Power: What If High Decision Authority Is Combined With Low Power

A power hierarchy ranks higher the individuals who control more resources: high power individuals control more resources than low power individuals. What if decision authority is assigned against the power hierarchy? That is, what if individuals who have more power are given lower decision rights through decision governance?

This text is part of the series on decision governance. Decision Governance is concerned with how to improve the quality of decisions by changing the context, process, data, and tools (including AI) used to make decisions. Understanding decision governance empowers decision makers and decision stakeholders to improve how they make decisions with others. Start with “What is Decision Governance?” and find all texts on decision governance here.

Risks to the Quality of Decision Processes and Outcomes

Decision processes can become fragmented if high-power participants exert informal control or undermine the legitimacy of low-power decision-makers. This can reduce transparency and potentially slow down decision-making, as formal authority and informal influence clash. Moreover, high-power actors may protect their own interests behind the scenes, making it challenging for the organization to realize the benefits of decentralized authority. If the new structure lacks clear guidelines and adequate communication, confusion and friction can arise, ultimately diminishing the quality of both processes and outcomes (Cyert & March, 1963; Williamson, 1996).

Factors and Properties Favoring More Authority for Low-Power Participants

• Specialized knowledge: When lower-ranking individuals possess expertise that surpasses that of higher-level managers, granting them decision rights can enhance technical accuracy. Research in organizational theory suggests that decision quality improves when those with the most context-specific knowledge hold formal authority (Mintzberg, 1979; Simon, 1977).
  
• Neutrality: If the decision problem is prone to capture (where those with substantial resources might protect their own interests) giving less powerful individuals formal authority can help mitigate conflicts of interest (Williamson, 1996). Distributing authority can reduce the likelihood of self-serving bias and may contribute to a more balanced decision process.
  
• Collaborative culture: Organizations that value deliberative decision processes often benefit from broader participation. Low-power participants are more likely to foster inclusive, peer-based approaches to problem-solving (Cyert & March, 1963). Such practices can lead to greater buy-in across the organization and encourage innovative thinking.
  
• Problem complexity: In situations requiring multiple perspectives and cross-functional insights, distributing authority to less powerful stakeholders can generate diverse input, potentially leading to higher-quality outcomes (Simon, 1977). Complex problems often benefit from the cognitive diversity that arises when traditionally low-power participants have a voice in key decisions.

Factors and Properties Favoring More Authority for High-Power Participants

• Coordination needs: When swift and unified action is essential, decision-making authority might be best centered among those with the resources and hierarchical standing to coordinate quickly (Mintzberg, 1979). Concentrating authority in a small group can prevent bottlenecks and align stakeholders around urgent tasks.
• Clear accountability: High-power individuals often control budgets or other strategic resources, making it easier to hold them accountable for outcomes. Formalizing authority in their hands can clarify responsibilities and streamline performance monitoring (Fama & Jensen, 1983). This approach may also simplify reward and penalty mechanisms. 
• Strategic impact: Decisions that shape large-scale organizational direction or external relations may warrant the influence of high-power participants, who can leverage their networks and authority (Williamson, 1996). Large-scale strategic moves often require broad support and resource commitment that only high-power actors can fully command.
• Simple or routine problems: When decisions require minimal creativity or cross-functional debate, centralized authority with higher-ranking individuals may be more efficient (Simon, 1977). Routine processes, once standardized, can be executed swiftly by those at the top, expediting day-to-day operations.

References

• Cyert, R.M. & March, J.G. (1963). A Behavioral Theory of the Firm. Prentice-Hall.
• Fama, E.F. & Jensen, M.C. (1983). Separation of Ownership and Control. Journal of Law and Economics, 26(2), 301–325.
• Mintzberg, H. (1979). The Structuring of Organizations. Prentice-Hall.
• Simon, H.A. (1977). The New Science of Management Decision. Prentice-Hall.
• Williamson, O.E. (1996). The Mechanisms of Governance. Oxford University Press.

Definitions

• Capture: A situation in which a decision-making process is dominated or unduly influenced by a special interest (Williamson, 1996).

Decision Governance

This text is part of the series on the design of decision governance. Other texts on the same topic are linked below. This list expands as I add more texts on decision governance.

Introduction to Decision Governance

1. What is Decision Governance?
2. What Is a High Quality Decision?
3. When is Decision Governance Needed?
4. When is Decision Governance Valuable?
5. How Much Decision Governance Is Enough?
6. Are Easy Options the Likely Choice?
7. Can Decision Governance Be a Source of Competitive Advantage?

