The corporate world is currently embedded into a dynamic and fast-moving environment which is not only shaped by new technologies, but also by the pressure to design a more sustainable system composed of more environmentally-friendly business models. More and more employees are searching for a workplace in which they can proactively contribute and participate in the decision-making processes in order to have an impact with the work they do. Such an evolution implies that our organisational models represent the germination of new managerial modes.
In contrast to these trends, most current businesses are still built upon functional divisions, hierarchical structures and centralised decision-making. Approaches such as the division of labour, for instance, were introduced by F.W. Taylor around the First World War.
Now, we might assume that things have greatly changed over the past decades and that current businesses need organisational designs suited to the current challenges – not those we had around 100 years ago. It might be time to critically reflect if these concepts are the most appropriate ones. Especially if we consider that the average company lifespan of S&P 500 companies will probably be 16 years in 2028, compared to 67 years in 1920…
Luckily, it seems like there is a solution and/or a way forward, and even better it seems to be a concept that has already been tested and used for more than 40 years.
Back in the 1980s, Gerard Endenburg developed a peer governance system based on consent we now call Sociocracy.
We can observe a few examples of businesses across the world that are moving towards such a method, which facilitates corporate agility and a participative community. :mondora, for instance, is an Italian IT company that aims “to create benefit for all stakeholders by designing and building software solutions that maximise positive impact.” :mondora is not only certified as a B-Corp, it is also deeply rooted in sociocratic principles. What do these principles look like?
Let’s explore the key principles behind Sociocracy:
- Organisational structure: It is composed of small teams of people that are grouped together into so-called circles. The cores of these circles lie within their well-defined aims, and every member of a circle has a specific role that needs to support its aim. In other words, you could perceive each circle as if it was a startup within the general organisation.
- Decision-making by consent: Decisions within the circles are made by consent. We can see consent to an idea when no member of the circle has an objection. Someone can only vote for objection if she/he strongly believes that this idea might harm the aim of the circle. This approach is in contrast to personal preferences, which we usually apply to make our decisions.
- Continuous improvement: We can find several practices that support the overall commitment to continuous improvement. Performance reviews and meeting evaluations are key elements, for example.
But what can it look like for corporate businesses in real life?
A new circle is born
Within Sociocracy, hierarchy shifts from people to scopes and domains. Companies define the boundaries of the domains, appoint the leader of each domain and then let the circles come into being (see the Circle Structure picture below).
Typically, a business that is organised ‘sociocratically’ is composed of a general circle in which issues and decisions get harmonised and shared. This central circle is connected to the so-called department circles such as ‘people’, which can then be divided into various sub-circles like ‘personal development’ and ‘payroll’.
Source: Sociocracy for All
However, a newly-born circle is limited to a specific period of time, usually one year. After it is born, the leader of the new circle starts defining who can join its board and who can start working on its specific scope.
The circle’s first decision is to decide who will represent it to the leader of the higher circle. The circle has the autonomy and the power to split the scope, and generate a number of sub-circles. The leaders of the emerging sub-circles are members of the current circle. Whereas the delegate of the sub-circle becomes a member of the circle.
To sum up, there are three hierarchies in a society managed with sociocracy, namely the hierarchy of:
- Scopes or circles, which represent the formation of the company’s culture.
- Leaders, who forward information top-down.
- Delegates, who bring information bottom-up.
Let’s think about an example, such as a circle called ‘people’ that has the autonomy to organise and manage how employees live in the corporate context. Its domain should vary from salaries to engagement, to hiring, and to personal development. In Sociocracy, this type of circle describes the world in which all the workers live.
Working in a circle
One key element of practising Sociocracy lies in the structure of each meeting. Typically, one of the members acts as secretary of the meeting. His/her responsibility is to have the meeting agenda and related documents prepared, and make sure all the members are prepared for the meeting. Everyone knows before the meeting what they are going to discuss and decide. During the meeting, one of the members decides to be the facilitator of the meeting.
The facilitation takes the peers into three dimensions:
- Clarification is when all ask for clarifications and receive answers.
- Reaction is the opportunity to tell how you feel about that topic.
- Decision is when everyone consents in turn. As it is not a majority vote, it is still a ‘turn-and-talk’ decision where the peers voice their objections and integrate/modify the proposal in order to accept them.
During the Decision phase, there is a metamorphosis of the proposal as the collective consciousness gets activated and the original proposal evolves. In this way, every member of the circle takes an active part in every decision.
Every company can find a way to a more agile organisation!
:mondora is one example in which sociocracy can be used as a common framework to manage the entire organisation. In this specific case, the sociocratic principles were directly embedded from the start. Yet, companies can also use sociocracy to self-manage only some areas and practices.
By doing so, every organisation can start a gradual transformation towards a more agile and a more participative community instead of keeping static, functional divisions alive.
However, we are just beginning to explore how, and which principles we can implement into the corporate business world. The potential and past experience of some pioneers seems promising, though.
So, why don’t you take part in this explorative journey?
Francesco Mondora focuses on businesses that make impact, are self-organised, and regenerate. He is passionate about farming and regenerative investments. Francesco is currently co-CEO of :mondora srl sb, a Team Systems company, as well as a board member of Assobenefit, in which he manages the networking among Italian Benefit Corporations.
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