Democratic Ironies in Small Business
One of the great ironies is that while businesses flourish best in a democracy, a business cannot flourish as a democracy.
By definition, in a democracy stakeholders vote on issues and the majority rules. But while this process is one of the greatest inventions of mankind, with many applications, business is not one of them.
Pure democracy isn't practical in government, either.
But a group of visionary malcontents solved that problem over 200 years ago by creating something new: a democratic republic. Since then, Americans have elected a few to represent the interests of all, with understandable deference to the majority.
A business can be like a republic, in that someone has to be the final decision-maker. One desk, as President Truman so famously said, where the proverbial buck stops.
Here's another irony: a business functions best when structured like a dictatorship, but not if managed by a tyrant. But while the default structure of a business may look like a dictatorship, that doesn't have to dictate (no pun intended) how people are managed.
The dominator management model -- as old as humanity itself -- requires subordinates to dutifully follow the instructions of superiors. But this model is a withering vestige of centuries past and not currently competitive.
The 21st century management model must look more like a partnership. Just as effective government requires that democratic principles be augmented with outsourced representation, the necessity for an ultimate decision-maker in a business must be alloyed with the experience and brainpower of employees.
The Founders envisioned a nation that could be as dynamic as it was enduring, and as powerful as it was benevolent, but only if the stakeholders believed their investment in such an ideal was, and remained, valuable. The democratic republic -- warts and all -- essentially did this.
And even though Americans outsource the management of their government, the classic principles of democracy come to bear with regularly scheduled elections to see if the majority wants to change its mind.
Employees change their minds by seeking work elsewhere. And while they always had the right to leave a job that's managed by tyrants rather than leaders, many Americans in past generations swallowed their pride in favor of regular income, benefits, and what we now know was the illusion of job security.
Today, employees have no such illusions. And while they accept the reality that managers have to make final decisions, they also expect to contribute to the basis for those decisions.
In the 21st century, a business still can't be structured as a democracy. But today, employees expect to be led, not driven; they want to contribute, not just take orders.
Managers still must make the ultimate decisions, but after sharing the decision-making process with employees.
Write this on a rock... Having the power to make final decisions isn't a license to be a tyrant.
Jim Blasingame
Small Business Expert and host of The Small Business Advocate Show
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