Unions get a 20 per cent vote share under the system introduced in 2012. It took some power away from MPs, who get a 40 per cent say in the decision.
New Labour leader Jacinda Ardern was appointed in a simple caucus vote because it was less than three months before the general election.
After affiliated unions piled in behind Little, he squeaked ahead of rival Grant Robertson in the 2014 selection by just over 1 per cent.
Top union official Bill Newson defended the unions' role in propelling the former union boss into the role after just three years in Parliament.
''We knew Andrew closely and stand by that assessment; a very high sense of integrity and responsibility, a team player.''
Newson, Etu union's national secretary, acknowledged that Little ''didn't work out in the public eye''.
Newson said Little's decision would have ''weighed heavily'' on the former national secretary of the EPMU.
In 2014, Little got 75 per cent of the union's 20 per cent vote share. In the final result, he got 50.52 per cent to Robertson's 49.48 per cent.
University of Otago public law specialist Prof Andrew Geddis said it was a matter for the party, but the unions' involvement was problematic.
''The problem is, it's not the members of the unions who [vote], it's the officials within the unions. It's not a popular choice by union members.''
But Labour Party president Nigel Haworth said the system selected leaders in a ''very clear way''.
''The effort our previous two leaders have put into campaigning has been exceptional. The fact that they haven't necessarily won elections can't be sheeted home solely to them.
''The members very much wanted a new system in 2012. They will no doubt look at its performance and if they want to make changes they will,'' Haworth said.
Little might still get a winnable spot on the party's list, he said.
The party would deliberate to determine Little's new list placement. As leader, he automatically had the No. 1 spot.