Brexit has raised a very important management issue – whether leaders should ask for a referendum, when posed with difficult decisions.

Most great leaders in corporate life will sometimes have to take a difficult decision for their companies based on facts. If the decision is likely to be controversial does it mean that an easy way out is to be democratic and ask the company to vote?

Referendums are double edged swords that are not worth taking a gamble. While putting a referendum to vote itself is a high democratic process, one has to assume that very often people don’t know what is good for their own company or country. This is because leaders have better information about the results of a decision than are the ordinary people, who may take decisions based on emotion.

Brexit is a case study on why leaders should not put referendums for a vote. Being democratic may not always be the best thing for any company or country. If one analyses how the vote for Brexit was distributed this comes clearer.

Source : yougov.co.uk

As the chart shows the people who voted to leave the European Union don’t have to live with the impact of this decision for very long. In fact the result of the decision really impacts the people who have to live with this decision for the next 52-69 years. So in a case like this the decision is unfair to those who have to live with the effect of the Brexit vote.Also according to yougov more people came out to vote in the ‘Leave’ areas tilting the decision in their favour. Another uncontrollable but unfortunate fact.

As with countries, so with companies

I have often seen CEOs who are not willing to take a strong decision put something to vote on the conference table trying to make it a senior management decision for example. Should something go wrong for the CEO he can claim that everybody decided and it was not his decisions alone. By putting a difficult decision to vote, the CEO absolves himself of the negative effects of the final decision taken. On one hand he can claim that he was being very democratic and therefore would be difficult to fault. But often, it only shows that he was bad at taking difficult decisions and leading the company.

Brexit also raises the important question of whether countries can’t think like companies. De-merging is perhaps a more difficult and painful process, than merging. Besides commercial issues become more important than ideological issues when companies take similar decisions. In a company decision emotion has no place or weight. But perhaps in country decisions, emotions come into play.

Why we elect Leaders

Why do we elect people to represent us at any level of government? The answers are probably myriad, but most of them would seem to include the passage of legislation that permits our elected government to act on our behalf. We all have preferences for how government should work and what legislation we would like to see passed. Sometimes our governmental bodies meet our expectations and sometimes they don’t. This is part of being part of a democracy. The phrase “you win some, you lose some” is an apt description of how voters view government.

So when we elect leaders, we should trust them to take decisions on our behalf rather than want to take them ourselves. This is because we may not be the best informed or educated on the matters affecting every issue. We expect our government or our CEO or board of directors to be the best informed on all matter. They are the panel of experts. And they need to decide for us.

Leaders and Managers

But if a leader is ideologically lite then often he is not the type to make a large sacrifice. True leaders are willing to weather the storm and lead a revolution for something they believe in ( Mahatma Gandhi, Nelson Mandela & Martin Luther King ) Good managers like to walk the middle path, thinking that they might become more popular. They are good at achieving a balance of opinion. More often than not they are not willing to take a decision, and then the situation usually tides over and people forget that a decision hadn’t been taken. Because usually it creates a new situation that needs a new decision.

Company gain before personal gain

The other redeeming quality of a great leader is that he will put his company’s interests before his own. And while he may be willing to take a gamble, he will not gamble his company’s future for a possible benefit to his own future. Most greater leaders put their company’s or country’s interest before any personal or selfish interest.

To conclude, asking for a referendum only means that you have delegated your decision to the people and absolved yourself of the implications – a weak way of solving a difficult problem. Certainly not the quality of a great leader, but could well be how the weak but adept manager is known to handle difficult situations.