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Running a business like a democracy

  • Lucia A. Diaz, production supervisor at Guayaki Organic Yerba Mate in Sebastopol, where the management style known as organization democracy encompasses all employes at the growing business.

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.

A Day At Guayaki

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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.


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