Companionism: introducing democracy in the corporation

On the book by Madoc Batcup. Companionism: why companies need democracy as much as countries. Exposure Publishing, 2007

Interesting proposal to introduce democratic governance in the corporate world, featured in Open Democracy.

Madoc Batcup:

Democracy is a form of political governance. But it is also a principle, an idea about the best way for a society to order itself. In this sense, democracy needs also to be the foundation of its decision-making processes – especially in its most important and powerful institutions.

How would this apply to corporations? In essence, once a company reaches a certain size, it could adopt the same model of representative democracy that exists in the civic sphere. A company, after all, embodies the labour and the capital invested in it. The right of shareholders to vote at the company’s annual general meeting (AGM) – but not property rights – could be transferred to the employees of a company on the principle of one person, one vote. As in a representative democracy where the citizen votes for others to carry out the business of government on his or her behalf, the employees at a company’s AGM would be able to vote on whether they had confidence in the way the directors were managing the company. The shareholders would retain their dividend rights (possibly with some minimum dividend as a percentage of profit); if they were dissatisfied with their return they could sell their shares. None of the economic benefit of the shares would accrue to the employees.

In order to ensure that early-stage entrepreneurship is not stifled, the transfer of voting rights would take place on a graduated basis. This would also reflect the fact that the relationship between staff and management tends to be closer and more informal in a smaller company, and that often there are opportunities for staff to move to a different company if this is unsatisfactory. Moreover, small companies have a less powerful social impact than their larger counterparts. In order to accommodate these considerations the voting rights of shares could transfer in stages from shareholders to employees.

At each stage, the directors would need to balance the satisfaction of the employees with the need to provide an adequate return to shareholders so that the company could continue to access the capital markets. This dilemma would echo that of any government wishing to remain popular and also to balance its budget.

This new system of corporate democracy – reflected in the title of my book Companionism: why companies need democracy as much as countries – would both return the company system to its source as a way to mobilise human endeavour for a common purpose and to offer a much more positive identity to the people involved: not employees, but companions.

Such an arrangement has the potential to motivate all those who work in companies to scrutinise the decisions taken by the elected board, and in turn galvanise the board to take into account the interests of its “companions” by considering issues other than those of pure profit. In turn, this will make democracy more real to millions of people who feel disempowered in the workplace; and increased accountability in the workplace would be an inspiring example for engagement in the political democratic process as well.”