How Electing a CEO Benefits the Company

The time has come to practice true workplace democracy, including electing the company’s CEO and other top leaders. Not because it’s cool, but because it’s better business, for at least three reasons:

  • Workplace democracy brings everything that’s happening in secret “shadow organizations” out into the open, spreading the benefits of once-underground innovation through the entire company.
  • Workplace democracy insures that change inside organizations keeps pace with change in the outside world, where customers, partners, and competitors live.
  • Companies that practice workplace democracy benefit from employees who are more motivated, dedicated, and engaged.

I’m saying this not as an outside workplace theorist, but as a hands-on elected CEO who must stand for re-election by all my colleagues every year. If the employees who run my company don’t want me as their leader, I take another job in the company or head for the door.

Let’s look at the ways organizations benefit when employees elect their leaders:

The crucial difference between “leaders” and “managers”

Managers have employees. Leaders have followers. Management 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. Workplace democracy offers inspiring managers a chance to be recognized as leaders, through election by the people who want them to lead.

Let’s face it: Even without actual elections, every employee votes every day in the privacy of the heart whether to follow someone, so why not move that election out into the open where it can do some good for the organization?

Out of the Shadow Organization, into the Light

In companies lacking democratic transparency, people with better ideas get frustrated by clogged official channels – “Go back to the hive, Worker Bee!” These stymied workers can simply lose interest or leave the organization. At best, they start developing and executing their better ideas in secret and unhealthy “shadow organizations.” Shadow organizations confine innovation to small, furtive cells when those better ideas, shared across the company, could be accelerating productivity and success for everyone. What’s more, even the most creative shadow organizations lack access to the company’s full array of complex processes needed to move good ideas to adoption.

Electing leaders aligns strategy and attitude throughout the organization

Skeptics often greet my ideas about workplace democracy with incredulity. Get real, Kelly, they say. Electing top leaders – even if elections are already going on in everyone’s head every day – is simply too radical for the modern workplace. It will lead to anarchy. And besides, we’re busy. Who has time for elections – and electioneering – in today’s office? It’s tough enough just to get our jobs done.

The skeptics are wrong. Experience shows elections aren’t a waste of time. Just the opposite. The campaign period forces everyone – employees and leaders – to stop and examine the company’s culture together, and decide collaboratively how it should evolve. The election process forces leaders, who in most companies are usually too busy to share their strategic thinking with the workforce, to slow down and engage in honest give-and-take with the people who determine their ultimate success: employees.

Despite being super-busy, as an elected CEO I value the election process because it makes my job smoother and my contribution more valuable. Leaders who explain their strategy for the coming year to employee “voters” while campaigning find it easier to execute that strategy – employees already voted to support it. If the year ahead presents challenges that require tough decisions, I don’t need to explain them afterward: my colleagues already know they’re coming, and voted for them.

My company, Haufe, adopted leadership elections four years ago, when our founder, Hermann Arnold, realized he wasn’t the right candidate for CEO as the company grew. Rather than simply appoint someone, he asked himself, “If we truly believe employees run companies – as our key message states – what better way to prove it than to have our employees elect the next CEO and other top leaders?” All 200 employees at the time were enfranchised. As the company has grown, everyone still votes annually for all key leadership positions on a global basis.

It simply makes good business sense to empower employees to elect the people they will be following every workday for at least the next year. True democracy in the workplace – based on trust, transparency, and partnership – demonstrates at the most fundamental level that we’re all in this together.

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