to keep them motivated and engaged at work.
The impacts of workplace democracy
According to research, workplace democracy has an effect on productivity, the longevity of businesses, and the workers.
1. Effects on Productivity
An analysis of 43 studies on worker participation discovered a small but significant positive relationship between workplace democracy and increased efficiency and productivity. A report examining research on democratic workplaces in the United States, Europe, and Latin America discovered that workplace democracy resulted in employees working 'better and smarter' and production being more efficiently organized. Additionally, they were more efficient at organizing on a larger scale and in capital-intensive industries than in hierarchical workplaces.
A 1987 study of democratic workplaces in Italy, the United Kingdom, and France discovered a positive relationship between workplace democracy and productivity, as well as the fact that democratic firms do not become less productive as they grow larger. According to a report on democratic workplaces in the United States, they can boost worker incomes by 70% to 80%, growing at a 2% annual rate faster than other businesses, and have 9-19% higher levels of productivity, 45 percent lower turnover rates, and are 30% less likely to fail in the first few years of operation. A 1995 study of workplace democracy in the Northwest United States' timber industry discovered that workplace democracy increased productivity by 6 to 14%. According to a 2006 meta-study on workplace democracy, it has the potential to 'equal or exceeds the productivity of conventional businesses when employee involvement and ownership are combined' and 'enrich local social capital.'
2. Effects on Business Longevity
According to an analysis conducted in the 2000s in British Columbia, Alberta, and Quebec, businesses with democratic workplaces were nearly half as likely to fail in ten years as businesses with hierarchical workplaces. According to a 1997-2009 analysis of all businesses in Uruguay, businesses with democratic workplaces have a 29% lower chance of closing than other businesses.
In Italy, businesses with democratic workplaces that were created as a result of workers purchasing a business that was about to close or be put up for sale have an 87 percent three-year survival rate, compared to 48 percent of all Italian businesses. In 2005, 1% of German businesses failed, but the figure was less than 0.1 percent for businesses with democratic workplaces.
According to a 2012 study, democratic workplaces in Spanish and French businesses "were more resilient than conventional enterprises during the economic crisis." In France, businesses with democratic workplaces have a three-year survival rate of between 80% and 90%, compared to a 66 percent survival rate for all businesses. During the 2008 economic crisis, employment in democratic workplaces increased by 4.2 percent in France, while employment in other businesses fell by 0.7 percent.
Effects on Workers
In general, the effects of workplace democracy appear to be positive for workers. According to a 2018 study from South Korea, workers were more motivated in democratic workplaces. According to a 2014 study from Italy, democratic workplaces were the only type of workplace that increased worker trust. According to a 2013 study conducted in the United States, democratic workplaces in the healthcare industry resulted in significantly higher job satisfaction. According to a 2011 study conducted in France, democratic workplaces "had a positive effect on employees' job satisfaction." According to a 2019 meta-study, "the impact [of democratic workplaces] on employee happiness is generally positive." According to a 1995 study conducted in the United States, "employees who embrace increased influence and participation in workplace decisions report higher job satisfaction."
Firms where democratic processes in the workplace contribute to the success of the business. The best examples have been condensed into what one noted expert refers to as the Combining ownership and participatory management creates a potent competitive advantage. However, neither ownership nor participation alone accomplishes much.
Employee ownership is a term that refers to any arrangement in which employees own stock or the right to the value of their company's stock. Employee ownership is a broad concept that encompasses a variety of structures, ranging from straightforward stock grants to highly structured plans.
Forms of Employee Ownership
Employee ownership is most prevalent in the United States, its forms include:
- Employee Stock Ownership Plans (ESOPs).
- Equity Compensation Plans.
- Worker Cooperatives.
- Employee Ownership Trusts.
Employee ownership plans are most frequently used as a vehicle for business transition in closely held businesses. Employee ownership is also frequently used to help attract and retain employees, build long-term wealth, and foster a high-engagement work culture in which employees are encouraged to think and act like owners.