Strategy RSS

  The Proper Use of Power at Work 

Gallo, Miguel Ángel
Who holds power in your company, and are those people really prepared to use it? Although it's an issue many take for granted, power is sometimes wielded by those who lack the ability to use it appropriately.

A striking example of this came to light in 2015, when Turing Pharmaceutical CEO Martin Shkreli bought the rights to an infectious-disease drug called Daraprim and increased its price more than 50-fold overnight. What Shkreli then seemed to consider a profit-reaping masterstroke has led to his notoriety and now, some months later, he finds himself facing criminal charges.

Managing power is not easy, concludes IESE professor emeritus Miguel Ángel Gallo in his 2016 book. Indeed, he argues, power is a profession in and of itself which needs to be learned. He provides guidelines and recommendations for doing so successfully.



Power and Authority

In examining governance and management in business, the author makes a clear distinction between potestas, the Latin term for socially recognized power, and auctoritas, defined as authority or know-how earning the respect of others. Gallo suggests that people who hold power should increase their rightful authority through knowledge of their company and its environment.

When all is said and done, executives have an obligation to strive to learn and improve their ability to carry out the basic functions of a firm:
  • Strategic planning: imagining and designing better future scenarios for the company.
  • Entrepreneurship: starting up or changing, obtaining resources and aligning people.
  • Organization: finding the right place for everyone, providing the means and making things come together.
  • Teamwork: integrating people and making group decisions.
  • Helping others: understanding and managing priorities in pursuit of the common good and individual gains.
If power goes to a business owner or executive's head, that person may make strategic decisions based solely on personal preference or take actions without considering vital information about the company or business environment. Such a misguided view of power can "spoil" key processes within a company.

Having full potestas without the necessary auctoritas leads to arbitrary decision-making, or, at an extreme, tyrannical leadership.

Quality Governance
The improper use of corporate power can be seen on multiple levels: in executive pay, hiring, allocation of responsibilities and levels of autonomy, and implementation of personnel management systems.

Better quality governance is not just a moral obligation, Gallo argues; it also provides major long-term benefits by improving the inner workings of the organization and boosting its competitiveness.

But how to go about it? Start by fostering a collaborative environment. Sharing responsibility and decision-making among shareholders and boards of directors will help mitigate negative influences and personal biases in decisions.

And give some thought to executive roles. It is essential to fill these positions with responsible individuals -- and then delegate enough power so they can perform their functions autonomously.

Get Educated About Power
If there's truth to the Peter Principle -- that people are promoted to the level of their incompetence -- it's likely because few people have been taught how to use power effectively. Devoting a chapter to shortcomings in today's training, Gallo also notes that few educators themselves have expertise in this area.

This needs to change, and the author also makes the case that courses on management, leadership, authority and corporate governance should integrate anthropology and ethics into their curriculum.

And in the end, experience is an important way to learn to exercise power well. Just as business schools run simulations and practice sessions for decision making, there should also be practical sessions on how board and shareholder meetings work. Only by seeing power in action can you best learn how to manage it.
This article is based on:  El poder en la empresa
Publisher:  Libros de Cabecera
Year:  2016
Language:  Spanish
Print
Buy it Spanish
Share