There’s a trend in the modern organization whereby people are recognizing the value of empowerment. More specifically, there’s a mindset that people should have the ability to make decisions and if they do, it reflects positively on organizational effectiveness. To a large extent, I agree with this notion and I’m not alone in recognizing the importance of managers setting context and boundaries for their team and then stepping back, allowing them to make informed choices.
While making decisions, using judgment and taking initiative are positive characteristics that define organizational success, we try to avoid this happening in a vacuum as this would result in the organization being pulled in many different directions. In other words, empowerment does not mean that employees have unrestricted freedom to choose what they will do or when they will do it.
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In physics, if two forces are pulling in the same direction and each has the force of one, the total force being applied is two because the vectors add together. On the other hand, if the two vectors pull in opposite directions, the force is zero. If you think of multiple vectors as energy being applied in the organization through individuals, in most organizations many are pulling in different directions. This results in the organization not performing as well as it could, or in the worst case, actually being pulled off course.
So how do we foster empowerment while avoiding chaos?
Believe it or not, this starts with the Board of Directors, which has a very clear role in shaping the direction and overall course of the organization. Here’s how this accountability and authority breaks down and translates into an effective, successful organization.
The Board Has the Authority to Ensure that Organizations have an Accountability and Authority Framework
Although it isn’t typically expressed in these terms, the Board sets the context and boundaries for the CEO. The most critical element of context is set through the approval of the organization’s strategic plan. It also sets policies, which provide boundaries for the work of the CEO, and through her or him, the entire organization.
The Board also uses the strategic planning process to set specific targets (goals or objectives) for the CEO, with milestones, and measures progress against them. The Board holds the CEO accountable for the attainment of those goals or objectives.
Below that, the Board cannot directly delegate work; that is the job of the CEO. But the Board must ensure that the CEO has an accountability and authority framework in place throughout the organization so that appropriately sized objectives are delegated down the organization in such a way that they are consistent with the attainment of the organization’s strategy. Without this framework to guide individual effort, it would be nearly impossible for the CEO to be assured that work delegated throughout the organization is consistent with attainment of the strategic plan. Without this framework, people will interpret and prioritize in inconsistent ways. Despite good intention and best efforts, the results can be counterproductive, if not damaging.
The Board is Accountable through the Founding Documents of the Organization
On what basis does the board have this authority? It is grounded in the founding documents and organizational bylaws. Whether it’s a non-profit, for profit or government department, there are legal documents that state organizational purpose, and the role and authority of the Board of Directors. Invariably the Board is accountable for the governance of the organization, and has the authority to oversee the organization, to engage a CEO, and to delegate the accountability and authority to the CEO to operate the organization. In every organization, it’s these structured and legal mechanisms, which establish the accountability and authority of the organization. The Board must recognize that it alone has accountability for ensuring results. They are entrusted with critical organizational assets, they make strategic decisions and they are ultimately responsible for ensuring that organizational outputs are consistent with the strategic direction of the organization.
In small organizations, there may be an operating Board of Directors, with accountability and authority for the overall organization, but also for doing part of the work. However, in most substantial organizations, the board cannot handle the workload and creates staff positions. As part of that process, the accountability of the board is to create a framework for how work will be done. This is generally handled through the CEO who is delegated accountability and authority to hire staff, implement decisions of the board, and recommend strategy, among countless other priorities.
The founding documents and legal bylaws of the organization are in place to ensure accountability and authority is delegated from the board to the CEO. The board makes certain that the CEO has an appropriate accountability and authority framework in place as work is delegated down and across the organization and that each manager is clear about the authority they have and the objectives they are accountable for delivering. In total, in a well-functioning organization, everyone can then pull in the same direction to help maximize organizational results.