If You Love Your People,
Set Them Free

Summer 2010 By JAMES KROHE JR. | PHOTOGRAPHY BY BERTRAND DEMEE/PHOTOGRAPHER'S CHOICE IMAGES

Winning back disengaged employees will require changing the nature of work itself.

JAMES KROHE JR. is a Chicago-area writer and editor. His most recent article was “Location? Location? Location?”, in the Fall 2009 issue.

“Management, as we traditionally think of it,” says Dan Pink, author of such works on work as A Whole New Mind, “is a great way to get compliance. But it’s proved to be a terrible way to get engagement.” Oh, workers are engaged all right—by Facebook and Twitter and sports replays and porn. They are empowered, too: The Internet in particular has empowered them to become entrepreneurs of their own amusement. But engaged with their work or the company that pays them? No.

Why this should be so is important. Why it is still so is interesting. William C. Byham’s manifesto Zapp! The Lightning of Empowerment came out in 1988, and the following decade saw large companies begin to abandon direction in favor of dialogue with their employees. Yet workplace polls stubbornly refused to show evidence of actual engagement. “What makes these numbers especially discouraging,” wrote Richard S. Wellins, Paul Bernthal, and Mark Phelps of Development Dimensions International in a 2005 article, “is that for the past two decades we have been trying to realize the benefits of empowerment, teamwork, recognition, people development, performance management, and new leadership styles.“

If you want to know why efforts to engage the workforce have failed so dismally, look again at that list. It contains not a word about work itself. Industrial psychologists have long understood that few workers are motivated to excel by pizza parties, bonuses, lunches with the boss, employee-of-the-month awards, or even the promise of annual raises. What does motivate workers is work: interesting work, useful work, work that challenges them, work whose completion satisfies both ego and the social self.

Unfortunately, the focus of conventional management, from hiring to evaluation to compensation to status, is on jobs, not work. The two are not the same, and it’s time we began shifting focus from the former to the latter.

Where to begin? In today’s workplaces, the surest way to engage people, say Pink and others, is to disengage management. By surrendering many of the decisions about the means of work to the people who do it, new management models promise to liberate the craftsman inside of every clerk and, thus, liberate big business.

Down with the bosses. Up the self-directed worker!

When Work Becomes a Job
In Drive: The Surprising Truth About What Motivates Us, Pink boils down findings in developmental sciences about the profound impulses that motivate people at work. Among them: being able to challenge yourself and accomplish new tasks, having choices over what you do and where and how you do it, and being able to work with and help others. While getting meaningful recognition for one’s work is important, most of work’s rewards are internal. Its ability to satisfy innate needs for autonomy, mastery, and purpose is what separates work from mere labor; one is excited by tasks in which one will engage for no reward other than the interest and enjoyment one feels in doing them.

This is a familiar truth outside the land of the cubicle-dweller. Independent contactors usually choose independence (at some cost to income) to enjoy the rewards of autonomy. A chance to do something well, rather than merely well enough, drives the inventor to clock hours that will never likely be rewarded—financially, anyway. As for purpose, nonprofit and healthcare organizations have for generations exploited people’s willingness to put up with low pay and stressful days when it comes to making a difference as well as a salary.

No CEO with a basement woodworking shop needs to be told about the seductions of labor that feels good and produces tangible results. All the more interesting, then, that the managers of large organizations, especially in business, so seldom apply to the people who work for them what they know to be true about themselves.

As Pink puts it, a lot of big business’s HR woes owe to the mismatch between what science knows and what business does. Management typically assumes that when work is not done well, it is because workers are dull and stupid, when in fact it probably owes more to management having rendered work dull and stupid. Management precepts, for all their apparent evolution, remain rooted in the efficiency ethic espoused before World War I by Frederick Winslow Taylor in such works as The Principles of Scientific Management. Taylorism underlies modern industrial enterprise, in which work is centralized, mechanized, rationalized, managed, and broken down into a series of operations so simple that one need not be a craftsman to do them. Organizational theorist Russell Ackoff once summarized this approach as reducing a complex system to its parts and then trying to manage each part as well as possible on the assumption that if the parts are managed well, the system as a whole will behave well.

The problem is that a system thus organized often doesn’t behave well. Putting science into management—meaning making output measurable and processes controllable—often takes the reward out of work. Rewards for performance are usually based on measurable traits: number of sales, time taken to execute, number of defects, and the like. Doing a “good job” does not mean solving a problem or creating a way to avoid problems but, rather, increasing one of these measurable values.

