The Economics of Good Team Work – The Easy Way to Improve Business Profits for the Long Term (s)

I wrote this article for the Al Jarida newspaper and it was published on Saturday 21 February 2015.

This article took a full page to discuss the economics of good team work for a business.

It is published here:

Al Jarida Article 21 Feb 2015 (Go to page 12)

The Economics of Good Team Work – The Easy Way to Improve Business Profits for the Long Term

How do you improve human group dynamics and allow people be more productive, your business to be more profitable, groups to be self reliant, whilst at the same time have it be more satisfying, more rewarding and straight out more enjoyable for the individuals involved?

The solution: Develop a self organising, collaborative workplace (also known as in the industry as “Sociocracy“.

Many big companies have worked out how to do it, for example GE, BMW & Semco (a Brazilian manufacturing company). Many more practising the process have registered themselves at WorldBlu.com. While Worldblu calls it “democratic workplace”, it’s really more likely to be collaborative one, since when you have a flexible organisation, it is more likely that 100% consent is necessary to achieve anything, and not merely majority rules – what a democracy is. The key word here is “consent”.How to achieve great success, with great results, rewards and satisfaction in a manner which is harmonious to the group, to other participants, and to the world in general? It is not through competition. It is through collaboration.

Much of the presently accepted models in many organisations are military style and competition based. Competition is a poor use of human potential. The autocratic leadership methods necessary lead to almost total staff disconnection. Poor performance, and whip-like management mentality becomes necessary to maintain performance. Such a culture is easy to start, and success may be evident and easy to measure, but it soon grows into a dismal forgotten failure as any long term success measures are applied – staff retention rates fall, production efficiency, product quality, and eventual profits follow soon after. It’s simply a dismal failure at humanity, at being human even. Even for those directly measured to have “succeeded” they experience high stress, poor health and eventual a short, and ultimately an unsatisfying life.

One of the most successful examples of collaboration has been documented by Ricardo Semler with his company Semco, today a billion dollar operation. He wrote two books about it: “Maverick” and “7 Day Weekend” where he explains everything in succinct terms. He took his small family run company and grew it into an international corporation whilst he progressively ceased his day to day operational involvement.

“Semco has no official structure. It has no organizational chart. There’s no business plan or company strategy, no two-year or five-year plan, no goal or mission statement, no long-term budget. The company often does not have a fixed CEO. There are no vice presidents or chief officers for information technology or operations. There are no standards or

practices. There’s no human resources department. There are no career plans, no job descriptions or employee contracts. No one approves reports or expense accounts. Supervision or monitoring of workers is rare indeed. Most important, success is not measured only in profit and growth.” Ricardo Semler, Founder of Semco

I personally have applied Semler’s processes to great success in my own endeavors. For example I’ve taken totally disconnected and non-performing employees, and turned them into stars, “fought” over within the office for new assignments. One of the very useful Semler tools I like to use often is the upward feedback tool. This provided management with very directly, and some times very revealing feedback on their own performance from their staff and employees.

I’ve been searching for a methodical system to describe Semler’s approach, and for a long time I called it “democratic” as he and many others have done. But I’ve never liked that, that word “democracy”. It is essentially a competitive system.

Dubbed “the worst form of government” by Winston Churchill, democratic environments automatically and immediately lead to the oppression of the minority and any group that contains oppression of any kind is never a good thing in the long term.

“Many forms of Government have been tried, and will be tried in this world of sin and woe. No one pretends that democracy is perfect or all-wise. Indeed, it has been said that democracy is the worst form of government except all those other forms that have been tried from time to time.” Sir Winston Churchill, Hansard, November 11, 1947

Democracy, by it’s very design, is an oppression regime: the oppression of a few by the many. “This is fair. It’s only natural”, I hear you say, but do you really think so? Is any oppression fair? Of anyone? It is quite plain to see that any minority oppression in a social group no matter how large or small, has an ultimately negative consequence. Suppressed negative thoughts, feelings, and emotions harbored by the minority can only grow and manifest in other forms. The costs – both social and financial, short term and long term – to control, pacify, down-right-openly-oppress increases for the majority. Then something curious happens: the majority find themselves the minority, the minority becomes the majority and the cycle is repeated. Back and forth, back and forth. Those once-were-majority of course hang onto their once-granted-power with great enthusiasm and vigor, as long as they are able. The majority learnt what to do while in power. They learnt the rules of the game. The Occupy Wall Street or “99% protests” were examples that highlighted how a majority can be controlled by a minority. The minority has a much better understanding of the rules.

