Leadership contracts

Exploring how leadership contracts could be used in contributionism

Some organisations can greatly benefit from strong leadership. Leadership could help with guiding an organisation towards greater success, increasing operational efficiency and with the creation of more innovative solutions. However leadership can also be highly problematic. Leadership can become stagnant and difficult to change due to the ownership and governance structures that have been adopted. Workers may become demotivated and disengaged if leadership becomes increasingly misaligned with the values and preferences of its workers due to differing motives or incentives.

Organisations need to self determine what balance they want between adopting individual leadership roles with collective governance responsibility. Leadership contracts can help with enabling individuals within an organisation to take on greater responsibility and autonomy to make important decisions and lead the organisation in certain areas.

Leadership contracts need to apply suitable terms for the arrangement to be accepted by the workers and be beneficial for the organisation. Having the right terms will mean the scope of the leadership role is limited to what is required to achieve the intended outcome.

The benefit of using leadership contracts is that they would be time bound so that someone doesn’t have perpetual influence and control over certain areas within an organisation. This makes leadership more accountable towards the collective preferences of the organisation. Leadership that doesn’t take into account worker preferences will make it less likely that they are elected again into that position.

Leadership contracts represent an opportunity to balance the benefits of high responsibility roles that have more autonomy and efficiency to make important decisions with the need for those roles to have greater accountability and flexibility to be changed over time as the needs and preferences of the organisation evolve.

Leadership contract parameters

Leadership contracts will need to include a number of parameters to define the responsibilities included in the contract with any sensible policies and clauses that can help to protect the organisation.

Contributor

Personal details about the contributor that is being selected for the leadership role.

Duration

A start and end date for how long the contract will be valid. This means that workers will not need to make a dissenting proposal and vote to remove a person from a leadership position in most cases. Fixed term length contracts help to ensure that leadership roles aren’t given in perpetuity and instead it is earned through contributor selection. Temporary durations should also help to reduce the likelihood for conflict.

Governance rights

A leadership contract should define exactly what responsibilities and controls the position includes. This could mean outlining the key decisions that they are responsible for and what processes they must follow. Making this well scoped instead of broad means that both the wider organisation and the person that takes the leadership role will be confident in what is expected from the leadership role.

Veto power

The organisation could include veto authority to overrule a decision that has been made by leadership. This overruling authority could be useful for preventing leadership from making decisions that are strongly opposed by the wider organisation. If veto power is included the terms and thresholds required to use it will need to be accurately documented.

Early cancellation

The preferences and opinions of the contributors could change over time. They could become increasingly opposed to the approach or decisions that leadership is making. In these situations it could be useful to have an early cancellation clause in the contract so that an organisation's contributors are able to make changes to the leadership when it makes sense for them to do so. The thresholds and steps to complete this cancellation process will need to be defined in the contract.

Rules & policies

How the leadership should behave and act throughout their term can be documented. The contract might be automatically cancelled if any of these rules of policies are breached.

Emergent leadership

Sometimes leadership can emerge out of challenging situations. A leadership role might not even be defined. There could be many situations where leadership emerges in group working environments. Leadership contracts might not be necessary for some organisations or for certain situations.

The main desirable outcome for situations where leadership has emerged is that it is accepted by the group. If there is opposition to the emergent leadership then contributors within the organisation would be able to express their opposition. They might suggest that this role should not exist as it is excessively influencing the organisation in one direction. Others might suggest that the role is beneficiary and it should be legitimised by creating a proper leadership role with a contract so that a person can then be elected into that position.

Specific governance contracts

Organisations could benefit from creating contracts that give someone highly specific responsibilities in the organisation. This could be a single decision that the organisation wants to delegate to a person or group that is inside or outside the organisation. In these situations a more specific contract could be used to delegate this responsibility.

Responsibilities that are historically bundled together into single leadership role positions could be broken down into very specific responsibilities that are distributed across multiple people. When decisions are overlapping and require similar context it might be more efficient to bundle these responsibilities into a single role. In other situations an organisation might want to delegate decisions to people to increase governance efficiency but would still prefer to delegate the responsibilities across multiple people. This approach could help to ensure that each individual is only given a limited amount of control and influence over the organisation.

Founder leadership contracts

Sometimes a person or group of people can come together and have a vision for something valuable and impactful that a new organisation could achieve. Without leadership contracts there is a risk that future contributors that join these organisations do not agree with the direction of the organisation. If this happens the new contributors in the organisation could democratically decide that the organisation should go in another direction instead of what is preferred by the founders. Sometimes the founders could be right and sometimes the other contributors could be right about which direction would be best for the organisation.

Founders could create leadership contracts at the start of an organisation that outlines the responsibilities they have and how long it should take for them to execute their vision. These contracts provide the benefit of reassurance to the founders that they can execute their vision as intended. They are also beneficial for the contributors that join the organisation as the responsibilities and influence that the leadership has is very clearly defined. Workers can either accept or reject these terms when deciding whether to join or not. A leadership contract should also mean that a finite amount of time has been specified in which the leadership is given these responsibilities. After these contracts lapse, contributors would be able to vote on whether the leadership role should continue to exist or not and if so who is going to be elected into that role.