FAQ

How does a sociocratically governed business work?

An example is the best way to explain this — I'll use a landscaping business.

Three friends start a landscaping business named the Green Amigos. They work as a group planning and operating the business. As the business grows, the Amigos hire three other friends who also participate in planning meetings. Together they make all policy decisions — setting the budget, planning the daily and seasonal schedules, determining who will complete which tasks, and delegating the day-to-day operations management. They each work independently in their operational areas, coming together to consult, adjust their previous plans, and make new decisions.

The business begins to grow quickly. They now have 20 new Amigos. It is no longer feasible for all 26 to meet once a month to make decisions for the whole organization. The meetings are too long and taking time from the work that produces their income. They are also boring because some employees are only concerned with caring for plants on site, others with the lawns they have contracted to maintain, and others with the business of marketing and financial affairs. Each set of Amigos wants to concentrate on the many decisions related to their own work. Specialization is important if they are to have time to both do their jobs and educate themselves about new techniques and products.

They divide into teams and the owners assign a managing Amigo to each group. Not everyone believes the best Amigo has been chosen but they weren't asked — that would cause conflict. At first the Amigos work as hard as they did before. The managers meet alone with the only remaining Original Amigo who wants to take charge of the business. There are no Amigos and no shared decisions. They are all servants with no voice. They begin to miss work more often, do only what they are told, and no longer feel pride in their work because they no longer have any control over it. The managers can change the rules at any time.

In each team, the manager is busy doing all the planning and decision-making, and spends little time actually doing any income-producing work. New ideas from any employee are a bother because the manager has little time to consider them. Employee warnings of potential problems are now called complaints. Too many complaints and the employee is fired. Empoyees learn not to warn the manager about impending crises. Employee turnover starts to rise and customers start to see spotty work and incorrect billing. The manager is now even more over-burdened and anxious because the manager is expected to prevent errors.

No one is happy or thriving. Green Amigos begins to decline.

The Original Amigos, as they call themselves, see their dream fading. No one is like family anymore. Their dream has become just a declining business. They would soon have to begin firing staff. One night over a beer, actually at the end of several beers, they vow to fix their company. One of them knows a business consultant. They have no idea what she does but she wears a suit, one with a skirt. And high heels. They invite her to dinner (with wine this time) and tell her about their problems and their fading dreams. In less than three days she arrives to begin studying the company. In less than a week, she has a plan. "Change the way you make decisions. Go back to your dream."

The Original Amigos are skeptical but relieved. They don't have to learn new tricks. But what about those long meetings? Even with donuts, they were exhausting. But the Original Amigos say nothing and listen. They have nothing to lose.

The three teams are given responsibility for making the planning decisions in their area of work.They have to decide who will do what jobs. They have to budget the money allocated to them. They have to plan their daily, monthly, and seasonal work. They have to set their standards and goals, individually and as a group. They have to educate themselves about best practices and new discoveries. They have to listen to each of their Amigos when they raise objections. No decision could be made if there were objections because each Amigo was important to their work. Each Amigo would be an Amigo and in every meeting all Amigos would be equivalent, both different and the same.

The managers breathed a sigh of releif. They were Amigos again.

Within a month, everyone is whistling and showing up for work everyday. The billing office no longer looks like a whirlwind of paper — all complaints and bills returned with no payments.

Teams had to keep records and measure their productivity, not so they could be fired but so they could improve their work. The records belonged to the team. Part of each Amigos pay was linked to the financial sucess of the company. Even the high school students who came each afternoon to do odd jobs were paid two wages, one set at market rates and one variable based on the success of Green Amigos. The variable wage was paid seasonally and annually. Financial records were open to both Amigos and customers.

Each team was required to participate in choosing their leaders — one to facilitate their monthly meetings and one to lead daily operations. The team alone chose the facilitator of their meetings, but their operations leader was chosen by the general management team with their consent. They still had a boss, but as a team of Amigos, including the boss, they set the criteria on which the Boss Amigo would make the day-to-day decisions.

Each team also had to choose one of their Amigos to join the general managment team as their representative. The role of the representative was to carry information, feedback, from the team to the general management team. The operations leader carried information from the general management team to the team. In effect, the consultant was setting up a system of checks and balances, a feedback loop, that would keep information flowing "up and down" the organization. Since each Amigo in each team had to consent to decisions based on that information, the teams had to listen.

Once the general management team had assigned an area of responsibility to a team, it could not overrule the team's decisions related to that responsibility. It could only present reasons and demonstrate how the decision was negatively affecting other teams and the productivity of the company, but the team had to consent to changing their decision. Like the game of paper, rock, scissors, each team had power related to its nature and its place in the organization.

The general management team made the decisions that affected all three teams or on which a team could not reach consent. These were generally the more abstract, less detail-oriented decisions related to strategy and the larger business environment. The general management team was composed of the operational leaders of each team, the elected representatives of each team, and the general manager who would be responsible for daily operations of the whole company. With three teams, seven Amigos, two from each team and the general manager worked togeher as a team to guide the general manager in day-to-day operational decisions.

The general manager was chosen by a top team, similar to a board, with the cosnent of the general management team. The top team was composed of the general manager, a representative chosen by the general management team, and "outside experts." The outside experts would include a financial expert, a legal expert, an expert on landscaping, and perhaps a business consultant and someone from the local government. The top circle would also use consent decison-making with each expert able to object to a top team decision. The top circle would be responsible for the financial viability of the company and for long-term planning. All the strategic plans made by the top circle would be reviewed by all the teams. Through their representatives they would be able to object to plans that negatively affected their work.

There would be a lot more training in how to measure success and how to plan work on a long term basis, but this structure would reestablish the deep sense of community and commitment that had existed when they were three, and then six, and then twenty-six Amigos. The principle of consent would ensure that no Amigo would ever again feel like a servant.

It was a very short time before the new structure began to ease the frustration and alienation the Amigos had felt only weeks before. It was hard for many workers to assume responsibility for their own work, particularly to plan, but gradually they began to act and feel like equals, speaking up more in team meetings, even objecting. With encouragement they began educating themselves and studying methods for making their work more effecient and effective.

The end result was a company alive from top to bottom and bottom to top, as profitable and efficient as it wished to be.