An another example was the 2008 US election with Obama and McCain running against each other: it was 53% versus 46%. Is that a “democracy” when almost half of the people have to yield their desires for the other half? This is more like a society close to reorganization as the majority may soon become the minority. Such a shifting of power will occur either violently (like has been seen in many Arabic countries with the so called Arab Springs) or passively, as with not-even-newsworthy Iceland. In Iceland the people rejected the debt burden of the banks their brethren in government attempted to impose upon them from the financial meltdown of 2008. They arrested a number of bankers and changed their laws so it cannot happen again!

So, what is it? What is the magic that means a group of people will be inspired to performance, all by themselves, with little external influence, other than maybe “Go!”.

Studies have shown that for complex, creative projects, monetary incentives actually inhibits performance! It’s not carrot and stick that works best where creative thinking is required.

Much has been done on the subject and reading Semler’s “Maverick” and “7 Day Weekend” you’ll understand that it is an evolutionary process, and it occurs by consent of the individuals of the group.

“Consent” a better option.

This is the important word: consent.

Work that recent came to me by the Dutch thinker Gerard Endenburg offers very substantial physical elements to this evolutionary process. A good short summary of this thinking is in “Sociocracy: The Creative Forces of Self-Organization”, by Gerard Endenburg and John A Buck.

These two resources: Semler’s books and Edenburg’s work combined results in a very harmonious outcome: the flexibility of the benefits, and the basic parameters on how to get there.

Endenburg defines four basic concepts for a self-organising group:

Four Principles of Sociocracy

1. Consent: The principle of consent governs decision-making. Consent means no argued and paramount objection. In other words, a policy decision can only be made if nobody has a reasoned and paramount objection to it. Day-to-day decisions don’t require consent, but there must be consent about the use of other forms of decision-making, for example, for day-to-day operations.
2. Election of Persons: Election of persons for functions and/or tasks takes place in accordance with the principle of consent and after open argumentation.
3. Circle: The organisation maintains a structure for decision making, consisting of semi-autonomous circles (i.e. groups of individuals). Each circle has it’s own aim and organises the three functions of leading, doing, and measuring/feedback. A circle makes its own policy decisions by consent, maintains it’s own memory system, and develops itself through integral research, teaching and learning. A circle makes consent decisions only in special circle meetings (also called round table meetings).
4. Double-linking: A circle is connection to the next higher circle in the organisation with a double link. This means that at least two persons, one being the functional leader of the circle and at least one delegate from the circle, are full members of the next higher circle.

With these four principles in place, more specific actions can occur. Here’s an example of a Sociocratic Circle Meeting, a meeting of consent:

Sociocratic Circle Meeting

1. Opening round: a time to tune into the members. Like an orchestra just before a concert.
2. Administrative concerns: such as announcements, time available for the meeting, consent to minutes of last meeting, date of next meeting, acceptance of the agenda.
3. Content: First agenda item, second agenda item, etc
4. Closing Round: a time to measure the meeting process. E.g. use of time, did the facilitator maintain equivalence, how could the decision-making have been more efficient, did everyone arrive prepared. Also this is a time to mention agenda items that should be on the agenda for the next meeting.

During the Circle Meeting there will be times to appoint a leader or a task or role or job to an individual. Here’s how it’s done:

Template for Sociocratic Elections

1. Task: establish the job description and the period of time the person will perform the job.
2. Ballots: Fill our ballots and hand to the election leader
3. “Public Gossip”: each person says why they made their nomination
4. Changes: Election leader asks each person if they want to change their votes based on the arguments they heard.
5. Discussion: Election leader usually proposes a name after step 4. However they may ask for discussion if the arguments are very unclear – i.e. informal consent has not been reached.
6. Consent round: Election leader asks each person if he of she consents to the proposed person, asking the person proposed last. If there is an objection, the election leader takes everyone back to step five before trying another consent round.

For making decisions by consent, a sociocratic organisation will operate in the following manner:

Template for making policy decisions by consent

1. Consent to the issue(s) to be decided. “What’s the concern, problem or challenge?”
2. Generate a proposal. “What’s our opinion?” Often a person or persons may be asked to prepare a proposal and bring it to the next meeting.
3. Consent to the proposal. “What is our decision?”
   1. Present proposal – questions and discussion is for clarification only
   2. Quick reactions round – quick feedback about the proposal (intended to illicit the “feeling response”, and not the “thinking response”)
   3. Amendments – proposer amends proposal, if needed, based on the questions, discussions and quick reactions
   4. Consent round – collect and record any objections on a flip chart. No discussion at this time
   5. Discussion – improve proposal to deal with the objections if any
   6. Consent round – Each person indicates their consent to the proposal, with the proposer speaking last. If there are remaining objections, they are recorded (no discussion), everyone goes back to “Discussion”, before trying another consent round.

