Power: Influence on Decision Making and Its Risks

Power significantly influences decision-making behavior, often leading to overconfidence, insensitivity to others’ perspectives, and increased risk-taking. Recognizing the behavioral and structural signals of power can help organizations identify potential governance risks. Implementing decision governance frameworks that enforce accountability, promote diverse input, and counteract cognitive biases ensures that decision-making remains balanced and evidence-based. This text outlines how power influences decision-making, the signals that indicate its presence, and governance strategies to counteract potential biases.

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.

The Influence of Power on Decision-Making Behavior

The possession of power fundamentally alters cognitive processing, emotional regulation, and behavioral tendencies in decision-makers. Research in social psychology suggests several key effects:

• Increased Confidence and Overconfidence: Powerful individuals tend to display heightened confidence in their judgments. This can lead to decisive action, but also to overconfidence, where they underestimate risks and overestimate their knowledge or abilities (Anderson & Brion, 2014).
• Reduced Perspective-Taking: Studies indicate that power reduces an individual’s ability to adopt others’ perspectives, making them less empathetic toward subordinates or stakeholders (Galinsky et al., 2006). This insensitivity can lead to decisions that disregard the concerns or insights of others.
• Increased Risk-Taking: Power has been shown to elevate risk tolerance. Because powerful individuals perceive themselves as less vulnerable to negative consequences, they are more likely to take bold, and sometimes reckless, actions (Keltner, Gruenfeld, & Anderson, 2003).
• Resistance to Feedback: Power can make individuals less receptive to feedback, particularly if it challenges their authority or perspective. This effect can create an echo chamber, reinforcing poor decision-making processes (Fast, Sivanathan, Mayer, & Galinsky, 2012).
• Greater Goal-Orientation: On a positive note, power often enhances goal-directed behavior and persistence. Decision-makers with power are more likely to focus on long-term strategic objectives and to mobilize resources efficiently to achieve them.

Signals That Indicate a Decision-Maker’s Level of Power

Power dynamics in decision-making can often be inferred from behavioral, communicative, and structural signals:

Signals of High Power:

• Control Over Information: Decision-makers with power have access to privileged information and may control its flow within an organization.
• Initiating and Directing Conversations: Those with power often dominate discussions, set agendas, and interrupt others.
• Confidence in Decision-Making: Powerful decision-makers tend to make quicker and more decisive choices, often without seeking extensive input.
• Minimal Justification Required: The more powerful an individual is, the less they feel compelled to justify their decisions to others.
• Command Over Resources: Those with power dictate budget allocations, personnel changes, and strategic priorities with limited resistance.

Signals of Low Power:

• Deferring to Authority: Individuals with less power tend to seek approval or confirmation before making decisions.
• Hesitancy in Expressing Opinions: They may be reluctant to voice dissenting views or to challenge those in authority.
• Lack of Access to Information: Less powerful individuals often rely on secondhand information and have limited direct control over data.
• Greater Sensitivity to Group Consensus: Lower-power decision-makers are more likely to conform to group norms rather than assert independent judgment.

Signals That a Decision-Maker Is Ignoring Important Information or Taking Inappropriate Risks Due to Power

Power can distort perception and behavior, leading to poor decision-making outcomes. Key warning signs include:

• Disregard for Expert Advice: When a leader dismisses technical experts or refuses to consult relevant stakeholders, it suggests an overestimation of their own knowledge.
• Overly Optimistic Projections: Unrealistic expectations about project timelines, resource availability, or market conditions often indicate overconfidence.
• Suppression of Dissenting Opinions: Decision-makers who discourage debate or marginalize critical voices create environments prone to unchecked risk-taking.
• Resistance to Risk Assessment Processes: A refusal to engage in formal risk evaluations or to acknowledge potential downsides signals a potential governance issue.
• Frequent Rule-Bending: Decision-makers who frequently override policies or procedures in the name of efficiency or expedience may be taking inappropriate risks.
• Emotional Dismissal of Negative Feedback: Leaders who respond defensively to criticism rather than engaging with constructive input are likely ignoring valuable information.

Decision Governance Guidelines to Mitigate Power-Related Biases

To counteract the risks associated with power in decision-making, organizations can implement governance frameworks that promote accountability, transparency, and balanced decision-making.

• Structured Decision-Making Frameworks: Implement formal decision-making protocols that require structured risk assessments, scenario planning, and evidence-based evaluations.
• Checks and Balances: Introduce mechanisms such as peer reviews, advisory committees, and independent oversight bodies to prevent unilateral decision-making.
• Mandatory Stakeholder Consultation: Establish policies that require decision-makers to solicit input from diverse perspectives before finalizing key decisions.
• Regular Risk Audits: Conduct systematic reviews of decision outcomes to identify instances where power influenced inappropriate risk-taking.
• Encouraging Dissenting Voices: Foster an organizational culture where critical thinking and constructive dissent are valued and protected.
• Accountability Mechanisms: Implement clear lines of responsibility and consequences for decision-makers who ignore governance guidelines or engage in reckless behavior.
• Training on Cognitive Biases: Provide leadership development programs that educate decision-makers about the psychological effects of power and strategies to mitigate overconfidence and insensitivity.

References

• Anderson, C., & Brion, S. (2014). The loss of power: How illusions of control undermine the powerholder. Journal of Experimental Social Psychology, 52, 49-56.
• Fast, N. J., Sivanathan, N., Mayer, N. D., & Galinsky, A. D. (2012). Power and overconfident decision-making. Organizational Behavior and Human Decision Processes, 117(2), 249-260.
• Galinsky, A. D., Magee, J. C., Inesi, M. E., & Gruenfeld, D. H. (2006). Power and perspectives not taken. Psychological Science, 17(12), 1068-1074.
• Keltner, D., Gruenfeld, D. H., & Anderson, C. (2003). Power, approach, and inhibition. Psychological Review, 110(2), 265-284.