Power and authority for a CEO can be a delicate matter that has the potential to disrupt your organization’s balance, either by tipping it in the direction of power struggles with the board, diminishing the legitimacy of the CEO’s status and decision-making abilities, or disempowering front line employees who are unable to make decisions or a myriad of other challenges. Your candidate must therefore understand how power and authority work together to drive a company to peak performance.
While authority comes from a person’s rank and title, power is informal and intangible; it is the ability to influence others and create impact in a company, as well as garner respect from the team. Great CEOs will push power and authority down the organizational line, empower their front line, and give away as much power as they can. This will result in having a quicker and more agile organization, with better customer experience, and better risk and control functions. Conversely, bad CEOs will hoard power and suffocate the organization, because it would mean freezing the business, making it difficult for employees to get anything done without the sign off of the boss. Customer experience suffers as decisions take ages and approvals are backlogged.
Underperforming CEOs also have bad processes and big gaps in their policies, which cascade into their risk and control functions, making them even less trusting to empower the team. Without the right controls and risk assurances in place, executive management feels the front line would be at risk of running loose with runaway costs. This, then, becomes a vicious loop in which the management team can be locked into creating a stone wall for any real progress that the company can achieve. With customer experience becoming a major focus point for most companies today, it can spell disaster for the business. Your CEO should be making a conscious effort to ensure they have the power and authority they need to drive the company to peak performance while maintaining the right amount of control and risk management to ensure the company does not lose its direction and focus or experience a lapse in quality.
During the interview, you should ask questions to check how the candidate uses power and authority to manage the organization both in the downward and upward directions. When it comes to the former, you may ask:
Have you ever restructured the organizational chart to push power and authority down the chain?
This allows you to gauge the candidate’s understanding of how front-line employees who have more power and authority can deliver a better customer experience, which can include small concessions and discounts for disgruntled customers or the ability to customize services. Any empowerment the CEO describes must include the distribution of resources, front-line employees having the green light to compensate customers on the spot or provide free upgrades, and allowing new consultants to spend on corporate credit cards. It cannot just be talk, it must result in more junior people having the ability to spend resources, financial or otherwise, in the name of achieving the business’s objectives.
As a CEO you have a lot of power, do you ever feel like relinquishing some of that power to your benefit? Have you ever done that?
This allows you to highlight the candidate’s understanding of the concepts of power and authority. Great candidates understand that power will always trump authority, and work to ensure that their power base grows while having the requisite power they need to execute the company’s strategies.
All actions, including the termination of employees or disciplinary actions, must be viewed as an expression of the company’s values and would be utilized by great leaders to communicate the organization’s values, ethos, and culture to the team.
When it comes to managing the organization in the upward direction, you can ask them:
How do you ensure that, as it relates to the board, no one in the company can erode your power and authority?
Here, it’s important to note that when a CEO does not understand how to use power and authority properly, they will not be able to interact with the board in an effective manner and they may end up getting terminated. They can easily lose control of the board if they are not savvy enough to limit the influence of saboteurs or ill-motivated executives who are vying for the board’s ear.
A smart CEO who just joined a company will do something called “closing the back door”, meaning assessing the organization to see where authority and power sit, severing links that legacy employees have used to access the board. They will make a conscious effort to ensure they have the power and authority they need to drive the company to peak performance.
Here’s an example and a true story: A board chairman employed a janitor a few decades ago, then went on to hire his son, so there was a personal relationship between the two families. While the CEO of the company was implementing changes to change the production line, the janitor was meeting with the chairman on the weekends and by voicing his opinion on the irrelevance of these changes, actually managed to undo decisions made by the CEO.
This is a true story and a great example of how a CEO who does not understand how to manage power and authority was outdone by the most junior person in the company who had no authority but was overflowing with power.
Good CEOs come in, understand the power dynamics at play, and communicate to the board that there should only be 2 to a maximum of 4 communication points into the board and will avoid having their power and influence diluted.
Looking for more questions to ask a CEO? Read “CEO Assessment and Selection” to learn more about the 7 universal success factors for the Chief Executive Officer and unlock over 450 fail-safe questions that allow you to recruit top performers. Get more free CEO Assessment tips at https://tpgleadership.com/ceo-assessment-selection-book/ .
If you like this essay, you can see our video here