These employees can tell their CEO, 'you're fired'

Democracy in the workplace
Democracy in the workplace

Workplace democracy has taken on a whole new meaning at one company — employees can vote on whether their CEO can keep his job.

Last year, employees of Haufe USA elected Kelly Max as their CEO and every year, they decide if he should stay in office.

"It comes from the fundamental idea that we have that employees run companies," Max said in an interview with CNBC's "Power Lunch."

It all began four years ago when Haufe's founder and chairman decided he wasn't the right person for the global CEO job as the talent management and human resources company expanded. Instead, he opted to have the employees vote on the matter.

Max wrote about his company's policy recently in Fast Company, contending that, among other things, it keeps staff motivated and dedicated and allows the company to keep pace with the outside world.

It also brings "shadow organizations" out into the open, he said.

"A lot of shadow organizations happen in many enterprises, where a lot of ideas are worked on but they never come to the surface and really flourish and create more power for the organization to thrive," he told CNBC.

Max insisted that despite the challenges that come from vying for his job every year, he can make the difficult decisions because he knows his employees are behind him.

"The crowd genius that we have in the organization is very smart. It is much smarter than we think it is," he said.

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While giving employees the power to hire and fire CEOs may work for Haufe, it is certainly not the way workplaces work, said Vivek Wadhwa, a Stanford University fellow at the Rock Center for Corporate Governance.

Workplaces are a "dictatorship," he told "Power Lunch."

"You need a strong leader who has a vision who can articulate it … and then everyone has to fall behind him or her," said Wadhwa.

Those leaders need to be able to fire people, shape strategies and shut down divisions.

"If you have to keep worrying about your popularity, you are not going to do the right thing for the company. You are just going to try to get re-elected next year as our leaders do and the whole thing falls apart," he said.

However, Max said that Haufe's democracy makes everyone stronger.

"If you look at the generational demands that you have today, dictatorship in my opinion doesn't work anymore," he said.

"The millennials, Generation Z that are entering the workplace, they want a voice, they want to have fulfillment every day, they want to really be part of something bigger and giving them democracy is one part of that purpose."