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a democratic workplace framework
Traditionally a company is owned by capital and the shareholders. Labour is secondary. In a democratic company, the fundamental idea is that labour (the people) is primary and capital is secondary. Shareholders are not owners of a company, but suppliers of capital. If they don’t like the returns, they can invest elsewhere. We believe that a company as a system is self-correcting based on the excess value it creates for its stakeholders. The people with the most “power” are customers, and the employees and shareholders bring labour and capital to create value.
Frappe is a democratic company. Democracy means that every voice should be heard when a decision is taken and conflicts are resolved via dialogue and not authority. Democracies are great because if they are functional, it means that the best ideas win. Great ideas can come from anywhere and not just from people up in the hierarchy. The goal of the Constitution is to ensure the democratic nature of the company.
Frappe is also a platform for all its members to contribute and do their best work. There is no vision for the company other than the vision each individual member brings in. Frappe also operates around its “values”. Our values are freedom, excellence and authenticity. Excellence is a direction - everyone in Frappe should aspire to do outstanding work.
1.
Legality
2.
Rights and responsibilities of every member
3.
Rules and decision making
4.
Chief Executive Officer
5.
Cabinet
6.
Membership
7.
Expenses
8.
Fellowships
9.
Shareholder rights
10.
Operating rules
Indian law does not (rather no law in the world) recognise a “democratic company” as we have defined it. In the outer framework of statutory law, a company is treated as property. The rights to the property are held by the shareholders. The shareholders elect a board and the board appoints the CEO, who is then responsible for hiring the executives. The board also decides what to do with capital, distribution of profits, raising new capital.
There are ways to make our operations legal. Frappe will work with the right legal framework to ensure that the memorandum and articles of association are amended to accept this way of operations. Other than that, Frappe will publicly proclaim this model and make it clear to all future shareholders to accept this model.
The heart of a democratic company is the people. Every Frappe member has some basic rights and responsibilities.
Rights
The right to choose their work
The right to choose their team
The right to choose their working hours and place
The right to as much autonomy as possible
The right to participate in team governance via an equal vote
The right to express themselves in a public forum
Responsibilities
Responsibility to represent the core values of Frappe
Responsibility to contribute to the team to meet its goals and deliverables to internal or external customers
Responsibility to be honest and transparent
Responsibility to be fair to all members of the team and treat them with dignity (also guaranteed by the constitution)
Responsibility to call out any injustice in the team, either active harm to other members or non-performance in terms of their pay.
Responsibility to follow standards, brand, and technology guidelines set by the team
Making new laws
Laws will be made via an online sociocratic vote (sociocratic vote is not anonymous and requires everyone’s consent to pass. People can agree or object to the proposal. The law must be amended till there are no objections)
Process:
Law must be proposed via a Gameplan post and questions must be invited.
A non binding pulse poll should be taken to know the overall mood of the company.
A discussion must be done during at least one all hands / offsite.
After 14 days, the voting must begin with options (I agree, I object)
If there are objections, then the proposer must discuss with the objector and settle.
If there are no objections in 14 days, then the vote passes.
All laws must be updated in this document, along with change logs. The latest version must exist on the Company’s website.
Business Vote
A business vote has to be proposed on Gameplan with the tag [Proposal] for business decisions like expenses, hiring and confirmation of cabinet.
If there are no objections within 7 days, then we can assume that people are okay with the proposal.
If there are objections, then there must be a poll which will be closed in 7 days.
A Business Vote is passed if there is a 70% approval.
Conflict resolution
Anyone can register a complaint against anyone for breach of laws or responsibilities.
In the first round, the HR manager / CEO will try and arbitrate in the conflict. If the complainant is unhappy, they can ask for a judiciary review.
A judiciary committee of 5 members will decide on the conflicts after listening to both sides.
The ad-hoc judiciary committee will be set up by the HR manager.
Consequences
There are no prescribed consequences to not following any of the rules and responsibilities but not following them may trigger an exit (PW). No rules are perfect and should never be applied without exceptions. How strictly should they be applied will be left to the context taken by the people who raise the PW and the judicial process.
The chief executive officer (CEO) is the nominal head of the company. Here is what the role means:
Responsibilities
Enable all members in the team to do their best.
Ensure that the company’s values are upheld.
Overall financial goals are met.
Long term sustainability of the company.
Ensure compliance to legal / fiduciary responsibilities to all stake holders (customers, employees, shareholders, government etc.).
Election
The CEO will be elected at the beginning of each financial year.
Anyone can nominate themselves to be a CEO. The nominee must make a proposal on Gameplan with a statement of purpose and have endorsement of 5 members. All nominations must be made before 1st of April. Voting must be done before 30th April.
If there are no nominees/challengers, the existing CEO will continue for one more year.
If the CEO wants to give up the position and there are no nominees, then the CEO can nominate the next CEO. The new nominee must be approved by a Business Vote (or the CEO has to call for another candidate).
If there are multiple nominees, they will be elected via secret ballot in a run-off style poll. One nominee will be eliminated in each round till one remains.
Each nominee must present themselves for a Q&A at an allotted period.
Recall
A CEO can be recalled with a Business Vote and a new election can be forced.
