Alienation

  • Artem Kvashnin
    • 22 Jul
    • 5 min read

Indeed, the first and probably one of the most challenging task to facing the development of a teal organisation is the exclusion of employees both from the results of their work and from the company itself. However, we need to remember that the same problem was tried to be solved within an ordinary organisation and the result was a widely used concept of corporate spirit. So what is the fundamental difference between what was offered earlier and what a teal organisation can and should offer today?

A teal organisation should change over from “corporate attributes (a sign assigned to someone or something)” to “corporate attribute (necessary, essential, inalienable property)” a small linguistic step but a huge essential transition. The transition from a set of external practices meant to reckon or associate an employee with a company to an inner consciousness of involvement supported by legal and official grounds. It is obvious that the concept of private property is the very essential and inalienable feature. But can every employee be an owner? There is no definite answer to this question. Formally, and this is certainly not so difficult to do, having of 0.000001% of the share capital already awards each shareholder with this honorary title. Though, we understand that the goal of a “tile” transformation is the creation of a highly motivated owner, the owner who fully associates himself with the work he does or the property he owns. At the same time we certainly understand that it’s important to keep the proper balance between the company’s goals. To achieve them we need:

  • — concentration of capital (which partly contradicts the desires of the individual, who, as we remember, is a shareholder and owner at the same time);

  • — administrative efficiency and availability of decision-making and responsibility centres (which also contradicts the decentralised system and the developed structure of the joint-stock company).

Of course, nowadays nobody knows for sure how to do this, which set of practices to use, what really matters and what doesn’t. We simply set goals for which we have developed a framework and a set of practices which on the one hand are designed to transform the consciousness and behaviour of hired staff into the consciousness of a business owner, and on the other hand to avoid the burdens and difficulties described above.

We mentioned a few key factors which we believe are the predictors of the “owner’s psychology.” These are the characteristics of an organisational relationship in achieving and maintaining of which an employee may stop feeling his estrangement from the organisation and vice versa adequately estimate not only the possible success but also the potential business risks. So what are these factors?

Awareness (Transparency). The owner knows exactly what is happening with his business! An employee is more likely to guess! Assumptions about the unfair distribution of profits.

Management. In this case term "power"(using which I would rather avoid) can be synonymous with management. Everyone should be able to make decisions even very important and related to finance.

Right to property. Everyone’s assurance that the result of his work belongs to him in a proper way, protected against infringement by any person in the company (primarily by administration and directorship).

Notably, the order of enumeration of factors fully reflects the timing of the implementation of reforms of our company. First goes transparency for all the participants in the process, then incorporation of the knowledge gained into management decisions and finally securing the result of these decisions in the right of property.

To embody the idea of transparency we are going to use the financial reporting mechanism of joint-stock companies. Every quarter, six months and a year, each partner of the company will receive a comprehensive report on the results of the company’s financial and operating activities. We will borrow the report form from IFRS reporting standards, significantly curtailed, due to the absence of the staff of accountants and consultants. The role of the auditor should be performed by the selected employee or group of employees provided with all the necessary primary documents supporting data reports.

Control of financial flows. This is one of the most complicated tasks and the most controversial of all due to the contradiction in the relationship between employee, owner and company interests. In particular, the “fair” distribution of profits in the form of dividends and its accumulation in order to pass the investment cycle or to form a safety cushion. It is worth mentioning that the concept of the fairness here is extremely subjective and difficult to algorithmize. Indeed, we don’t know how a new type of organisation should be implemented at this point and which pattern will resolve the current dilemma most efficiently. However, we recognise the problem and will try different approaches to solving it. Our first step was the creation of ICVC.

Further reforms include the following points:

  • — To achieve average market wages, a further increase should be approved by the team, since these changes will directly affect the company’s profits to the distribution of which all partners of the company will be relevant.

  • — The distribution of the company’s net income will become transparent and all the employees will have a hand in it. A possible option is to determine the collective percentage of shares that will be distributed between investments, stocks and dividends.

  • — The dividend will be strictly relating to teams’ KPI and team member productivity.

  • — Employees are engaged in the management of ICVC.

  • — Operating costs are controlled and accountable to the whole team.

  • — The salary of the management team and the directorship is transparent and approved by the team.

Ownership of a share in ICVC is disposed to an employee after a 3 year period and is legally established. The share of employees who left before the agreed period is redistributed among all colleagues or divided in a special way by the decision of the team.

We will inform you of the gradual transformation of our company on our blog.

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