Implementing a self-organising group requires consent from the people who exert power over the group. Simply stated this means that senior management and/or organisation owners must support Sociocracy. Full stop. No “ifs”, “buts” or “maybes” or even “veto rights”. Otherwise internal fractures will be created when the a circle’s “assumed power” confronts the more senior “declared power”. If that happens, growth is stymied and a slide back to pseudo-autocratic or totalitarianism, or even democratic systems will follow.

The great thing about this Sociocratic process as described by Endenburg, is that it’s an excellent way to get self-organisation into an existing organisation without changing or upsetting the existing power structure. The magic then begins to happen and once the system is running well, initiatives and improvements emerge organically and naturally. There is no revolution, only evolution.

All companies and groups that utilise such or similar systems experience better performance, better products, innovation, higher moral, lower turnover, lower loss, lower costs.

Semler advocates this because, after all, he created the 7 day weekend!

It is simply the human way to operate.

What could be better?

About the author

Mr. Jeremiah Emanuel Josey is an Australian who has been living in the Middle East for 7 years. Expert in the finance and energy markets, he is the Chairman of Swiss based Meci Group, a business and investment consultancy that operates across the Middle East, Central Asia and Russia.

See www.JeremiahJosey.com and www.Meci-Group.com for more.

Jobs, Kevin Rudd, Taxes

I met Kevin Rudd once a couple of years ago before he was the Prime Minister of Australia.  It was at a local restaurant in his electorate in Brisbane.  He’s a sharp chap.  Clean dress.  Quick mind.  Academic type.  I like him.  We spoke about general things and he asked me how many jobs my company would give.  I said about 30, but I was thinking to myself, “I’m planning to have the manufacturing done in either Malaysia or Singapore.  It’s much better there: lower costs, higher quality.  The headquarters I’ll be moving to the US just as soon as I can. That’s where the market is”.  But this didn’t need saying.  It was a pleasant exchange.  He knows what he is doing and the woes of Australian manufacturing industry is for another time, Insha Allah.

I’ve been thinking about what he was most concerned and interested about in our conversation: jobs.  “How many jobs will I give?”  Why?  Why the focus on jobs, on money, on being busy?  Well there are two reasons that I have worked out.  One is cynical and other one is naïve.

The naïve view:

That people need to be busy to have a “satisfactory” life.  Really?  Working 40 hours a week doing something you don’t really have a say in, or doing the same repetitive task over and over?  Computers and robots can replace most jobs in the world now, and they will eventually – in manufacturing they already have.  So who wants a job where they’re just a robot?  No one.

The cynical view:

The present western system of social infrastructure (i.e. Government and the services provided) relies on taxes to exist – contributions from the people in the society served by the Government.  Tax on income (income tax) and tax on things you buy (sales tax) give all the funds needed to pay for the roads; the health care; the education and the entertainment.  Sell a few bonds to cover the difference when it’s needed.  Tax comes from peoples’ pay.  Pay comes from their jobs.  They pay their income tax before they get paid.  They pay their sales tax when they spend their pay.  So people need a job to keep the government going. Simple really.  Why is this cynical?  Because a “job” is no longer a “nice” thing, and a “government” is no longer efficient at providing what it’s supposed to give.  It’s a very expensive service.  Health care in the UK anyone?  Legal support in the US my friend?  Roads and communication systems in outback Australia?

So where does Kevin Rudd get his view-point from?  Being cynical again,  “Jobs” is easy to sell to get votes.  “Job” is only a three-letter word.  It’s easy to explain.  It’s security for you and your family: if you don’t work you don’t eat; if you don’t eat you don’t shit, if you don’t shit you die!!  So: get a job or die!!!  Everything is set up for this: our education system, our financial system, our employment system.  Everything.

A Job “works” in our current society.  It’s the basic fundamental unit that makes everything function. Get more jobs, and everything will be all right.

However that only applies if you have an infinite amount of everything to consume, to make, to be busy in a “job” with!  We don’t.  We’re reminded every day about how small this little planet of ours actually is.  Global warming, water pollution, land pollution, overcrowding, slums, dying soils, E.coli deaths from hamburgers, anti-biotic resistant bacteria – super bugs, mad cow diseases from feeding cows dead chickens… and so on and so on… This is what has been created: the consuming, un-conscious monster, stemming mainly in the US in the 40’s, 50’s and 60’s, mainly to provide more jobs, mainly to provide more taxes, for more Government!  More, more, more.  More profit, more food, more cars.  More everything.  But is this still working?