While researching his 2009 book The Pleasures and Sorrows of Work, the Swiss writer and thinker Alain de Botton spent time studying a British cookie manufacturer. He noted—as do most first-time visitors to any kind of assembly plant—that the process had broken down basic tasks such as mixing dough into even more basic steps that were “isolated, codified and expanded to occupy entire working lives.” In such a system, Botton writes, “Biscuit Packaging Technologists leave questions of warehousing to graduates in supply-chain management, the better to concentrate their own energies on the improvement of roll-wrap mechanisms.” In such a place, he adds, efficiency for the company comes at the expense of pride, challenge, and meaning for the workers, who exact compensation by goofing off and goofing up.

The New Sweatshop
“Any activity becomes creative,” John Updike once said, “when the doer cares about doing it right, or doing it better.” That’s true whether one has in one’s hand a paintbrush, a computer mouse, or—the subject of Matthew B. Crawford’s recent Shop Class as Soulcraft: An Inquiry Into the Value of Work—a mechanic’s wrench.

Or a mop. In a recent lecture, Swarthmore psychologist Barry Schwartz considered the way that work gets turned into tasks in the case of hospital janitors. Their official job description is the usual catalog of drudgeries such as mopping the floor and restocking the cabinets—simple tasks. Schwartz learned that the janitors’ own unofficial job description focused instead on doing such simple tasks while working around patients and their families and doctors and nurses—a complex set of responsibilities.

Schwartz noted that because management in this case had no idea what the job requires, doing it the hospital way meant doing a bad job. If a janitor skipped a scheduled task so as to not disturb a family coping with a crisis, he risked a reprimand. Wages were set to encourage tasks to be done quickly (the hospital’s bottom line) rather than sympathetically (the patients’ bottom line).

It doesn’t matter what color the collar is either. The machines are new, but even the corporate headquarters or division office hews to an old factory model. The same form of industrial organization once applied to the making of iron ingots is now applied to the processing of information about iron ingots. The worker is not the master of such tools but their servant. Work is centrally planned, workers trained by management to perform tasks defined by the firm and under supervision of the firm, with wages geared not to how well one does the job but to how well one follows directions.

Indeed, the office looks more and more like the typical nineteenth-century sweatshop. While companies rarely let workers have a real say in how work is done, they did begin in the 1980s to let them have some choice about where work is done. This was offered as liberation for the worker, who could now work from outside the office, even at home. But workers kept on a longer leash are still on a leash. “Workers of the past were just overworked,” says Joanne Ciulla, author of The Working Life: The Promise and Betrayal of Modern Work. “Today many workers are overworked and overmanaged.” The 24/7 work life is merely a more modern form of slavery—one in which the BlackBerry is the ball and chain.

Today’s foremen are the creatives who invent software used in office applications, whose thinking and creativity are embedded in them. Workers need no skills at running a business or solving problems—only skill at manipulating the software designed to do those things.

aylor assumed that the simpler the job, the simpler the persons doing it. At the lower levels of the job hierarchy, workers could not be expected to be capable of independent judgment. If not creatives in the popular sense, ordinary people are still humans with extraordinary innate problem-solving skills that can be applied in a flexible management milieu. There’s plenty of evidence that ordinary workers can undertake to be, in effect, their own managers.

In The 8th Habit: From Effectiveness to Greatness, Stephen R. Covey tells a management consultant’s story of what we will call the janitor problem. Janitors are seldom listed as knowledge workers, but that is not because janitorial work demands no cognitive thinking or other problem-solving skills. It is because management doesn’t demand cognitive thinking of janitors.

In Covey’s example, the maintenance foreman was doing all the interesting bits: scheduling and monitoring maintenance; selecting, purchasing, and evaluating waxes and polishes and the machines that used them; and determining which janitor covered which areas of the plant. The janitors’ input was reduced to crude labor. Under the consultant’s direction, Covey wrote, the foreman handed these tasks to the janitors themselves. “[T]heir best thinking was tapped—body, heart, mind and spirit. The net effect, to the surprise of most, was that quality went up, job turnover and discipline problems went way down, social norms developed around initiative, cooperation, diligence and quality, and job satisfaction increased significantly.”

