Skip
Current Issue
This Month's Print Issue

Follow Fast Company

We’ll come to you.

4 minute read

Lessons Learned

This CEO Only Keeps His Job If His Employees Say He Should

Kelly Max stands re-election each year in order to retain his leadership role. Here's why he's a believer in workplace democracy.

This CEO Only Keeps His Job If His Employees Say He Should
[Photo: Flickr user Joe Hall]

I'm an elected CEO. Every year, my colleagues decide whether they still want me as their leader. If they don't, I take another job in the company or head for the door.

I'm not alone. In March, the Wall Street Journal reported that "workplace democracy" is beginning to catch on. The way it works is simple: Employees are finally getting the power to vote on the day-to-day decisions that affect their working lives.

Sometimes that's as minor as which snacks to stock in the break room, but in a few instances, employee elections are deciding bigger issues, too, like which candidates to hire for teams. In some cases, bosses still have a chance to veto those decisions, but it's worth noting that the practice is spreading.

And if you ask me, that's a good thing—including when it comes to the most consequential decisions, like picking a company's top leaders. Here's what being an employee-elected CEO has taught me about the value of workplace democracy.

Bringing It All Out Of The Shadows

My company, Haufe, adopted leadership elections four years ago, when our founder, Hermann Arnold, realized he wasn’t the right candidate for global CEO as the company grew and expanded. Arnold stepped down from that post in 2011 and assumed the role of chairman. Then, rather than simply appoint someone, Arnold asked himself, "If we truly believe employees run companies—as our fundamental market approach says—what better way to prove it than to have our employees elect the next CEO and other top leaders?" So all 200 employees at the time were enfranchised, and they chose Marc Stoffel as the company's CEO.

That set a pattern, which the company followed globally. I put myself up for election in 2015 and was chosen as CEO of Haufe USA. As the company has grown worldwide, all employees still vote annually for all key leadership positions, including mine.

In my experience, workplace democracy can simply make for better business. Here are a few reasons why:

  • It brings everything that’s happening in secret "shadow organizations" out into the open, spreading the benefits of once-underground ideas and innovation through the entire company.
  • It helps ensure that change inside organizations keeps pace with change in the outside world, where customers, partners, and competitors live.
  • It helps keep employees motivated, dedicated, and engaged.

Consider this: Each of your employees votes every day in the privacy of their hearts whether to get on board with a new initiative or follow someone. So why not move that silent election out into the open?

Without this level of democratic transparency, people with better ideas get frustrated by clogged official channels and start working on them behind the scenes. That can lead to "shadow organizations," which are unhealthy to your company's culture as well as its progress. They confine innovation to small, furtive cells when those better ideas, shared across the company and imbued with its full resources, could be accelerating everyone's success.

One infamous example of shadow organizations influencing entire companies came in 2007, when the iPhone was introduced, putting a powerful, web-connected personal computer into everyone’s pocket. Before long, waves of employees were quietly bringing iPhones into offices and using them for work, foregoing their officially issued BlackBerries.

At first, that made more than a few IT departments furious. BlackBerries were secure, familiar, supported. iPhones, on the other hand, were rogue devices—a Pandora’s Box of security and compatibility issues. But it soon became apparent that those shadow iPhone users weren’t rebels. They were simply gravitating to a tool that helped them do their jobs better. One by one, corporate lights came on: Let’s not punish people for seeking innovation outside official channels.

The Strategic Value Of Elections

Fine, you might say. But this is a far cry from electing a company's leaders. And you'd have a point—but the same principle, of deferring to employees' demonstrated preferences in the interests of progress, still applies when it comes to electing top-level leaders. It's true that electioneering can be time consuming in offices that are already running at breakneck speeds. But holding annual elections aren’t a waste of time.

The campaign period forces everyone—employees, leaders, and aspiring leaders alike—to stop and examine the company’s culture, and decide how it should evolve. Most unelected leaders are too busy to pull back from their other strategic plans to engage in an honest give-and-take with the people who determine their ultimate success: their employees.

Despite unceasing demands on my time, I value the election process because it makes my job as CEO both smoother and more valuable. Leaders who explain their strategy for the coming year to "voters" find it easier to execute it later; employees have already thought hard about it and decided to support it.

And if the year ahead presents challenges that require tough decisions, I don’t have to explain them afterward—my colleagues already know what's coming.

Beyond these practical advantages, true democracy in the workplace—not just giving employees the freedom to choose their own snacks—has two other upsides. First, it helps makes genuine leadership possible. Leaders have followers. Management, by contrast, is about getting a specific job done. Leadership is about creating productive change that can accomplish things that weren’t even thought of when the day began. Leadership elections help bridge this gap by giving inspiring managers a chance to become leaders who have the sincere, active support of their teams.

Second, and more fundamentally, workplace democracy is the ultimate proof that everyone in a company—at every level—really is in it together.

Kelly Max is cofounder, president, and CEO of Haufe USA, Inc., a San Francisco–based talent management/HR company that custom-tailors combinations of consulting software. Its clients include Vice, Proper Hospitality, and NeueHouse.

loading