The average American – the average westerner – consumes about 90 kg of meat each year.  Such a high meat consumption is way above what a human body needs and leads to all sorts of long-term social health issues (besides being overweight, there’s slow bowel movements leading to bowel cancers, transferring diseases from animals to humans and I don’t want to go on).

If the average western person simply halved their meat intake, all the current overproduction, animal mistreatment, pesticide pollution, over subsidization and everything else associated with this industry would stop.  Over night…..  So why doesn’t it?  The need for more, more, more, and the program we have in us that drives this. Besides, what about all those “jobs”  What will people do???  :o)

To pay for government you need taxes, for taxes you need jobs, for jobs you need business, for business you need consumers…  So the western economic system, lead by America, has become the best consumer-job-tax-government model in the world.  Around and around and around we go!  What a ride!  Stop I’m getting dizzy and want to get off!

It’s a dangerous little trap we have caught ourselves up in.

The irony of it all: mediation, the key to a fulfilling, happy life, takes almost zero resources to carry out.  That’s the Universe laughing at us!

“JOB” ends up being a pretty dangerous little word.

Don’t get me wrong, I don’t worry about this stuff.  I just ponder it, working out how it all works.  How we work.  We, people, will always do what we have always done: our own thing.  So, don’t stress.  Just become aware, conscious – really conscious – of what you are doing and you can decide if you want to keep doing it or not.

Oh, yeah, and the solution to all of this is two 2 things.  The first is to pay for government budgets entirely with tax on company revenues (not profit, revenue) and hence cancel all personal and sales tax. This will put the soul back into the company,  and give people the freedom to grow and expand as they wish, as we have always done.  The second thing is to create democratic, participation  workplaces.  This makes your job a nice thing to do.  Train people in what this means, at school, in companies.  Everywhere.  (BMW and GE already do it)

Easy.

My turn.

Jeremiah Josey

The New Frontier: Adults in the Workplace

I often think about what is coming next, with instant world wide communication, and access to information from anyone, any time, any way. Personal choice and satisfaction is now more than ever the key question for everyone in all countries, people are seeking – and obtaining – answers from all around the globe.

I think what is next is that marvellous final bastion of time consumption for the majority of us on this little blue planet: employment – trading our time for money.

This is being questioned more than ever – just talk to your parents about getting a “safe secure job”. Perhaps we feel that being gainfully employed means more than money, like “something to do with our time”, but recent studies show that employee disengagement is the epidemic of the 21st century: most employees have switched off. We are running in neutral; idling; bored; tuned out; not interested; keen to move on. The UK has one of the lowest levels of employee interest.

That’s most of the work force not happy to be there / here / anywhere!!

No viral influenza outbreak has nothing on the misery and suffering caused by that amount of chronic disengagement.

That’s why I’m excited. With all this untapped human potential, just sitting in idle, what does it take to re-engage, re-motivate and obtain excellence from them? That’s exciting: that potential. I know the answer and it’s straight forward: once you get your ego under control, let go of the reins, the need to control, and let your employees step up.

A friend of mine was doing their MBA in Kuwait and I was helping them prepare for an exam and a group assignment on leadership and organisational management. Great stuff. I was enthralled by a case study about BMW under our study. It clearly identified the participative management work environment that clearly explained why BMW is so successful right now, whilst other car manufactures are faltering: BMW had engaged 12,000 new people since 2000, whilst GM and Ford have sacked similar numbers. BMW does not have workers and managers, they have associates and leaders, and there’s more to it.  It’s not what they are doing that is important. It’s why and how. And it’s all about engagement. (This web page is not the case study, but alludes to BMW’s practices a little).

I explain it to my colleagues and my teams like this: the traditional method of business is like a school class room. [Really it is like the military model, as is school, but relatively few of us have military experience, but most of us have been in school. ]

In a typical school there is a teacher and there are the students. The students are treated as individuals and instructed what to do by one person: classical management style theory. The teacher dictates the rules and the students work to their own limits – in solitude – to reach their own level of achievement: the grades. That’s it. Students can’t wait to leave. The teacher struggles to inspire and motivate. There’s very little group work, in fact working in a team can lead to expulsion – it has a special term: “cheating”.

Consider what happens when the teacher leaves the room? What happens? We all know: we’ve all been there before. We bumff off, goof off, focus on anything and everything but the subject matter.

Something else very interesting is happening and that is the essence of participative management: grouping together into collectives to discuss stuff, all kinds of stuff. And what is discussed is what is interesting to each collective.