Stakeholders of Decision Governance 

1. Who Is Responsible for Decision Governance in a Firm?
2. Who are the Stakeholders of Decision Governance?
3. What Interests Do Stakeholders Have in Decision Governance?
4. What the Organizational Chart Says about Decision Governance

Foundations of Decision Governance

1. How to Spot Decisions in the Wild?
2. When Is It Useful to Reify Decisions?
3. Decision Governance Is Interdisciplinary
4. Individual Decision-Making: Common Models in Economics
5. Group Decision-Making: Common Models in Economics
6. Individual Decision-Making: Common Models in Psychology
7. Group Decision-Making: Common Models in Organizational Theory

Role of Explanations in the Design of Decision Governance

1. Explaining Decisions
2. Simple & Intuitive Models of Decision Explanations
3. Max(Utility) from Variety & Taste
4. Expected Uncertainty to Unexpected Utility
5. Perceptiveness & Experience Shape Rapid Choices

Design of Decision Governance

1. The Design Space for Decision Governance
2. Decision Governance Concepts: Situations, Actions, Commitments and Decisions
3. Decision Governance Concepts: Outcomes to Explanations
4. Slow & Complex Decision Governance and Its Consequences

Design Parameters of Decision Governance

Design parameters of decision governance, or factors that influence decision making and that we can influence through decision governance:

• Factors influencing how an individual selects and processes information
• Factors influencing information the individual can gain access to

Factors influencing how an individual selects and processes information in a decision situation, including which information the individual seeks and selects to use:

1. Psychological factors, which are determined by the individual, including their reaction to other factors:
   1. Attention:
      • Attention Depends on Stimuli & Goals
      • Motivated Reasoning: How To Detect And Mitigate Its Risks
   2. Memory:
      • Selective Memory Can Be Desirable
   3. Mood
   4. Emotions:
      • Emotions Mediate Decisions Always and Everywhere
   5. Temporal Distance:
      • Why Perception of Long Term Outcomes Should Be Influenced First?
   6. Social Distance:
      • Increased Social Distance (Over)Simplifies Explanations
   7. Expectations
   8. Uncertainty
   9. Attitude
   10. Values
   11. Goals:
       • Goals: How Goals Shape Decisions
       • Goals: How Goals Form and Change
       • Goals: Factors That Stabilize and Destabilize Goals
       • Goals: Factors Influencing Goal Selection
       • Goals: How to Improve Alignment to a Team Goal
       • Goal Displacement: What It Is And How To Mitigate It
   12. Preferences
   13. Competence
2. Social factors, which are determined by relationships with others:
   1. Impressions of Others:
      • Impressions Of Others: How They Influence Decisions And How To Regulate Them
   2. Reputation
   3. Social Hierarchies:
      • Social Hierarchies: Why They Matter for Decision Governance
      • Social Hierarchies: Benefits and Limitations in Decision Processes
      • Social Hierarchies: How They Form and Change 
      • Power: Influence on Decision Making and Its Risks
      • Power: Relationship to Psychological Factors in Decision Making
      • Power: Sources of Legitimacy and Implications for Decision Authority
      • Power: Stability and Destabilization of Legitimacy
      • Power: What If High Decision Authority Is Combined With Low Power
      • Power: How Can Low Power Decision Makers Be Credible?
   4. Social Learning:
      • Social Learning: Impact on Decision Making Behavior
      • Social Learning: How to Accelerate It
      • Social Learning: How to Use It to Accelerate Adoption of Decision Governance

Factors influencing information the individual can gain access to in a decision situation, and the perception of possible actions the individual can take, and how they can perform these actions:

• Governance factors, which are rules applicable in the given decision situation:
  1. Incentives
     • Incentives: Components of Incentive Mechanisms
     • Incentives: Example of a Common Incentive Mechanism
     • Incentives: Building Out An Incentive Mechanism From Scratch
     • Incentives: Negative Consequences of Incentive Mechanisms
     • Crowding-Out Effect: The Wrong Incentives Erode the Right Motives
     • Crowding-In Effect: The Right Incentives Amplify the Right Motives
  2. Rules
     • Rules-in-use
     • Rules-in-form
  3. Institutions
• Technological factors, or tools which influence how information is represented and accessed, among others, and how communication can be done
• Environmental factors, or the physical environment, humans and other organisms that the individual must and can interact with
  1. Detail: Level of Detail Can Influence Probability Estimates

Change of Decision Governance

1. Public Policy and Decision Governance:
   • What is the Role of Public Policy in Decision Governance?
   • Dynamics of Public Policy Development
   • How Does Public Policy Influence Decision-Making?
2. Compliance to Policies:
   • Adapting a Decision Process to Comply with a Policy
   • How a Decision Process Can Create Evidence of Compliance
3. Transformation of Decision Governance
   • Punctuated Equilibrium: How to know if a Decision Process is ready for disruption
   • Policy Windows: What They Are And When They Occur
4. Mechanisms for the Change of Decision Governance
   • Incrementalism: What it is, and when/how to implement it in decision governance
   • Governance Dynamics: Change Driven by Cases and Principles
   • Governance Dynamics: Case-Based Development of Decision Governance