All together now: What makes knowledge workers is not what they know but how well they are able to use what they know.

Forward Toward the Past
A new generation of senior executives are marking a new path. They have never heard of Frederick Taylor and possibly never heard of unions or strikes either. They tend to be youngish men and women who are not specialists in business management, if they think of themselves as businesspeople at all. Rather than applying the old factory model to postindustrial information processing, they borrow from the workshop model that nineteenth-century industrialism set out to destroy. As was the case early in the Industrial Revolution, the company decides what work needs to be done, but the workers—individually or collectively—decide how best to do it, when to do it, and with whom they do it.

Young companies are more likely to experiment, if for no other reason than that their rapid growth has created a management vacuum. Amy Wrzesniewski of the Yale School of Management notes that employees in such companies are often left free to adapt jobs informally to new situations simply because formal management oversight systems have not quite caught up. One might add that such companies might be growing rapidly because employees have been left free to adapt.

Two former Best Buy HR execs, Cali Ressler and Jody Thompson, came up with the idea of ROWE—the results-only work environment. Staff in such setups don’t have schedules—indeed, they are not obliged to come to the office at all. Management’s only expectation of them is that they complete agreed-upon tasks on time.

More radical than letting workers define their own jobs is to let them not do their jobs. Under the terms of Google’s much-discussed (and much-misunderstood) 20 percent program, software engineers are allowed—not required, mind you—to spend up to a fifth of office time on unapproved projects. This is less an indulgence of their staff’s inner Edisons than a savvy R&D program. (Neither is it new: 3M freed technical staff to spend up to 15 percent of their time on projects of their choosing back in the 1930s and ’40s.) However, it does foster entrepreneurial behavior: To the worker intent on trying something new, the opportunity to fail is just as appreciated as the opportunity to succeed. In most companies, that opportunity does not exist, because the company believes it can’t afford it or because compensation and promotion are based on short-term notions of success, on doing the familiar rather than trying the new.

Interesting but Impractical?
If a self-directed workforce is reform, a self-directed company is revolution. And whenever the word revolutionary is spoken about management, Ricardo Semler enters the conversation. Semler is president and former CEO of Semco S/A, the Brazilian jack-of-all-trades that some saw as the new millennium’s IBM, its GM, its Toyota—a model of industrial organization in the postindustrial age. In his 1988 book Maverick, Semler recounts how he transformed the firm by ending what he calls repressive command-and-control management practices. In their place was installed (according to who was asked) participatory management, cutting-edge capitalism, or anarchic socialism.

At Semco, would-be executives are interviewed by those who would be reporting to them. The company is run by a committee that makes all major strategic and operational decisions, with a different member seated as acting CEO every six months. Semler himself decided he was superfluous to decision-making and took to the road to spread the gospel as an author, teacher, and lecturer.

Semler’s approach began with dispensing with traditional job descriptions. “At Semco we don’t dictate to people what their responsibilities are,” he writes in his 2004 book The Seven-Day Weekend: Changing the Way Work Works—“we assume that as adults they can figure out for themselves what it takes to do their job, and that without guidelines to adhere to, they’re more likely to test the boundaries of what they do,” with invigorating effects for the company. Also, leaving workers free to do what they can do as well as what they may do has an invigorating effect: Semler quips that fewer people choose to leave Semco than heaven—as of 2004, annual turnover had spent a decade below 1 percent.

Semco’s new paradigm sparked any number of conversations but few followers—too small, people said, or too Brazilian. The best-known North American example of the unstructured company is W.L. Gore & Associates, the Delaware-based high-tech fiber manufacturer whose breathable, waterproof, and windproof Gore-Tex is a ubiquitous component of foul-weather gear. Since its 1958 founding by a former DuPont engineer, the company has evolved what it calls a flat lattice organization instead of the customary hierarchy. (In place of workers and bosses, Gore has associates and sponsors, although the latter function more like mentors.) “There are no traditional organizational charts, no chains of command, nor predetermined channels of communication,” the company explains. Instead of command-and-control, Gore relies on consultation and cooperation.

Like Semco, Gore lets workers handle job placement. People are hired with no specific assignment in mind; only after they become familiar with the work being done do they commit to projects that match their skills. And also like Semco, Gore reports high—indeed, scarcely believable—rates of retention among its nine thousand workers, with around 3 percent annual turnover in recent years.

