The Nine Consequences of Business Democracy

Management elections at Haufe-umantis

Business democracy at Haufe-umantis: Our management elections have just taken place for the third consecutive year. Nonetheless they are frequently dismissed as a PR stunt – sometimes even by individual employees of our company. In particular when only one candidate is put up for a position. And the question is always the same: what kind of election is it when I don’t appear to have an alternative?


Business democracy: an experiment but not a PR stunt

It all started when I felt that I was no longer the right person for the position of CEO. I saw our current CEO Marc Stoffel as my successor. But we both agreed: that’s not how our company works. We can’t simply put someone in the top job. So instead we allowed the employees to decide.


160129_Insights_Hermann Arnold_Learnings aus den Wahlen_Foto der Wahl
At Haufe-umantis employees democratically elect their management.


Lessons learned: the positive effects of management elections

Back then we really couldn’t foresee how the company would develop with the introduction of elections. But now we are certain that we made the right move – and that goes for all employees, as our last strategy meeting showed. Together we decided that we wanted to continue working according to the democratic principle. Because thanks to our type of company management we have achieved key positive impacts that make our culture strong today:

Consequence 1: an elected leader has backing from the team

Through the election of a manager their visions and goals become those of the team, for with their votes the employees have made an active decision and therefore assume responsibility for successful execution.


Consequence 2: A non-election is an election too

An election remains an election even in instances where there is only one candidate for a position because I have the choice of not giving my vote to this candidate. The deselection of a candidate has even turned out to be the much more important tool. Because someone may do a good job of selling her- or himself but anyone who fails to do a good job in the long term can also be voted out again.


Consequence 3: Elections encourage dialogue

Every candidate must define their desired role in advance of the election and communicate this definition along with all associated targets, possible challenges and their own strengths and weaknesses to everyone. In addition they must be questioned by the employees so that mutual expectations can be weighed up in advance.


Consequence 4: communication is enhanced

employees and managers listen to one another in completely different ways. Whilst employees know that they must ultimately reach the right decision, managers realize that their position lies in the hands of employees. As a result both parties are encouraged to communicate and to take these discussions seriously – not just immediately before elections.


Consequence 5: the election campaign strengthens management qualities

The elections are like a barometer of opinion. Some managers are indeed elected but fare worse than the previous year or than other candidates. This is a kind of warning and also acts as a spur to become better. In addition, the candidates can also always learn from one another.


Consequence 6: limited terms of office increase willingness to go the extra mile

On occasion someone is elected who isn’t up to the job or who quickly reaches the limits of their abilities. In classic companies the first effect is a dip in the mood and performance of the team. As a result some employees – typically the best ones – leave the company and finally the manager is replaced or departs. This causes considerable suffering on both sides. But if there is clear end in sight to this difficult phase it is easier to tolerate.


Consequence 7: deselections and resignations are normalized

A deselection or non-election is certainly not easy to accept because it initially feels like a loss of face. With time, however, it becomes a normal process and a voluntary resignation becomes a self-determined alternative. The important thing to bear in mind is that just because someone isn’t currently the right person for this precise position it doesn’t mean that this person essentially isn’t a good manager.


Consequence 8: a career becomes a spiral

Managers who have been deselected or resigned work in the team again. During this period they observe the new manager going about their work, make comparisons with their own management qualities and learn from their mistakes but above all observe the strengths of their successor – always balanced against their own experiences. The learning effect is huge and can be used to great advantage in a subsequent management role.


Consequence 9: employees demonstrate foresight and a sense of responsibility

Some managers don’t risk making unpopular decisions, fearing that they will not be reelected. However, this self-paralysis is unjustified because in our experience employees are definitely able to differentiate between tough decisions that have to be made and poor leadership skills.


The introduction of elections has strengthened our business culture and processes in unexpected ways and we are certain that they can be effective for other companies too.


Can you envisage staging elections in your company? Or have you already experienced democratic elections in your company? Do your experiences correspond with ours? Where do you see further challenges?


Photo Credit: Davide Ragusa via Unsplash

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