by Sharon Florentine

What if you could fire your CEO?

Sep 01, 2016

For the last four years, Haufe U.S. has functioned as a workplace democracy, where its executive leadership is elected by the employees annually. The craziest part? It's working.

girl with pigtails against orange background holding out vote election pin
Credit: Thinkstock

What if you could fire your CEO?

At talent management and human resources company Haufe U.S., you can. CEO and co-founder Kelly Max — along with most of the other C-level and executive leadership — are elected, and each year employees vote on whether or not they stay or go.

It sounds crazy, right? How could that possibly work? Wouldn’t it be chaos? Wouldn’t executives spend all their time campaigning and none of it actually running the company? These are all questions I had, too, but here’s the thing: They’ve made it work for three years. No, really!

Here’s the deal: Four years ago, the company’s founder and chairman stepped down and announced that, while the firm was looking to expand from Europe to the U.S., he wasn’t the right person to be at the helm. He had a potential successor in mind, but he wanted to put his money where his mouth was and figure out the best way to really give employees ownership and a voice in the running of the company.

That meant creating a workplace democracy, in which C-level leadership is elected by the employees for a one-year term. There’s also a constitution that lays out process, policies and terms of service. Here’s Max on CNBC talking about the system.

Three years later, it seems the experiment is working. I talked to Kelly Max, who’s currently serving a term as CEO, to find out how this workplace democracy idea worked, and how he juggled the day-to-day responsibilities of being a CEO with campaigning to keep his job.

Sharon Florentine: What is this whole “elected CEO” thing all about? I mean, this is a really radical concept.

Kelly Max: It sounds crazy, doesn’t it? But the thing is, if you’re going to talk about how your employees “own” the company, if you’re going to tout how they all have a voice, why not go all the way and see what happens? Because why not? You already have people working for and with you who elect you every day, who either agree or disagree with you and follow you, so we wanted to make it very transparent.

The way it works is your term is one year. That doesn’t sound like a long time, but it’s actually perfect because you have to constantly ask yourself, how am I providing value to the company? What am I accomplishing? Setting and tracking goals becomes easier because a year timeframe is manageable and more digestible. Then you have a short, set period of time for campaigning, too — we have very strict timelines around those so they don’t turn into a circus. No political theater here.

Another thing — we have a yearly strategy meeting where the elections are done for all the key leadership positions from the CEO, the CTO, all the heads of the market areas we serve, and anyone can ask the candidates anything they want in front of a global audience. At first, it wasn’t as easy for people to speak up, but now it’s become more of a norm so people really feel like they are empowered and have an impact on the direction of the company.

SF: What was it like when you decided you wanted to run for CEO? Tell me about how that works.

KM: To tell you the truth, it was scary, and it was really emotional. I knew I wanted to run, because I thought I had really great ideas for where the company should go and how to get there. I was going up against 260 other employees worldwide.

But — I was elected, and here I am. I’ve been re-elected each year for the last three years. That does not mean, at all, that every single employee in the company voted for me. We’ve adapted over the years; it used to be just a simple majority vote, but we found out quickly that wasn’t the way to go. Now you need 51 percent of the vote from your immediate team in your country, and 66 percent of the vote from the global employees.

If I hadn’t reached that majority, I wouldn’t have the job. Also — this is important — it’s not just a “yes or no” vote. You have the option to vote yes or no tentatively, or with “comments.” That means people can tell you, “I didn’t vote for you, but only because the other person had a better strategy in such-and-such area” or “I voted for you, but I’m concerned about the direction you’re taking when it comes to so-and-so.”

What that does is it shows you feedback you may have never seen before, and it allows you to focus your efforts, so you can respond to and connect with people and with areas of the business. I try and respond publicly and honestly to all of the feedback, especially to the negatives and to the “no” votes, because even though those people didn’t want to elect me, I’m still working for them.

SF: What do you see as the biggest benefit to this system? What are the biggest challenges?

The biggest one, for me, is that I am constantly reminded to put myself in service of the company, and not in service of my own ego. That’s a powerful tool if you can live that. That doesn’t mean your personal goals are gone. It means that it’s about the public good of the company, and not about your own personal good. That’s something I think can easily get lost the moment the money or the success starts flowing.

And when you are in a key leadership position, the terms and the timeframe mean you have to really reflect constantly on how you’re getting to goals, what’s truly important every day to the company, how to fail fast and succeed sooner to meet the promises you laid out when you were elected. It kind of kills the rumor mill, too, and the “shadow organizations” that spring up in companies where there are groups of people kind of doing their own thing because they don’t feel they’re heard by the leadership. Not entirely, of course, but it basically provides a good forum once a year for everyone to speak up and say, “I don’t agree,” or “I don’t think that direction is good for us, because X, Y and Z.”

For the employees, I think the benefit is they really see and feel that they are empowered in the running of the company, and that they have as much of a voice and a say in where we’re going and how we get there. It also offers them a very different perspective on their career journey. Like, “Yes, you too could get to this level, it’s really possible!”

Challenges? The biggest was just figuring out what a “workplace democracy” meant. We had to learn that not every topic is for election. We learned that, as executives, you’re elected to make certain decisions that aren’t going to work out well if they’re up for debate. At the beginning we tried to use elections for everything, but that wasn’t realistic, so we had to find that balance.

We figured out how much time to devote to the elections process, and to developing and modifying the constitution. That took lots of time and energy, sure. But we found that the increase in performance and motivation and productivity gained us much more time and energy than we imagined!

SF: So, this is clearly working well for Haufe. Do you think this is going to take off and we’ll see more organizations moving toward this model?

KM: After three years, we did a company-wide check in and asked if we should continue going forward with this model, or if we wanted to go back to the classic model, and overwhelmingly everyone said, “This is what’s enabling us to do better and be more competitive, so let’s keep going.” Obviously, this model does not work for every company, and in our case, we were opening a new division in the U.S. so we had a clean slate and a starting point. I think this is a logical offshoot of crowdsourcing and the Kickstarter-type movements we’re seeing everywhere.

It’s really all about giving people the opportunity to speak and be heard. If you give your people a voice and shown them they are equal participants in the system, everyone becomes a part of the successes and the failures, and it’s truly empowering. You can only do great work if the people are truly behind you, and how can you know they are or aren’t until you ask? It’s so much more than just a clever marketing story, we’re actually living it.

What do you think? Could a workplace democracy succeed in your organization?