You're reading

Not every investment decision has to be made by a director or vice president.

Roberto Henriquez had an intriguing idea. The 30-year-old information technology project manager thought he and his IBM colleagues could work more efficiently if they had an app enabling them to manage projects through the company's internal social media network.

Normally, he would need approval from a senior-level review board for such an idea.

But not this time.

Instead, he quickly received the blessing — and financial backing — of his peers through a new “corporate crowdfunding” system in IBM’s internal IT organisation.

Henriquez’s idea was pitted against other proposed projects seeking funding from employees in the IT group. Each of the more than 300 participants — from entry-level workers to vice presidents — received $2,000 to invest over an eight-week period. Then, through the crowdfunding system, Henriquez managed to raise a total of $20,000, and after a few months of development and testing, project managers started using his app.

The experience was empowering for Henriquez, who is based in Bratislava, Slovakia. “I don’t feel like I work for IBM; I feel like this is my company,” he said.

That’s music to the ears of IBM executives who hope the iFundIT project will engage employees and spark more innovation from the bottom up.

Getting employees engaged

Employee engagement is a pressing issue for most companies these days. In a study of 142 countries, Gallup found that only 13% of employees worldwide are engaged in their work. The percentages vary widely by nation, with 30% of workers in America saying they are engaged; 24% in Australia; 17% in the UK; 15% in Germany; 9% in India; and just 6% in China.

One possible solution to this problem: more egalitarian workplaces where employees feel they have more control over decisions, such as IBM’s iFundIT program.

“Companies need to be more compatible with this democratic age of the Internet and social media that we live in now,” said Traci Fenton, chief executive officer of St. Louis and London-based WorldBlu, which provides consulting services for creating “freedom-centred” workplaces. “Organisational democracy means decentralizing power and recognising that good ideas are everywhere in the workplace.”

Seeking employee input may slow some types of decision-making, but Fenton believes it could speed up the execution process because workers would feel more invested after having their say. “Of course, companies only want to do this if they’re sure they’re going to act on a group decision,” she said. “If they don’t follow through, they’ve done more harm than good.”

WorldBlu compiles an annual list of the world’s “most democratic workplaces” based on such factors as being transparent and accountable, sharing power, and giving employees meaningful choices. The biggest obstacles to workplace democracy are executive ego and ignorance, Fenton said.

“Some people simply don’t want to give up control; others fear what they don’t understand,” she said.

A democratic workplace has cross-generational appeal, although IBM believes its crowdfunding project will especially resonate with millennials, who are used to airing their views in blogs and social media and believe they deserve to be heard at work, too. Millennials is a term used to describe the generation of people born between about 1980 and 2000.

Small workforce, big voice

Some companies with a small workforce are going even further and giving employees a voice in some very major decisions. When DreamHost’s founders decided in 2011 to recruit the first CEO for the Los Angeles-based Web hosting firm, they let employees vote on the finalists. More recently, its 165 workers voted on the company’s health benefits plan.

“We feel that by letting our employees make the decision after they know how much different benefit packages will cost, we’re empowering them and encouraging them to stay with the company,” said Ed Wesley, director of organisational development and learning. “It takes guts to be democratic and give employees more control, but the payoff is happiness and engagement.”

Companies like DreamHost and Menlo Innovations, a software company in Ann Arbor, Michigan, also are opening the financial books to their employees to guide their decision-making. “Our goal is for the staff to make decisions about where we spend money, but they need to understand the big financial picture of the company first,” said Rich Sheridan, the CEO at Menlo, which has about 50 full-time and temporary workers.  

Already, Menlo gets 15 to 25 workers involved in assessing a job candidate as he or she goes through interviews and tryouts. “We work in pairs so we want to see evidence of kindergarten skills, whether they can play well with our employees,” Sheridan said.

Of course, it’s easier to democratise small businesses than multinationals with thousands of workers scattered around the globe. But IBM shows that even a company with more than 430,000 employees in 170 countries can give at least some of them more decision-making authority.

 “We need to flatten the organisation; not every investment decision has to be made by a director or vice president,” said Francoise LeGoues, the head of IBM’s CIOLab and creator of iFundIT. “We want collaborative innovation. How do we ensure that young people’s ideas get attention and that someone in Bangalore connects with someone in New York?”

Eligible projects must be related to internal information technology, although they could also be applied to products, such as IBM’s social software platform for businesses. “It has to be a small project,” LeGoues said. “These won’t be large, multi-year projects like a redesign of the entire HR system, for example.”

About 160 projects were submitted during the first two crowdfunding rounds this year, with 20 reaching their funding target of between $10,000 and $30,000. Funded projects included Influence of Communities from China (search results based on influence, not popularity) and reMap from the UK (a collaborative outlining tool to organise and share information across teams of all sizes).

“The level of excitement and participation has surprised me,” LeGoues said. “People have even begun running internal campaigns to try to get others to spend money on their projects. This is really a game changer in the way people think about what it means to be an IBMer.”

Follow BBC Capital on Twitter @BBC_Capital or join the conversation about this or any other Capital story on Facebook: BBC Capital on Facebook.

Around the bbc