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Buzz in the Press

Buzz in the Press

Running a business like a democracy

MARK ARONOFF/The Press Democrat
Lucia A. Diaz, production supervisor at Guayaki Organic Yerba Mate in Sebastopol, where the management style known as organization democracy encompasses all employees at the growing business.
By NATHAN HALVERSON
THE PRESS DEMOCRAT

Published: Monday, April 19, 2010 at 6:05 p.m.
Last Modified: Monday, April 19, 2010 at 6:05 p.m.

Typically, decisions originate at the top and trickle down.

But at one Sebastopol company, sometimes the ideas brew at the bottom and percolate up.

Guayaki, which bottles a tea-like beverage brewed from the leaves of a rainforest tree, adopted a little-known management strategy called “organizational democracy,” which encourages employees to understand everything about their company and provide feedback.

At Guayaki, any of its 35 employees can see the company's financials and give input and feedback on company decisions, said Chris Mann, Guayaki's chief executive officer.

“The biggest factor is just the level of openness in our communication. We are so focused on transparency,” Mann said. “The more they know about the company's direction, the more informed their decisions can be.”

For instance, an employee who knows that management is contemplating scrapping a project might ask before ordering fresh supplies for the program — thus reducing waste. The structure also encourages employees to suggest ideas or changes to a recent management decision based on what they see from their position.

“We don't always make the change. But it gives everyone the ability to share, and that often gives us more timely information,” Mann said.

Company executives credit the management style for helping Guayaki grow and transition as it scales to meet rising demand.

 

Since moving its headquarters from San Luis Obispo to Sebastopol in 2006, Guayaki has more than doubled its revenues. The beverage company's revenues grew from about $5 million to an expected $13 million this year, Mann said. It now imports about 200 tons of “mate” leaves from South America, where it works with native farmers to prune the leaves from trees that grow underneath the indigenous rainforest canopy.

Traci Fenton, an Austin-based consultant who evangelizes for organization democracy and has worked with Guayaki, said the strategy works in both small and large businesses. Fenton is working with IT service company HCL Technologies, which has about 55,000 employees, to help it adopt organization democracy strategies, she said.

One of the big benefits is a by-product of increased employee engagement, Fenton said.

“When people are more engaged, they are more happy. They show up to work more often,” she said.

It leads to increased productivity, efficiency and innovation, she said.

“They are going to be coming up with ideas, rather than just staring off into space,” Fenton said.

Those ideas give top-level executives fodder for strategies.

“Essentially, it is crowd sourcing within your own company,” Fenton said.

At Guayaki, it also helped the company attract top-notch employees who could have earned bigger salaries at bigger firms, but were attracted to the level of openness and distribution of power, Mann said.

“There is a lot of latitude for people to make decisions in their day to day work,” Mann said. “It gets them inspired.”

The company has seven managers who represent various departments in Guayaki and who will vote when competing companywide decisions are proposed.

“We go to a vote if we need to. And I'm the tie breaker as the CEO,” Mann said.

That is typical of democratic organizations, where hierarchy still exists but at a much subdued scale, Fenton said.

“It tends to be a structure that is less hierarchal, and more flat,” she said. “But not completely flat. You still have a leader.”