2011 was the year where dictatorial governance was proved to be unsustainable and ineffective. However, while dictatorial rule is in its last days in terms of governmental structures backed by the rule of law, there is one area in society where authoritarian rule is still the norm.
While a government's power is contained by checks and balances in a democracy, the nature of leadership and culture within a commercial organisation of the modern-day CEO can still go unnoticed. For much of the latter quarter of the 20th century, government corruption was a focus of the public eye - both domestic government corruption and more large-scale abuses abroad. 2011 proved that financial corruption was a distraction from the real issue at hand; for corruption is a symptom of authoritarian rule and only made possible by a lack of democratic structures.
As executive pay gains closer scrutiny in the UK, one must fear that this too is the wrong focus of our attention. The coalition government's proposed solution - having shareholders vote on executive pay - hinted towards the true problem at hand; that democratic structure are healthy and key to sustained success. This is as true for commercial organisations as it is for the governments of nation states.
Democratic Structures for Commercial Organisations
Natan Sharansky, the famed Soviet dissident, described in his magnum opus 'The Case for Democracy' the difference between a 'free society' and a 'fear society' as a key facet to a Democratic society. In highlighting the difference between these two types of societies, Sharansky invokes the Town Square Test, "If a person cannot walk into the middle of the town square and express his or her views without fear of arrest, imprisonment, or physical harm, then that person is living in a fear society, not a free society".
Democratic structures ensure that each individual is given the opportunity to have a say in the decisions which will have an impact on them and life around them. This is a good thing for an organisation. Individuals want their organisation to succeed, because it means they succeed with it. The Town Square Test holds true for an authoritarian-led commercial organisation, as much as for an authoritarian government. In a fear society, the right to dissent is taken away by the risk of reprimand from the hierarchy above. While that is unlikely to be imprisonment or physical harm, the risk of being overlooked for a promotion, a pay-rise or an exciting new project at work is enough to stifle debate and free expression that would advance the bright ideas that exist within an organisation.
Nick Cohen, wrote in Standpoint magazine in December 2011, "Every time you go to work you leave a democracy and enter a dictatorship". While this may be something of a generalisation by the observer columnist, casting a wide net upon all commercial organisations, it would appear to be an accurate description of the morning of an HBOS risk manager - as illustrated by Cohen himself. Former head of Group Regulatory Risk, Paul Moore, was sacked by former HBOS CEO, Sir James Crosby, for speaking-up about the bank heading in the wrong direction, back in 2004. In further soviet-style reprimand, Moore was also subjected to an injunction in his claim for unfair dismissal, which was eventually settled.
Learning the Lessons
Thought leaders in human capital and organisation effectiveness need to harness the lessons from 2011 for the benefit of global commerce. Organisations need to identify the issues that stifle freedom in the workplace. Government needs to guide both private and public organisations through the required change and transformation, leading to an outcome where talent is fully capitalised to help businesses face the challenges of 21st century commerce.