While the conventionally managed company puts its faith in its leaders’ wisdom, Gore draws on what president and CEO Terri Kelly calls the knowledge of the organization by leaving decisions about projects to the people closest to the work. Project leaders are anointed rather than appointed, after demonstrating special knowledge, skill, or experience that advances a business objective.

However successful these kinds of companies may be in their sectors, and how admired their management approaches, none has become a model for new industrial management. The Semco management system is an interesting blend of Brazilian attitude, Swedish worker democracy, and Japanese lean production and commitment to continuous improvement—perfect for competing in an internationalized economy, one might think. But most experienced executives’ judgment about such innovations has been “interesting but impractical.”

Impractical for most organizations, anyway. It is no accident that the companies that have made workplace democracy work are smallish and employ technical staff. They are offered as proof that what is not considered true for countries is true of business corporations—namely, that some cultures really are more suited for democracy than others. (The problem with engineers and kindred is not getting them to experiment—it’s getting them to stop.)

But W.L. Gore is not exactly a mom-and-pop shop: Last year’s sales topped $2 billion. Kelly, the nominal CEO since 2005, was at the helm when a slowdown prompted doubts within the organization about whether the company culture was scalable. “We realized that the culture wasn’t the problem,” she explained in a 2008 interview—“we just hadn’t done the right job in stewarding it.” In most companies, a crisis would lead to managers taking control; at Gore, management tweaked its formal and informal mechanisms to ensure that everyone was working collectively. And the firm is back on track.

Will the Nobles Storm Their Own Castle?
The problem of the unproductive worker persists, and conventional management cures plainly haven’t worked because companies still apply early-twentieth-century management solutions to a twenty-first-century puzzle. Workers are not restive because they feel oppressed—they are restive because they are bored. In the 1870s, their ancestors took to the streets to protect losing control of the workplace; workers today mainly just sulk. But sulking is proving as effective a brake on company ambitions as the strike or the boycott, and it will require innovations as far-reaching as Frederick Taylor’s were in coping with this new kind of worker discontent.

In 2008, a group of management scholars and senior executives worked to define a new agenda for management—or, rather, they sought an agenda for new management: a way of organizing large businesses that would ameliorate the toxic effects of hierarchy, find better ways to unleash staff creativity, and broaden managers’ thinking. Important to achieving each of these goals was rethinking work and endowing workers with full citizenship in their organizations—in short, to quote management sage Gary Hamel, writing in Harvard Business Review, “making every company as genuinely human as the people who work there.”

Certain prevailing winds are pushing companies in that direction. Under scientific management, decisions that had always been made in the workshop were now being made in the office or, at least, by the company foreman. A century later, knowledge about how to get things done is migrating back into workers’ hands. “Firms in which the competitive conditions are changing rapidly are looking at this,“ says Amy Wrzesniewski, “because employees on the ground have critical information about how their jobs can be changed in ways that serve clients and other stakeholders better.”

Technology, for example, is driving trends toward customization, decentralization, dispersed production, and the rest and, in the process, is pushing business backward into the future. JetBlue, which successfully allows its telephone customer-service representatives to work at home, is only one of the firms that are reverting—knowingly or not—to the very first form of industrialism. In eighteenth-century Britain, the manufacture of cotton cloth for export was done by individual workers, usually working at home in mini-factories with living quarters on the lower floors and looms on the top floor.

Looking ahead this way, it is not hard to imagine the traditional contract for services being replaced as the basis of employer-employee relations. Companies would instead operate according to what amounts to social compacts among self-selected workers with shared values, backgrounds, and purpose. The early Toyota, for instance, was less a conventional corporation than a community of interest; the film studio Pixar still functions pretty much along those lines. And whatever sense Ricardo Semler’s ideas make as economics or management science, they are sound anthropology; Semco’s “autonomous business units” function like tribes—humanity’s most ancient and thus most natural social system.

Losing gills and growing legs would be nothing compared to evolving from company to community. By and large, our schools teach kids to behave and to anticipate the answers the teachers want; they are not taught to explore an issue or to act autonomously within the classroom. One can hardly expect a 22-year-old to really think on the job when no one has ever expected her to think about anything more complex than what to wear to the office. Managers at all levels, trained in versions of Taylorism, would have to do their work in a wholly new way, going from overseer to teacher or counselor.

an Pink acknowledges that making the transition to workplace democracy will require supporting workers as they take their first wobbly steps away from apathy toward autonomy. But it can happen if workers realize the company is serious about it.

