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).