Democratic organizations place significant responsibility on the different leaders and their team which makes people feel empowered. Decision making and influence is spread amongst the team which creates a more collaborative, engaged, and adaptive operating system. While democratic organizations are able to make faster decisions to solve many problems at once, they can also get bogged down in consensus building, limit cross functional visibility, and can easily lose sight on the original plan.
"Each department has their own expectations and procedures when it comes to spending - there are no written rules on how it should be done. It’s up to the team and the people to decide!"
When it comes to Spend Culture, democratic organizations are setup to take the guesswork out of where resources and money should be allocated. A democratic approach makes operations easy to setup, reduces the strain on training, and keeps the team aligned, however it can take some time to discover areas where spending started to become ineffective.
Like its name, a common trait democratic leaders wants is independence and consensus. Democratic leaders don’t believe in ‘one right way’ to do things, and would rather find the ‘best’ way - whatever that may be.
It’s common to see many differing beliefs in democratic organizations and different types of leaders - which may result in some healthy debates. Various departments may have different kinds of goals - which creates a very cross-functional and diverse environment that is at once innovative and nimble.
Democratic finance teams are one of the toughest to be in -- as the financial processes of a democratic spend culture vary from team to team.
Department leaders and managers usually have set policies dependent on the team’s needs, but translating the requirements to one unified process could cause some confusion - which means one unified process usually means something most people are comfortable with, such as spreadsheets or email purchase approvals.
A common challenge in many democratic organizations is standardizing processes on an organizational and global basis, as well as gaining spend visibility across the entire organization. Software or SaaS spend is a common problem, as different departments implement different software for their needs.
For example, different departments tend to each have their purchase tracking systems which they control and adapt to fit their needs best; the marketing team might track their expenses on a spreadsheet, while human resources require an expenses reimbursement form.
Due to the diversity of democratic organizations, procurement teams often have to manually compile reports on regular KPIs to consolidate purchasing and spend data.
Finance often tracks down issues or confirms approvals through email, which sometimes could get lost. Democratic organizations do not like having to learn software or commit to just one software, so getting an entire organization on board with a purchasing process could be difficult. Balancing the change management portion and working cross-functionally as a strategic ally to the finance department is a critical challenge in democratic procurement teams.