The fact that so few companies are serious about it is not for want of successful models. Putting workers back to work would benefit them, obviously, but also the firms for which they work. The terminal attendant for Southwest Airlines sees his work as helping an old lady in a wheelchair get to her plane on time; the company sees his work as cementing a passenger’s allegiance to Southwest. Each satisfies the need of the other.

The agents of such miracles are upper-level management, and, unfortunately, they also have the most to lose by doing it. The advantage of the industrial system in which workers are seen as labor inputs rather than craftsmen is to the managers, not the company. It is not necessarily a more efficient use of human resources, but it is simpler to manage. The people who run that system will defend the palace against the mobs to the last, and not only to protect the perks of their class. Most executives resist because they are honestly convinced, as was evidenced in France in the 1790s, that the peasantry simply can’t be trusted to run a really big organization.

Asked what, if anything, distinguishes the self-directed worker of the 2010s from the empowered worker of the ’90s, Pink says, “Most twenty-first-century notions of management presume that, in the end, people are pawns rather than players. Management still revolves largely around supervision, if-then rewards, and other forms of control. That’s true even of the kinder, gentler Motivation 2.1 approach that whispers sweetly about things like empowerment and flexibility. Flexibility simply widens the fences and occasionally opens the gates. It is little more than control in sheep’s clothing.”

Joanne Ciulla, who teaches leadership studies at the University of Richmond, agrees. “They never let go of scientific management,” she says of senior managers as a class. “It is one of the most seductive ideas ever. They keep rediscovering teams, but a lot of organizations use group dynamics just to get people to conform.”

A recent Inc. profile reveals that Zappos now requires managers to spend 10 to 20 percent of their time horsing around with employees because founder and CEO Tony Hsieh believes that a company culture is built in part by “hanging out outside of the office.” Whether you measure output in horsepower or in horsing around, a production quota is still a production quota.

Working for others “has always been a struggle for freedom and control,” Ciulla reminds us in The Working Life: The Promise and Betrayal of Modern Work. “Employers struggle for control over employees, employees struggle for autonomy and control over their work and lives.” Stephen Covey approaches the problem of creative work as an aspect of reforming the leader; Amy Wrzesniewski approaches it as a way to reform the job.

Who will reform the company? Changing the ways in which work is organized (including who gets to decide how to organize work), compensation and kindred reward schemes, and the rest will require self-directed executives, set free by directors who realize that management doesn’t have all the answers because it often doesn’t know the questions.

Liberating Leaders, Liberated Companies

By Isaac Getz

Is it farfetched to think of most companies as walking on their hands—that is, upside down? Consider the mistrust, disengagement, and stress rampant in today’s workplaces, and visions of corporate handstands don’t seem so fanciful. Skilled hand-walkers are genuinely impressive, but no one expects a great deal of forward momentum. It’s enough of an achievement to remain upright. Only 2 percent of U.S. companies significantly outperform their competition over a period of a decade, and just 1 percent survive forty years without either going bankrupt or being acquired.

Is this news? Not really. Employees know it: After all, they are the (aching) hands. Managers know it too: Not trusting the hands with walking, they must keep their noses to the floor to monitor them. Finally, shareholders and other stakeholders know it too, so insufficient is the average performance. If this looks absurd enough, why do so few companies challenge the way they walk?

Employees can’t do much, since it’s not them who organize walking. Managers are busy with motivational sticks and carrots. And the unhappy stakeholders? They can’t do much apart from urging the occasional lopping-off of an executive head. So it’s up to executives, most of whom are well aware of the problem: Studies show that the average executive believes his organization is functioning at about 60 percent of its productivity potential. Why, then, do so few let their employees run on their feet—freeing them to self-direct their actions for the good of the company?

This mystery drove four years of research that brought me and my co-author Brian Carney close to thirty companies in which employees are free and responsible to take actions that they—not their bosses or some procedures—decide are the best for the company. We called these companies “Freedom Inc.’s,” and although we observed their functioning and extracted some commonalities among them, our focus was deeper: their emergence. We found that every successful Freedom Inc. has been initiated and built by one person at its top, whom we dubbed a liberating leader. We interviewed these current or former CEOs or owners looking to understand what exactly they did, and we can summarize liberating leadership in the following four principles:

They stopped telling people how to do their work and started listening to their solutions. Then they removed all the other symbols and practices that prevented their people from feeling intrinsically equal.