Imagine if those little groups could be harnessed to drive outcomes? Self driven, enthusiastic, motivated…

That’s exactly what companies like BMW and Google have done. They have worked it out. They work as dynamic, organic groups, openly and in plain sight.

It’s so much fun to do to as well! People come alive in my groups when I employ the strategies and rules to engage and motivate a team: to form a participative group. Quiet people begin to contribute. Bullies and those who can’t manage their egos become quiet, and they either get with it or leave the group. It’s magic to watch it working. Just watching the outcomes and achievements of a self motivated, self actualized group of people is wonderful.

Have a look at this very good web site: WorldBlu.com. Traci Fenton, the founder, has decided to recognize “democratic” work places and on her web site there are 40 companies that qualify for her 10 point checklist as a democratic company for 2009.

Here are her 10 points:

The WorldBlu 10 Principles of Organizational Democracy™

1. Reflection + Evaluation

Democratic organizations are committed to continuous feedback and development and are willing to learn from the past and apply lessons to improve the future.

2. Purpose and Vision

A democratic organization is clear about why it exists (its purpose) and where it is headed and what it hopes to achieve (its vision). These act as its true North, offering guidance and discipline to the organization’s direction.

3. Transparency

Say goodbye to the “secret society” mentality. Democratic organizations are transparent and open with employees about the financial health, strategy, and agenda of the organization.

4. Dialog + Listening

Instead of the top-down monologue or dysfunctional silence that characterizes most workplaces, democratic organizations are committed to having conversations that bring out new levels of meaning and connection.

5. Fairness + Dignity

Democratic organizations are committed to fairness and dignity, not treating some people like “somebodies” and other people like “nobodies.”

6. Accountability

Democratic organizations point fingers, not in a blaming way but in a liberating way. They are crystal clear about who is accountable to whom and for what.

7. Individual + Collective

In democratic organizations, the individual is just as important as the whole, meaning employees are valued for their individual contribution as well as for what they do to help achieve the collective goals of the organization.

8. Choice

Democratic organizations thrive on giving employees meaningful choices.

9. Integrity

Integrity is the name of the game, and democratic companies have a lot of it. They understand that freedom takes discipline and also doing what is morally and ethically right.

10. Decentralization

Democratic organizations make sure power is appropriately shared and distributed among people throughout the organization.

Apply these principles and just watch what happens to your organisation.

I believe that the essence of a successful democratic process, is captured by Malcolm Gladwell in his book Tipping Point from 2000. That is: “Peer pressure is much more powerful than the concept of a Boss. Many, many times more powerful”. (You’ll find this little gem buried on page 186).

Think about the teacher/student concept. How much power does the teacher have? Very little really. It depends on their character, but it is a doomed, decaying system. The stronger and more controlling the teacher is with the class, the more the class will work against the teacher when the teacher is absent: it’s a system bound to fail. On the other hand, peer pressure does nothing but enhance the values and achievements of the group – the only thing to do is guide the group in the desired direction.

But this is not new is it??

Of course not.

Here are some very interesting events of world note that were affected to some degree by the amount of engagement of the participants:

• The Dutch East India Company founded in 1602 experienced stable consistent share price growth for nearly 200 years, paying an average annual dividend of 18%,
• British South Sea Bubble and crash of the early 1700’s,
• French Mississippi Company another early 1700’s crash,
• Erlanger Cotton-backed bonds of the US Civil war great in theory but doomed the entire war effort.

And to bring it back to the future: GE/Durham. One engine per day, total control by the employees: perfect balance of people and workplace harmony.

So what does all this mean? We’ll it means that a company can limp along on a net profit margin of 0% to 5% using traditional management processes (stressed out managers and tuned out employees) or a company can achieve 20 to 30% returns in an environment with very little turnover, where everyone wants to be there.

The new frontier is Workplace Democracy.

I’m going to end with two beautiful quotes from Sir Richard Branson he made on 13th October 2007 when being interviewed on TED. The video is called “Life at 30,000 Feet“. Richard left school when he was 15. He was told by his headmaster that he will either be a roaring success or he would go to prision: he’s done both.

“A company is all about finding the right people, inspiring those people and drawing out the best in people.” @ 1 minute, 45 seconds

“I don’t actually think that the stereotype of a business person treading all over people to get to the top generally speaking works. If you treat people well, people will come back and come back for more. All you have in life is your reputation. It’s a very small world. I actually think that best way of becoming a successful business leader is by dealing with people fairly and well, and I like to think that’s how we run Virgin.” @ 21 minutes, 20 seconds

Be well.

Jeremiah Josey

Blog of Jeremiah Josey