Power or Profits – You Can’t Have Both

“Command-and-control is less and less the model for how the world works. Hierarchies, with their emphasis on obedience and conformity, are ill-suited for a modern economy in which knowledge workers must improvise and bend the rules.”

~ Gary Hamel

Organisations often face a tradeoff between distributing power to lower level employees (and thereby increasing innovation and productivity) versus maximising management power and control. The traditional hierarchical structure concentrates decision-making authority with senior managers. While this enables top-down control and accountability, it can come at the expense of agility, innovation, and employee empowerment.

Some argue that pushing down real power and autonomy to rank-and-file workers or frontline staff threatens the traditional managerial chain of command. And this may be true. However, the counterargument is that empowered employees with a voice in key decisions, access to resources, and fewer bureaucratic constraints are more engaged, productive, and creative.

Studies of organisations that have “flattened” their traditionally steep hierarchies show they often outperform their more top-down competitors. Giving teams ownership of projects and problems paired with accountability for outcomes can drive faster iteration, customer focus, and solutions that leverage insider knowledge.

However, power distribution introduces messy realities to the tidy organisational chart. Concerns around losing control can make management reluctant to adopt more decentralised structures. And managers oppose changes seen as diluting their status or job security. The instinct is often to limit autonomy to non-critical functions.

So organisations face a stark choice between retaining centralised control or pushing down power to unlock greater innovation and responsiveness. The reality is you cannot have both tightly held managerial authority and the agility enabled by widespread employee empowerment. Attempts to blend elements of both will inevitably lead to confused systems with conflicting priorities.

Organisations have a choice – commit fully to either top-down control or bottom-up autonomy. There are reasonable argumentsfor both options. But make no mistake – compromising between the two by granting partial empowerment on select issues resolves nothing. It brings only greater frustration and deteriorating morale over time. Organisations have the choice of direction for the organisation and its culture – management power or burgeoning profits. The middle ground is ultimately untenable.

Further Reading

Lilla, M. (2024, February 26). Against managerialism. Current Affairs. https://www.currentaffairs.org/2024/02/against-managerialism