Special powers
To fire anyone without Performance Warning causing harm to the organisation (subject to judiciary oversight)
Financial / material harm
Mispresentation
Theft / fraud
Harassment
A company is a complex entity with various functions like sales, engineering, support, marketing etc. A cabinet is the team that looks into the needs of each functional unit. Cabinet members are not supposed to directly execute but support the team in execution.
Responsibilities
Planning, monitoring, expansion and accountability of their units
Enable all members of the unit they are responsible for
Give regular performance feedback
Cabinet members are nominated by the CEO and must be approved by the Business Vote. A cabinet member must be hired first and then nominated to the cabinet.
Term: Cabinet positions can be changed by the CEO. If a new CEO is elected, they can change the cabinet (or choose to continue).
The HR manager is responsible for managing the process of adding or removing members.
Adding new members
A new opening for a permanent member must be proposed by an existing member (proposer) on Gameplan and subject to a Business Vote.
A new member has to be endorsed by 3 members for junior positions and 5 members for senior positions in consensus. If there is a conflict, then all interviewers should sit together and come to a consensus.
It is the responsibility of the proposer to ensure onboarding, mentoring and success of that member. If the proposer does not have bandwidth, they must not propose.
Removing (firing) members
If a member does not contribute to the team fairly, they can be removed.
Anyone can raise a Performance Warning (PW) for an existing member. Ideally email warnings should be given before a PW is raised.
When a PW is raised, a judiciary committee of 5 members who have the context of the person in question, will be formed by the HR Manager to review the warning.
If the warning is withdrawn, then at least one member of the committee must vouch for the candidate being reviewed and be responsible for fixing the issues that led to the warning.
All PW records must be transparent and available to everyone.
Transparency
A democracy only works if all members have access to the same data for decision making.
All business / financial data must be available to all members in the company.
All non customer information (excluding PII) must be available for everyone in the company.
If any member wants access to information / process that is not directly available (unless it is related to security), it should be available when required.
Compensation
Every member gets to select their pay every year in April. Pick your pay does not mean “free lunch”. Everyone is expected to contribute more than their pay to the company. A “fair pay” is a “shared understanding” between the person and the team.
Pay must be endorsed by 3 members.
Everyone’s pay will be publicly visible in the company.
ESOPs
ESOPs will be managed as per the ESOP agreement in place and will be managed by the Board (as per the will of the Shareholder).
Any buy-back / relinquishment will be approved by shareholders.
Expenses
Expenses will be validated by Accounts Controller.
Expenses more than 3 lakh must be proposed on Gameplan and approved by Business Vote.
Contracts
Any long term contracts must be proposed on Gameplan and approved by Business Vote if there are any objections.
They must have a term of 1 year and be renewed.
Investments
Investments more than 1cr must be approved by the Business Vote.
The proposer is responsible for successful deployment of the investment.
Investments more than 1cr must get shareholder approval (currently we are bound by this for Zerodha).
Reporting
A quarterly report has to be presented to all members and shareholders by the CEO/cabinet.
It must include the financials: Balance Sheet, P&L and Cash-flow statement.
Reducing expenses
Any expense can be cut with a Business Vote within contractual obligations (notice period, penalty etc).
If compensation has to be reduced due to the company not achieving profitability target:
The CEO will propose a % of pay cut to be voted by Business Vote.
The company will vote whether the pay will be reduced by cutting everyone’s pay proportionately or removing the worst performers via a majority vote (there are only two options here. Also if it is Frappe specific thing, then people will most likely abandon ship).
If there is a deadlock in cutting expenses or there is an immediate crisis, then the CEO has the right to cut expenses as seen fit.
Fellows are members who have made “contributions with significant impact” to the company.
Fellows are awarded equity as ESOPs from the ESOP pool in appreciation of their contributions.
New fellows are selected every year by voting among existing fellows by consensus (sociocratic vote).
The quantum of ESOPs will be decided by the existing fellows based on the impact and the quantum of available equity.
Shareholders should declare their intent at the start of the FY (eg. 15% margins / 50% growth).
Shareholders have right to 15% profit before tax (PBT).
If the company does not deliver 15% PBT, the shareholders via the board have emergency rights:
Ability to appoint the CEO
Ability to appoint cabinet members
Force the CEO and cabinet to cut costs in 3 months by examining expenses, forcing lower pay or reducing the head-count.
Statement of purpose: All members must submit a plan / statement of purpose at the beginning of each financial year outlining their role and responsibilities. If they choose to change their role, they must give a 2 month notice to ensure smooth handover.
Transparency: Every member must post 2 work updates on Gameplan each month for transparency and accountability.
Feedback: Every member must present their work for feedback to their team once a month, ideally on Open Days.
All hands: The company will have an all-hands each Tuesday at 4pm to review customer feedback, important metrics and proposals. All members are invited. Attendance is optional.
Quarterly reflections: Every member must share quarterly reflections and be available for a performance feedback each quarter.
Availability: Every member must be reasonably available on company’s chat channel (Raven) during (self selected) working hours.
Offsites: Every member must attend the company’s two in-person offsite meetups each year.
Events: Every member must attend the annual flagship event (Frappeverse) in Mumbai each year.