They started openly and actively sharing their vision of the company so people would “own” it. But they didn’t do this before the first step, because people who are not treated as equals—with respect, fairness, and trust—leave their leaders alone with their vision.

They stopped motivating people. That is, they stopped using carrots—and sticks—to make people do what they are disinclined to do. Instead, they built an environment that allowed people to grow and self-direct—and let them motivate themselves.

They stayed alert. To keep their company free, they became the culture-keepers. In this role, as Radica Games co-founder Bob Davids says, “one drop of urine in the soup is too much—and you can’t get it out.” The price of liberty is eternal vigilance.

Those are general liberating leadership principles, but each liberating leader we studied had to apply them to his own unique set of circumstances—and so can others. In other words, this isn’t a formula, a tool, a technique. As a British saying goes, “a fool with a tool is still a fool.” This leads us to the question of whether the liberating leaders who successfully applied those principles possess some distinguishing features.

Among the leaders we studied, we found no such features in terms of their social origins, education, or professional experience. However, we did find three distinguishing character and psychological traits: egalitarian values—respect, dignity, consideration, trust, fairness, equity; creativity—an ability to redefine problems; and wisdom—holistic (considering all of the ways in which one problem may be related to its surrounding circumstances) and dialectical (entertaining both sides of an apparent contradiction) thinking style. The combination of these traits is rare, which partly explains why there are so few liberating leaders. But there is more. Having some traits is a predisposition; a leader must live certain experiences to fulfill it.

Bob Davids, whose intellectual mentor was Up the Organization guru Robert Townsend, remarked to us that “the people who are already predisposed to such leadership can easily get the concept but maybe not put it into practice.” It’s natural for a leader holding egalitarian values to become highly critical of an organization that consistently violates them. Yet criticism rarely triggers action. We found that these triggers stem from two fundamental emotional experiences: exasperation with traditional command-and-control organizations and admiration of freedom-based ones.

So that’s where liberation campaigns originate: with heads of companies whose egalitarian values lead them to exasperation with organizational cultures of hand-walking and admiration for those that run free and fast. At that point, their creativity and wisdom allows them to successfully master the liberating-leadership process. This isn’t easy, of course, which is why there are so few liberating leaders. But companies with continuous outstanding performance over time are similarly rare, and liberating leadership is one way to get there. It has an important advantage over other ways: In every Freedom Inc., outstanding performance is reached through people’s happiness—not through the lack of it. And it begins with turning the company right side up.

ISAAC GETZ is a professor at ESCP Europe Business School and co-author of Freedom, Inc.: Free Your Employees and Let Them Lead Your Business to Higher Productivity, Profits, and Growth.

Change Your Operating System

By Traci L. Fenton

Today’s leading management trends espouse the need to give employees more autonomy, more opportunities to fully engage in their work, and more choice about how they want to work in order to benefit both the employee and the company. But these ideas, well intentioned as they are, are only Band-Aid solutions if we don’t recognize that it is a company’s fundamental operating system that must change.

The centralized command-and-control model of management, which has caused many an employee to feel disempowered—and many a megalomaniac to rise to the top—must be exchanged for a model that gives true power to people in a way that uncaps human potential and allows ideas such as autonomy, empowerment, and choice to be supported and ultimately sustained.

In a word, we need to recognize that the new operating system—the opposite of the Industrial Age command-and-control model—is democracy. Organizational democracy. Democracy is what creates the optimal conditions for learning, motivation, self-direction, and engagement. A democratic company is a well-calibrated business.

Consider the example of DaVita, a Colorado-based company that provides life-sustaining dialysis treatments to patients suffering from chronic kidney failure. In 1999, DaVita’s situation was bleak: The company was functionally bankrupt, facing an SEC investigation and shareholder lawsuits, and crippled by the departure of most of its senior executives. New CEO Kent Thiry understood that there needed to be a major change in the way the company worked. So he and the management team committed to fundamentally change the company’s operating system to function as a democratic community first and a company second.

With the company’s 32,500 employees taking a larger role in operational decision-making, DaVita dramatically reduced its turnover rate, stimulated organic growth above the industry average, and became the leader in its field. Net operating revenue grew from $1.45 billion in 1999 to $6.1 billion in 2009. The following year, the company made the Fortune 400.

