In a January 2011 editorial on the UK workforce website Management-Issues, Myra White uses a firsthand account of the progress that China has made in recent years to modernize its most populous city, Shanghai, as the springboard to argue that the country’s autocratic democracy values should be embraced by U.S. employers.

Basically, for White, modern U.S. workplaces exist in an equilibrium in which, as participative management practices – those that promote workplace equality – increase, management’s authority decreases. She makes the case that this cycle needs to be reversed so that managers can focus more on core business goals and less on getting into the minds of their subordinates to in order to spur them to keep doing their best work.

However, Winning Workplaces’ research on the management practices used by our Top Small Company Workplaces (TSCW) award honorees shows that U.S. businesses, small and large alike, can have their cake and eat it, too. That is, they can implement practices that encourage folks at all levels to put forth their ideas for growing the business while management retains the ultimate authority on where the organization should go, and how it gets there.

In fact, we have seen evidence from our most recent award winners and finalists – named in Inc. Magazine in June 2010 and honored at our Leadership Conference with Inc. last October – that there is a business case for working toward greater workplace equality. Consider:

  • At Winner Tarlton Corporation, a St. Louis-based general contractor and construction management firm, their collaborative work culture is aligned with a flat organizational structure. A core value is to treat others as they would like to be treated, starting with their employees and extending to field workers, subcontractors and clients. The words “team” and “teamwork” are used often at Tarlton because they subscribe to the belief that working together is the best way to meet a goal. This focus has helped to keep their turnover rate well below the industry average of 14 percent.
  • As we shared in our November 2010 Success Story on Winner Ginger Bay Salon & Spa, also based in Missouri, their focus on involving all of their 60-plus employees in business decisions, including cost-cutting ideas, led to higher revenues in 2009 – when their competitors saw the reverse – as well as being named a top salon in a key trade publication and turnover less than half the average for their industry.
  • In 2009 award Finalist Finelite, a California-based industrial goods manufacturer, saw a 13 percent decrease in shipments. Even so, it achieved record productivity levels that year, enabling the company to still pay out employee bonuses at 95 percent of target levels and avoid layoffs. How did Finelite achieve this? They rigorously implemented lean manufacturing principles; all employees from top management to the hourly employees were trained on how to detect and eliminate inefficiencies and incorporate quality measures to improve production processes. They even brought their strategic suppliers in on the learning process. Today Finelite represents a model for others – in 2010 more than 20 CEOs visited the firm to learn how they could replicate the company’s practices in their own organizations.

As we look at the applicant pool for our current, 2011 TSCW award, improved business results from egalitarian workplace practices is a continuing trend. In our award application we asked our participating firms a series of qualitative questions addressing learning and development initiatives, training of managers and supervisors, how the organization involves employees in important decisions, employee involvement in response to the economic downturn and – most applicable and telling – how investment in employees has improved company performance and results.

Among our applicant pool of nearly 350 firms, numerous responded to these questions using words that support a focus on workplace equality – in addition to equality, words like consensustransparentdemocraticcollaborative and flat management structure. These firms place value on building and sustaining democratic workplaces. For example:

  • 75 percent share the company’s financial information with employees, educating them on how the business makes or loses money, and
  • 65 percent offer some form of profit sharing to employees.

These practices contribute to tangible returns; among the 2011 applicants mentioned above that responded to our application questions with equality-focused phrases,

  • Average three-year revenue growth was 89 percent.
  • 98 percent were profitable in 2010.
  • Their average employee turnover in 2010 was only 9 percent.

The data above do not represent a complete picture of bottom-line results impacted by a focus on greater workplace equality. Still, they do show that some companies that encourage participation at all levels, educate people on how the business makes money and involve them in improving that process are seeing a return on their time and investment. In other words, autocratic management is not for every U.S. company concerned with improving their processes over time and achieving their long-term goals, as White argues it should be.