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09 Jan 2017

Bosses Without Power: the Efficiency of Democratic Company Governance

What if a sustainable company was one led by powerless bosses? In other words, what are the advantages of a democratic governance structure? We speak with Stéphane Jaumier, a researcher and professor at Grenoble Ecole de Management. He recently published the results from his research carried out within a worker cooperative that runs a sheet-metal factory in France.

A successful worker cooperative

Scopix was set up 30 years ago when the owner of the company decided to shut down the factory. Now, the organization is made up of approximately 25 employees, almost all of whom are also associates in the cooperative. To understand the success behind this organization, Stéphane Jaumier a researcher and professor at Grenoble Ecole de Management. He recently published the results from his research carried out within a worker cooperative that runs a sheet-metal factory in France.

"My first idea was to accompany the company in its implementation of management tools. I worked in the workshop for one month as a temporary worker and then for a year as part of production. Everyone was aware of my role as a management researcher," explains Stéphane. The goal was to carry out an ethnography of the company's organization by adopting the perspective of internal company players.

Managers that don't manage

The researcher chose to study Scopix because of its unusual governance structure. "Scopix operates with a supervisory board and an executive board. The supervisory board is made up of three people elected by all employees for a duration of six years. The executive board also includes three members, who are chosen by the supervisory board for a duration of four years. Currently, both boards are made up almost exclusively of workshop workers. This is a unique characteristic that distinguishes Scopix from other worker cooperatives, which are usually led by a general manager who is a professional manager or someone with a management background." underlines Stéphane.

A supervisory board that hardly supervises

Being elected to the supervisory board was mostly seen as a sign of popularity. Once elected, the board members would designate the executive board members and then for the most part, appear to be uninterested in further supervision. "The responsibility of managing the company is mainly attributed to the executive board, whose members must continue their usual work load in the factory while adding several hours a week to handle management issues. In addition, the executive board appeared to have very little influence on the overall orientation of the cooperative. The same goes for its various managers in the factory, accounting, sales, etc." adds Stéphane.

Powerless bosses are the result of a very operational organization

"Scopix's organizational structure is very open. Everything is laid out in the open. Conflicts are discussed all day long and contact with authority figures is direct. This is one of the organization's key characteristics." highlights Stéphane. Governance plays a reduced role. There are rules, however there's always a bit of leeway between a rule and how it's enforced. Everything is done to delegitimize authority.

While the company does have certain mechanisms designed to provide managers with legitimacy, Stéphane's study of the organization's day to day operations highlighted that three factors contributed to sapping the managers' effective authority. "First, co-operators relentlessly voiced their refusal of a divide between chiefs and lay members. This contributed to reaffirming a group culture in which there was limited room for hierarchical power. Second, co-operators expressed permanent criticism and requests for accountability towards chiefs, which put them in infinite debt towards members, a situation that conspicuously contradicts their authority. Third, co-operators used schoolboy humour to undermine chiefs' credibility and to limit their claims to authority."

"If the company operates in this manner, there's a reason for it. If bosses are rendered powerless, it's because the organization is set up in a very operational manner. It's based on reverse dominance hierarchy, which is described by the anthropologist Boehm. This model guarantees an egalitarian operation and sharing of power." says Stéphane. As a result, the key finding of this research is that strategic missions are carried out in a collective manner by all co-operators.

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