How did DaVita do it, and how can other business leaders start to upgrade their corporate operating systems to the democratic management model increasingly required for a decentralized, interconnected, and people (not corporate!)-powered world? The company began by recognizing three truths abut the modern business landscape:

As CEO, recognize that you are not the master of the universe—and be happy about it. Mention the idea of democracy in the workplace to a room of CEOs, and you have an instant conversation killer. After all, isn’t the very definition of a CEO the one-who-holds-the-universe-in-his-grasp? Perhaps in popular fiction, but the reality is that democratic companies still have—and need—clear leaders. The paradigm shift is in becoming less authoritarian, instead functioning more like an orchestra conductor. Rather than making decisions and decreeing them from on high, democratic business leaders create the conditions that allow authority to be shared and unleash the insights and talents of their people. After all, they’re smart too—that’s why you hired them. So let your people show you what they’ve got.

Kent Thiry figured out how to do this at DaVita. Rather than centralizing control in Denver, management made a radical choice to decentralize power to the company’s 1,500 clinics nationwide. By providing a clear set of guiding parameters and then giving each clinic the freedom to be its own boss within those boundaries, Thiry communicated a message of trust and respect to all the employees (aka: “teammates”), encouraging innovation and leader development at every level of the organization. In the end, Thiry traded the belief that he had supreme power for genuine influence—and a lot more loyalty and respect from his employees.

Let employees have a voice (and a vote). The idea of workplace democracy can conjure up the fear of no decisions ever being made or, even worse, employees sitting in endless meetings putting every minute decision up to a vote. And, done poorly, this is exactly what you can expect. But organizational democracy, done well, isn’t about black-or-white scenarios. Democracy is about voice, as well as a vote. Leaders want to create platforms in which employees can express themselves, with the goal that doing so brings forth more ideas and insights and better ways of operating. Then, with a full range of ideas and information, decisions can be made, either by consensus or by a majority vote. And every decision doesn’t need to go before the entire population—it should be made by those who have the best information to make that decision, which isn’t usually the people at the top.

DaVita’s management team understood the power of employee voice in creating lasting transformation and a sense of ownership. In the early days of the company’s democratic transformation, one of the first things Thiry did was ask employees to vote on the name of the company. They did, and they chose the name DaVita—Italian for s/he gives life. They also put other things up for a vote, such as core values, logos, and even strategic direction. The practice continues today: During the company’s annual meetings, several ballots are often cast to get staff feedback on new initiatives DaVita is considering for the upcoming year. The practice creates a sense of ownership by the employees and execution of the ideas. Whereas things often fall apart with command-and-control decision-making due to a lack of buy-in, democratic decision-making is typically more sustainable because the people have had a voice in the process.

Open up and be more transparent. If information is power, then give your employees the information they need to be empowered and smart. If you don’t, they’ll find a way to get it anyway. For example, democratically run companies commonly practice open-book management, in which financial information is openly and regularly shared with employees. Some companies even have open salaries, which can lead to an even greater sense of fairness and dignity within the organization once everyone knows what everyone makes and understands why.

As a public company, DaVita already is required to share its financial information. But there are additional ways it has chosen to open up. Each quarter, DaVita teammates are invited to participate in a “Voice of the Village” call with the CEO and senior leadership team. The purpose of the call is to openly share information about the state of the company and to address any areas of concern. At the end of the call, the floor is open to teammates in a question-and-answer session to ask the CEO or any member of the senior leadership team anything they would like. Leaders also send a weekly e-mail communication to all teammates to give them an “inside look” at the company and keep lines of communication open, and they publish a semi-annual internal magazine as well. Through these open channels, teammates can share their thoughts, questions, and suggestions on a regular basis with senior leadership. They have the information they need to be an informed citizen of the community.

Legends such as Zappos, Southwest Airlines, W.L. Gore, HCL Technologies, Cisco, and DaVita are all leading the management evolution. But they didn’t get where they are by sprinkling a little autonomy and empowerment into the mix. Tinkering with traditional practices didn’t produce such talked-about results. Changing their operating systems to a democratic model did.

TRACI L. FENTON is founder and CEO of WorldBlu, a company specializing in democratic corporate management, strategy, and innovation.