The Great Resignation needs a solution. Could DAOs be the answer?

Millions of U.S. employees are leaving their jobs in Covid-19’s wake, forcing employers to re-evaluate how to attract and retain talent. Better systems for rewarding workers’ contributions are essential. Decentralized autonomous organizations (DAOs) that empower workers with a say in governance and automatically reward merit-based actions can play a key role in creating the fulfilling work environments that modern workers seek. 

Imagine an internet-native organization where financial decisions — such as salaries, raises, bonuses, philanthropy, research and development, acquisitions, and so on — are member-governed, with each DAO member standing on equal footing with the other. There are no CEOs, managers or commutes standing between highly-qualified professionals, the work they want to do and the profits they earn.    

For now, this utopian work structure is too good to be true. Most DAOs fall short of creating the radically inclusive, equitable work environment they promise to form. However, the changes required by DAOs are simple and achievable.

What the Great Resignation reveals about employee satisfaction 

Nearly 4.3 million Americans quit their jobs in January, leaving 11.3 million U.S. jobs unfilled. For those who felt the impacts of the Great Recession, this Great Resignation is a remarkable paradigm shift. Only an event as catastrophic as the pandemic would seem an appropriate explanation, but it would be a mistake to say that Covid-19 caused this corporate exodus. More accurately, Covid has been an accelerant combusting a workplace model built to burn. 

Employees want to get the job done, which is why appropriately supported workers are more productive working from home than in an office. As it turns out, eliminating commutes from a person’s daily schedule frees up the time and energy needed to complete deliverables ahead of schedule. Allowing employees to do that work in the presence of their families and pets in their preferred work environments often motivates them to go above and beyond for their work teams. 

When the world shut down, salaried employees experienced a life-altering truth: they could work well without leaving home. This disruptive reality heavily impacted mid-career employees in technology and healthcare, who are now most likely to resign if their employers cannot provide a flexible, equitable workplace model. 

Can DAOs solve the Great Resignation?  

The rise of DAOs may answer workers’ demands for greater autonomy and efficiency. DAOs are blockchain-supported, decentralized organizations governed by self-executing rules. Deploying this technology as a workplace structure eliminates the need for corporate oversight, making truly democratic work environments possible.  

Workers can govern themselves as stakeholders rather than employees. DAO members can access their organization’s funds based on transparent smart contracts instead of relying on the decisions CEOs and CFOs make behind closed doors. When changes to the DAO are necessary, member votes are counted, and changes are implemented through algorithms on the blockchain, not human intermediaries.  

DAOs may be the answer to the modern workers’ disaffection with today’s outdated workplace structures. Still, creators must design them to be as inclusive, democratic and community-governed as possible to avoid repeating the same corporate pitfalls. 

What’s keeping DAOs from delivering their promises 

The current status of DAOs is not as decentralized or autonomous as purists would like it to be. In fact, many DAOs are funded by venture capitalists and used by corporations as yet another cutting-edge structure that allows them to complete thousands of simultaneous actions. When used this way, DAOs become tools of even greater, swifter corporate control rather than promoting a democratic work environment.    

Furthermore, not all DAO members participate equally despite holding equal status. For example, one DAO analytics engine reports that out of the current 1.8 million governance token holders, only 574,400 are active voters and proposal makers. That means that only about 30% of members participate in ways that impact the DAO’s direction. In other words, 70% of DAO members turn in their autonomy. Why? One significant reason for such low voter participation is cost. To cover the cost of gas, voters are required to pay a fee for every vote. This financial barrier discourages mass adoption and can make users lose interest in engaging in governance long-term. This also highlights the other major issue with lower than expected DAO participation: attention. DAOs have found it difficult to keep people consistently engaged. When you’re decentralized it can be hard to rally the troops, so a renewed focus must be on maintaining the DAO community and offering compelling reasons to stay involved.     

Toward a radically equitable workplace model 

The problems described above can be solved with the same innovative approach and courage that formed blockchain technology. With simple changes, DAOs can put people first, foster communities, and empower individuals to do bigger, better, and more equitable work than conventional corporate environments allow. DAO creators can reward members for voter participation and proposal suggestions rather than imposing fees for votes, and control decisions entirely with algorithms as well as raise funds without relying on VCs.   

Truly innovative DAOs offer their members a clear alternative to current workplace models where members govern themselves and access a public, indelible record of the organization’s financials. These benefits align with the values upheld by the workers who comprise the Great Resignation: autonomy, efficiency and transparency. If entrepreneurs want to form an organization that attracts and retains top talent, they should let the old models burn. Reimagine structures and expectations for work, and allow them to flourish through DAOs.